Hazards of Corporate Donations
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. HAZARDS OF CORPORATE DONATIONS .
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AMERICA NEEDS A LAW PROHIBITING ALL CORPORATE DONATIONS
by Jane Anne Morris[1]
Corporate civic, charitable, and educational "donations" of all
kinds should be banned. They strangle open public debate, and
contribute to the corporate colonization of our culture.
Life-or-death environmental issues are obscured, distorted, and
trivialized by this waste stream of corporate dollars.
Yet, we often hear the praises of corporate contributions.
Consider the headline, "Companies praised for making world
better."[2] A PR person's dream.
The article goes on to name names. One corporation (soft drinks)
helps minorities and women; another (soap) donated more than half
a million dollars for projects like buying a dance floor for an
arts school; a third corporation (shoes) teaches young people to
read and clean up trashy lots; yet another (photography) has an
AIDS education program; a big pharmaceuticals corporation is
helping preserve Central American rain forests. All five
corporations are recipients of America's Corporate Conscience
Awards.
Media corporations constantly remind us of corporate "largesse"
to everything from art museums to zoos, child care programs to
senior citizens' conferences, war veterans to peace monuments.
With all this giving and giving and giving, why isn't the world a
better place than it is?
When there's an accident at the plant, or a conflict between
management and labor, or a request for yet another corporate tax
break, or a dispute about environmental hazards --who will speak
out against the corporation?
Proponents of logical and overdue societal change are too often
paralyzed by the fear that if they speak out, they will be left
high and dry as corporate donation policies shift to favor more
pliant constituencies. Grassroots activists --many whose issues
have not been blessed as showcase causes by national or
mainstream groups --run into this whenever they try to build
support and make alliances. People who are even partly dependent
on corporations are hesitant to rock the boat.
It seems that they have us by the pigtails, so to speak.
Corporate leaders are not unaware of the effect of a well-aimed
sprinkling of corporate donations. Read any management textbook
and you will see how it coaches would-be corporate officers to
shamelessly court community support and pre-empt citizen
criticism. Or, glance through the excellent TOXIC SLUDGE IS GOOD
FOR YOU! by John Stauber and Sheldon Rampton[3] for a detailed
analysis of how corporate PR specialists manipulate their public
personas.
We have succumbed to a Good Cop-Bad Cop routine where the
government is the Bad Cop and corporations always play Good Cop.
The government collects taxes and enforces regulations: Bad Cop.
Then the corporations step in with violin music, sponsoring
nature walks for the mentally retarded, and awarding plaques to
conscientious recyclers. Obviously, Good Cops.
Back at precinct headquarters we would learn that government
enforcement of corporation operations is lax to nonexistent, and
that corporation tax rates are unconscionably low in view of
their real income. This being the case, corporation expenditures
for good deeds are a pittance that discombobulate the public's
ability to take a critical stance.
For a historic view of how corporations fought for and won the
right to contribute freely to community coffers, we can review
court cases in which corporate lawyers eloquently pleaded their
case.
Contrasted with corporations' never-ending struggle to pay low
(or no) taxes, deny workers their constitutional rights, reduce
wages and benefits, cut corners on health and environmental
standards, and wring financial "incentives" from municipal
governments, the history of their pleas to be allowed to make
charitable and civic donations makes interesting reading indeed.
We the People, acting through legislatures, once prohibited
corporations from doing anything not specifically allowed in
their charters.[4] In fact, if you read back to the early
corporate charters granted by your state, you will find to your
amazement that they were set up to address a specific public
need. Further, these corporations were to carry out their
activities under the supervision of the legislature on penalty of
charter revocation if their directors stepped out of line.[5] The
prohibition against exceeding their chartered purpose included
prohibiting donating money or things of value. It was intended to
discourage two things: the excessive or inappropriate influence
of corporations on public policy, and the waste of stockholder
resources.
Only in 1935 did Congress begin allowing corporations a tax
deduction for charitable contributions.[6] But until the 1950s,
a corporation's right to donate to this and that at will was not
firmly established.
In a 1953 case widely accepted as the final word on the matter, a
New Jersey fire hydrant manufacturing corporation had decided to
donate $1500 to Princeton University (another corporation).[7]
Several stockholders objected to this dissipation of their
assets, and sued. Testimonials from the President of Princeton
University and a former Chairman of the Board of U.S. Steel
eloquently pleaded for a corporation's right to be "socially
responsible," as they put it, and help out community
institutions. It was also noted that closer to the bottom line,
such contributions benefited the corporation indirectly by
improving public relations and gaining favorable publicity.
In its ruling, the New Jersey Supreme Court set aside stockholder
complaints and commended corporations for their contributions to
the general social and economic welfare.
Court cases like this one discussing the appropriateness of
corporate donations do not fail to note large-scale changes
occurring in the American economy.
One such change is the dramatic shift in wealth during the first
half of this century from individuals to corporations, and a
concurrent decline in the amount of charitable contributions
coming from individuals. A second change noted is the increasing
strain on government to provide for its citizens' social,
educational, and economic needs.
Corporations' manipulation of elections, the legislative process,
the regulatory agencies and the courts has led to both of these
problems. And yet in an underappreciated irony of massive
proportions, corporation representatives swept in to offer
themselves as selfless saviors, dabbing charitable salve on the
very social, economic, and environmental wounds that they both
inflict and profit from.
In the nineteenth century corporations got their way through
outright bribes of public officials. That's why political
contributions and other corporate donations were forbidden in
many state corporation codes. But in the U.S.A. today,
corporations use a kinder and gentler strategy. Since the 1950s,
all state corporation codes contain an odd phrase specifically
authorizing corporations to make civic, charitable, and other
donations.[8]
The strategic use of corporate "donations" has so muddled the
issues that face us today that rarely if ever is a public policy
decision made on the basis of the merits of the issue at hand.
Coupled with the impact of corporate political donations (made
legal by means of PACs), the willingness of citizen groups and
community organizations to accept corporate "donations" has made
a mockery of the democratic process.
But in the end a bribe is a bribe is a bribe.
A legislative package designed to put an end to the corporate
bribery that is so debilitating to our democratic process would
include:
1. A ban on all corporate donations.
2. Expansion of tax breaks and other incentives for charitable
and civic donations by individuals.
Other tax reforms, such as taxing individuals' and corporations'
real income, would work well with these proposals.
Those who would predict the imminent collapse of civilization as
we know it should such a ban (on corporate donations) be enacted
should note three points.
1. A law banning all corporate donations need not disrupt daily
life rhythms. It could be designed to take effect gradually over,
for example, a five-year period during which time a baseline
corporate donation amount would be reduced by 20% annually. In
this manner, recipients of such donations could plan alternate
funding.
2. This nation scraped by until the 1950s without the massive
amounts of legalized corporate bribery that corporations want us
to conclude we can't survive without.
3. If we taxed corporate income fairly, stopped throwing money at
corporations through "incentives" and other surrenders to
corporate extortion, and prevented corporations from ruining our
environment (and making costly programs like Superfund
necessary), we would not feel the need for corporate "charity."
Corporate apologists will claim, as they have for over a century,
that corporations have certain "rights," including the "rights"
to free speech, due process, and the like --in short the rights
of PERSONS. But corporations are instrumentalities set up by the
sovereign people to perform specific functions. They no more have
intrinsic rights than wheelbarrows do. A nation that has an
ongoing legal debate on whether Mexicans are PERSONS should ask
itself why we don't give a second thought to the idea that
corporations have constitutional rights.
Is banning corporate donations a good idea? Try the ultimate
test. Suggest it to a few corporate CEOs and they will cringe and
fight against it tooth and nail. It is a good idea,
counterintuitive though it seems at first.
Corporate donations are a brilliant strategy to frustrate
discussion of underlying issues. They work as a carrot to
encourage simplistic and short-term decisionmaking, as a stick
for retaliation, and as a careening cart that so churns up our
social terrain that we can't see a way out of the rut we are in.
Too often we are left fighting each other over the scraps doled
out by the Company (Corporation) Store.
Day care centers and art museums are things that citizens might
choose to fund with taxes (from both individuals and
corporations). If corporations paid their way through fair taxes
and exemplary behavior, citizens would be able to use the
democratic process to make such decisions in a rational manner.
Why should aid to a battered women's shelter free corporations of
the need to pay workers fairly? Why should corporations be
allowed to pollute our air, land, and water because they support
the Girl Scouts? Why should corporations pay less than their fair
share of taxes because they give computers to the community
college?
We the sovereign people should allow corporations to exist if
they serve public needs. We the sovereign people need laws and
regulations to direct corporate behavior. We the sovereign
people do not ask for their charity, but demand their obedience.
We want corporations to gain the respect of communities in the
old-fashioned way: we want them to earn it.
[1] Jane Anne Morris, a corporate anthropologist, is the author
of NOT IN MY BACK YARD: THE HANDBOOK (San Diego: Silvercat
Publications [phone: 888-299-9119], 1994). She currently lives in
Madison, Wisconsin and is working on corporation issues as part
of Democracy Unlimited of Wisconsin, 29 E. Wilson, Ste. 201,
Madison WI 53703 -(608) 255-6629]. This article originally
appeared in the Winter, 1996, issue of SYNTHESIS/REGENERATION 9,
A MAGAZINE OF GREEN SOCIAL THOUGHT, published by the Gateway
Greens in St. Louis; phone (314) 727-8554.
[2] David E. Kalish in an Associated Press story appearing 6-9-95
in the WISCONSIN STATE JOURNAL.
[3] Common Courage Press [phone: (800)497-3207], 1995.
[4] This concept is discussed in corporation law under the term
ULTRA VIRES.
[5] A discussion of this and related issues can be found in
TAKING CARE OF BUSINESS: CITIZENSHIP AND THE CHARTER OF
INCORPORATION, a pamphlet by Richard L. Grossman and Frank T.
Adams, 1993, available for $4 from Charter, Ink., P.O. Box 806,
Cambridge, MA 02140.
[6] Aug. 30, 1935, Chap. 829 Sec. 102(c); Vol. 49 Part I., Public
Laws U.S. 1016; See IRS Code, Sec. 170 (1958).
[7] A.P. SMITH MFG. CO. v. BARLOW, 13. N.J. 145 (1953).
[8] FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS, 1989,
paragraph 2939.
Descriptor terms: jane anne morris; corporations; legislation;
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