Would you donate servies to charity?

[Newton]

For example, if you own a hosting company, would you let them have a free hosting plan?

Or for the designers, a logo or website?

Obviously the charity would reward you by linking from their site or something.

But I just want to see, how altruistic are you

[The Stealthy One]

I've actually done all three of those! (with no links back! )

I'd rather do it out of the goodness of my heart than anything else - if I believe in a certain thing, I don't need a link back.

[akula]

no

it is immoral and should be illegal for companies to donate to charity

if someone fancies being a donor, they can donate personally, rather than through the company

if the interests of shareholders are compromised for the interests of other parties , the whole system breaks down

[The Stealthy One]

^^ Heh, I'm the only shareholder in my companies, at the moment. I definitely see what you're saying, though - and I actually agree (though I'll admit I had never thought about that before).

[Nigami Enterprise]

no

it is immoral and should be illegal for companies to donate to charity

if someone fancies being a donor, they can donate personally, rather than through the company

if the interests of shareholders are compromised for the interests of other parties , the whole system breaks down

Lol thats one of the stupidest things i have heard. The interests of shareholders get compromised everday and i can think of alot worse things then money getting donated to charity.

Above your talking about larger companies who usually budget charities into there marketing plan.

Have you ever seen a company donate a large sum and remain anonymous?

[TIM_S_JR]

I donate so much money to special places and they place a link on there website or on flyers as a sponsor.

[takeanumber3333]

Nah, I dont mean to sound like a jerk or anything, but Im in it to make money for myself. I understand how that may seem like a very selfish thing to say, but I guess I have a me first attitude.

[akula]

Lol thats one of the stupidest things i have heard. The interests of shareholders get compromised everday and i can think of alot worse things then money getting donated to charity.

Above your talking about larger companies who usually budget charities into there marketing plan.

Have you ever seen a company donate a large sum and remain anonymous?

Sure, we can have this debate...

I don't think your comment is stupid (because it doesn't contain any wrongful claims), but it is unreasonable because it lacks a coherent argument for why corporations should not be precluded from lawfully making donations (in the altruistic sense of the word).

The position that company executives and directors should reject all and every responsibility to non-shareholders (i.e. donate money) is not my position. It's the position of people like Milton Freedman (Nobel laureate) and Adolf Berle (the founder of US corporate law).

Cumulatively, these people's perspective is called the principle of shareholder primacy, and it's the chief reason why the Western civilization continues to power on, and deliver the kinds of quality of life that you're accustomed to. The alternative (what you're arguing), is to accept the what's termed the stakeholder theory (where corporations have lawful grounds to concede shareholder interests to those of non-shareholders).

Put simply, a lot of very bad things that are bound to happen if one happens to embrace stakeholder theory (corporate donations being one example of it). If corporate managers are excused to be altruistic, they will plunder corporate coffers and send shareholders to the wall. For example, should a (possibly departing) company CEO cause the company (her employer) to donate a $10million Picasso to her city council to support the arts? Should she donate $10million to provide housing for many of the city's homeless? Should she donate $10million for the city's teenage leukemia patients?

The answer to all these questions is NO, NO and NO, because it's not her money for her to spend, and it is immoral to let a manager reinforce her good standing in society at the expense of the shareholders.

What you're saying about "Have you ever seen a company donate a large sum and remain anonymous?" is irrelevant. If a corporation what's to buy advertising, or promotional benefit from a charity, they can do so if the advertising product being offered is the best advertising product available. The deal must fail to be lawful if altruism plays any part what so ever in the transaction. Managers should be able to buy beneficial marketing services from anyone they want, but not make donations.

That's the basis of shareholder primacy. It's there to protect us and our family's from rogue executives and directors. If your father has to get fired because some do-gooder CEO decides to build a new wing for the hospital, you will understand the importance of this fail-safe principle in corporate law.

Overall, you're wrong because what you're saying contradicts shareholder primacy theory, and if you reject this theory, you are rejecting the only safety net which stops corporate America from spiraling into a hopeless oblivion of corruption.

If, however, you can prove a legal basis for why corporations may be allowed to act altruistically, you deserve the highest of honors because countless crusaders have tried to make out this argument to no avail.

[akula]

Nah, I dont mean to sound like a jerk or anything, but Im in it to make money for myself. I understand how that may seem like a very selfish thing to say, but I guess I have a me first attitude.

No you are not a jerk, and you should be proud to have a selfish attitude, because that's the best way to contribute to society.

Adam Smith ( the founder of classical economics) achieved fame in extending ancient utilitarian theories (theories about how to create maximum welfare for all society) and showing that it is by acting selfishly that men create the maximum benefit for the society as a whole.

Don't worry, there's plenty of philosophical and economic reasons why you're a perfectly well adjusted moral agent :-)

[takeanumber3333]

Akula, do you have a degree in economics or something? You seem to really know your stuff

[Newton]

Akula, that's interesting, but society would not survive without altruism. There's something like 200,000 non-profit organisations in Australia, many of them providing essential services. If they disappeared our government would be in serious trouble.

Now to the issue of corporate altruism. You are correct that companies should act in the interest of shareholders. A well worked community sponsorship or donation program can be seen as a legitimate marketing or branding tool.

[Nigami Enterprise]

Sure, we can have this debate...

If, however, you can prove a legal basis for why corporations may be allowed to act altruistically, you deserve the highest of honors because countless crusaders have tried to make out this argument to no avail.

I can't give you a legal reason because im not a lawyer but what i can give you are some facts.

What you you have said sounds great in theory but unless your in a different world to what i am in it DOESN'T happen.

Now let's look at real world practical situations.

You sayed above
"That's the basis of shareholder primacy. It's there to protect us and our family's from rogue executives and directors. If your father has to get fired because some do-gooder CEO decides to build a new wing for the hospital, you will understand the importance of this fail-safe principle in corporate law."

Have you ever seen a company collapse because they donated to charity?

I am very suprised if you believe that every decision a CEO makes they are thinking of the shareholders. When ordering lobster and cavier im pretty sure they don't think they should get a home made sandwhich instead cause thats what share holders would want them to have. They dont fly economy instead of business. The list goes on.

Here is part of a post you posted yesterday.

"Los Angeles, CA. (January 10, 2007) – Online mobile content portal MyNuMo today invited teenagers to express their vision for a better world through the creation of unique mobile content. What’s Your Vision?, an online contest, will benefit the Lollipop Theater Network, a nonprofit organization that brings the magic of first-run movies to hospitalized children and teens with chronic or terminal illnesses. VISTAKON®, Division of Johnson & Johnson Vision Care, Inc. and makers of ACUVUE® Brand Contact Lenses is a supporting advertiser."

Now should share holders be up in arm's over Johnson & Johnson supporting this.

If Johnson & Johnson were not supporting this who would be?

I believe companies shouldnt donate to charity if they don't expect something in return but this is very rarely the case.

Companies don't just support charities they support communities.
Just take a walk down to your local oval this weekend and have a look at wat logo's kid's have on there sporting shirts and im pretty sure its not going to say mum and dad.

Companies never give away to charities for the sake of just giving. If this was teh case it wouldnt be called the ronald mcdonald house it would just be called a fun house for sick kids.

Im fine if people decide not to donate to charity but remember charity will help all of us in one way or another. And 100% of those charities will have corporate backing in some way.

Now if you can prove that we would all be better off if companies did what you said and don't donate to charity "you deserve the highest of honors because countless crusaders have tried to make out this argument to no avail."

[akula]

OK, let me try to comment on all these excellent points, offer a proof and conclude with something productive.

I can't give you a legal reason because im not a lawyer but what i can give you are some facts.

What you you have said sounds great in theory but unless your in a different world to what i am in it DOESN'T happen.

Now let's look at real world practical situations.

You sayed above
"That's the basis of shareholder primacy. It's there to protect us and our family's from rogue executives and directors. If your father has to get fired because some do-gooder CEO decides to build a new wing for the hospital, you will understand the importance of this fail-safe principle in corporate law."

Have you ever seen a company collapse because they donated to charity?

For reasons which I'll cover in the following paragraph, the quote "different world" is very fruitful. In terms of corporations (and corporate law), how the world actually is, and how the world ought to be are two very different things. In terms of donations, I can't think offhand of a company that's gone under specifically for making donations, but I can think of dozens of high profile corporate failures which have happened because the directors/execs have adopted the same mindset to that of a corporate donor. Companies like WorldCom, Adelphia, Tyco etc etc have all failed because they've put the interest of non-shareholders (i.e. employees) before the interests of stockholders.

That's the point of this debate; not whether it is right or wrong to make corporate donations, but whether directors/execs can be allowed to entertain the interests of non-shareholders (i.e. themselves). And that's the central problem in corporate law: how to prevent the company's insiders from acting for their own benefit, whilst at the same time, aligning insider interests to those of shareholders. They are two mutually exclusive objectives, which make corporate law an interesting area of study.

I am very suprised if you believe that every decision a CEO makes they are thinking of the shareholders. When ordering lobster and cavier im pretty sure they don't think they should get a home made sandwhich instead cause thats what share holders would want them to have. They dont fly economy instead of business. The list goes on.

You've hit the nail on the head. In reality, there are a lot of instances where stakeholder theory is shown to be the norm, rather than the exception to the way the "world works". For example, over 75% of Fortune 500 companies release "sustainability reports" where they detail how the company has been looking after the interests of non-shareholders (i.e. the environment and the local communities"). In that sense, by looking at how corporations actually behave many theorists argue that since companies regularly attend to non-shareholder interest, thy should be allowed (and encouraged) to do so by law, and since the law already requires that companies act for the benefit of non shareholders (i.e. provide maternity leave, not harm the environment etc etc), the law doesn't need to be changed but merely extended.

There are a lot of other arguments available for why corporations ought to entertain non-shareholder interests. For example, the fiduciary responsibility argument is the most accepted. Specifically, since corporate activity impacts non-shareholders, therefore managers are argued to have fiduciary responsibilities towards non shareholders based on the law of trusts. This is an important argument because where as the shareholder primacy argument seeks to protect shareholders from the tyranny of managers, the stakeholder argument seeks to protect the society from the tyranny of the corporations.

This dilemma is exemplified in the hypothetical CEO that you've described. Here we have an executive acting against shareholder interests. The law, based on shareholder primacy, should exist to censor this kind of conduct, but then again, there always exists the hypothetical mining company that exploits natural resources at the expense of welfare for future generations. In this instance, the law (based on laws of trusts) should exist to censor this kind of conduct - which is the conundrum of corporate law legislation. Namely, how to protect non-shareholders, whilst at the same time protecting the company's owners.

Here is part of a post you posted yesterday.

"Los Angeles, CA. (January 10, 2007) – Online mobile content portal MyNuMo today invited teenagers to express their vision for a better world through the creation of unique mobile content. What’s Your Vision?, an online contest, will benefit the Lollipop Theater Network, a nonprofit organization that brings the magic of first-run movies to hospitalized children and teens with chronic or terminal illnesses. VISTAKON®, Division of Johnson & Johnson Vision Care, Inc. and makers of ACUVUE® Brand Contact Lenses is a supporting advertiser."

Now should share holders be up in arm's over Johnson & Johnson supporting this.

If Johnson & Johnson were not supporting this who would be?

No, i don't think there's any problems with this example. J&J is described in the article as the "supporting advertiser". If they were described as "an altruistic donor" there would be a problem, but as long as the company is engaged in buying advertising for the purpose of maximizing shareholder returns, they are acting lawfully based on shareholder primacy theory.

The problem for the Lollipop Theater Network (and all other NGO's) is that they are often trying to solicit altruistic donations from corporations without understanding that acting altruistically is illegal for company managers. This is a huge problem and if charities want to continue raising money from corporations, they have to stop asking for donations and adapt their marketing to sell competitive sponsorship packages that maximise shareholder returns for the sponsor.

I believe companies shouldnt donate to charity if they don't expect something in return but this is very rarely the case.

Companies don't just support charities they support communities.
Just take a walk down to your local oval this weekend and have a look at wat logo's kid's have on there sporting shirts and im pretty sure its not going to say mum and dad.

Companies never give away to charities for the sake of just giving. If this was teh case it wouldnt be called the ronald mcdonald house it would just be called a fun house for sick kids.

Im fine if people decide not to donate to charity but remember charity will help all of us in one way or another. And 100% of those charities will have corporate backing in some way.

There's nothing wrong with charity. Many of society's goals can only be achieved through a charitable foundation, and since society is important, charities should exist.

The question here is whether corporate managers should be excused to spend someone else's money (the shareholder's) on transactions which don't generate shareholder wealth. The way the law stands, these kinds of transactions are unlawful. However, the way things really are (i.e. widespread corporate altruism, legislative requirements for the maintenance of non-shareholder interests, the powerless of shareholders to enforce shareholder rights etc..) is different to black letter law.

Now if you can prove that we would all be better off if companies did what you said and don't donate to charity "you deserve the highest of honors because countless crusaders have tried to make out this argument to no avail."

Absolutely. The proof can be made out two ways. Firstly, if managers didn't sacrifice profits to altruistic donations, and passed it on to shareholders, the shareholders would be wealthier, and they could donate the money to charities of their choice. This is a better way to distribute charity because it's more democratic and efficient. We don't elect company executives to choose which charity to donate to and which not to donate to. Company executives don't have the expertise to decide which charity deserves funding above all other charities. These sorts of decisions have to be made by individual members of the community and their government, not company executives.

Secondly, the proof that corporate managers shouldn't make donations can be made out via criminology. In our society, we believe that men should be free to enjoy the fruit of their labour, so we recognize the principle of private property. If I use something which isn't mine without permission, I can be said to have stolen it. Similarly with corporate donations, if we encourage managers to donate corporate money (i.e. use it to not generate profit) without permission, then we are gonna be encouraging theft and Robin Hood type behavior.

That's at least 2 proofs for why corporate managers should not exceed the powers given to them by the shareholders and make corporate donations.

[akula]

Akula, that's interesting, but society would not survive without altruism. There's something like 200,000 non-profit organisations in Australia, many of them providing essential services. If they disappeared our government would be in serious trouble.

Now to the issue of corporate altruism. You are correct that companies should act in the interest of shareholders. A well worked community sponsorship or donation program can be seen as a legitimate marketing or branding tool.

Absolutely. I'm just being pedantic. For me, a donation is something done explicitly out of non profit motive. When a transaction is made by a corporation, with a charity, for the future profitability of the corporation - then this is not a donation, but a purchase of marketing services.

There's nothing wrong with buying marketing from charities. Some say it generates a competitive R.O.I

[The Stealthy One]

You know, you've brought me to say something I've felt for a long time, and shared with a few people. Not really related to this thread, but I'll say it nonetheless. Tax breaks for charitable giving really piss me off! Giving should come from the heart, and should not be a financially-motivated action.

There, got that off my chest. Now I can go on with my night....