Corporate donations

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The term corporate donation refers to any financial contribution made by a corporation to another organization that furthers the contributor's own objectives. Two major kinds of such donations deserve specific consideration, charitable as well as political donations.

Charitable donations[edit]

Corporations give to charitable causes, either because of the personal convictions of influential leaders within the corporation, or more commonly to help establish the public perception that the corporation is a good corporate citizen.

Types of Corporate Charitable Giving[edit]

Corporate charitable giving can be divided into direct cash and non-cash contributions. Direct cash giving comes from corporate headquarters, regional offices, or company sponsored foundations. Examples of direct cash contributions include:

  • Community grants to support local community efforts or nonprofits - 100% of Fortune 500 companies provide some form of community grant or sponsor at least one fundraising event. [1]
  • Matching Gifts - Corporate donations to nonprofits as a match to employee giving. Approximately 65% of Fortune 500 companies offer these programs. [2]
  • Volunteer Grants - Giving to nonprofits in recognition of employee-volunteer service to that organization. Approximately 40% of Fortune 500 companies offer these programs. [3]

Non-cash contributions are contributions of equipment, supplies or time, and do not include cash contributions. Examples of non-cash contributions include:

  • Donation of new or used equipment or supplies, such as computers and other electronic equipment, office supplies, and targeted supplies such as clothing, canned goods, or paper products.
  • Use of organizational services/facilities, such as financial and administrative support, computer services, printing, mailing or copying, or targeted professional services and support.
  • Application of professional services, such as tax and financial advice, strategic planning and organizational development, graphic arts and copy writing, and legal assistance.

Non-cash contributions can also be interpreted through an organization's policy to allow employees paid time off when performing volunteer work.

Annual Charitable Giving Figures[edit]

Total corporate cash donations in 2010 are estimated to be $15.29 billion.[4] Of that, ~80%-85% came from corporate grants and sponsorship of fundraising events while ~15%-20% or $2-$3 billion came from corporate matching gifts and volunteer grants.[5]

Political donations[edit]

Corporate donations to parties, candidates or other political campaigns are a specific type of political contribution, which in general has three characteristics: its origin, its size and its purpose. A donation from the business community (mostly given by a corporation or an association representing businesses) is expected to be larger than a donation by the average citizen, and to aim at some kind of valuable consideration, be it easy access to politicians, a favorable decision or treatment in a specific matter, or a preferable policy in general. Because corporate donations are frequently seen to border on outright political corruption they have come under increased scrutiny by the general public, political scientists and the media.

The free flow of money into political competition is both a hazard and a necessity of democratic politics. The financial support of policies, politicians, and parties is an expression of economic and political freedom. However, a flow of corporate donations may be an expression of interested money, plutocratic financing, influence peddling or corrupt exchanges. Therefore such flow of political funds requires observation by civil society and transparency of party and campaign funds.

Contrary to political discourse and media attention, plutocratic funding and interested money are no longer a great danger in most established democracies. Due to political action committee (PAC) money and independent expenditures by Super PACs the U.S. may be the most important exception to that rule. Australia seems to come rather close.[6] The case of Japan seems to be unsettled still. Neither dominate corporate donors political funding as they used to do until the 1970s, nor has this source of political money been replaced by other sources or been limited by reform legislation. Japanese parties are heavily supported by public subsidies, campaign spending is relatively moderate. However, individual MPs still incur considerable expenses for "services" (presents) to their constituents.[7]

In Canada and France corporate contributions to political parties and candidates have been banned by law. In other established democracies of western Europe contributions from the business community ("corporate donations") have declined without such drastic measures. Germany, Sweden, and the United Kingdom can be named as the most outstanding examples. Public disincentives to discourage the flow of interested money into party coffers (disclosure of donor's identity, publication of political donations in annual reports by recipient parties and/ or by contributing publicly listed corporations, the need for shareholders' approval and occasionally the loss of previous tax benefits) reinforce the general trend. However, there are still relevant cases of political graft, among them the abuse of public resources for partisan purposes and the extortion of private businesses by politicians in need of cash.

References[edit]

Literature[edit]

The literature given here refers to political donations by corporate donors only:

  • Pinto-Duschinsky, Michael, British Political Finance, 1830-1980. Washington, DC: American Enterprise Institute: 1983, pp. 137–140, 228-238.
  • Gidlund, Gullan M., Partistöd. Umea: CWK Gleerup: 1983, pp. 149–164.
  • Alexander, Herbert E., Financing Politics. Money, Elections & Political Reform. 4th ed., Washington, DC: CQ Press, 1992, pp. 10–20, 54-70.
  • Ruß, Sabine, Die Republik der Amtsinhaber. Baden-Baden: Nomos Verlag, 1993, pp. 56–65.
  • Römmele, Andrea, Unternehmenspenden in der Parteien- und Wahlkampffinanzierung. Die USA, Kanada, die Bundesrepublik Deutschland und Großbritannien im internationalen Vergleich. Baden-Baden: Nomos Verlag, 1995.
  • Ewing, Keith D., The Costs of Democracy. Party Funding in Modern British Politics. Oxford: Hart Publishing, 2007, pp. 87–142.

See also[edit]