17 Oct. 2014 | Comments (0)
The latest edition of the Giving Thoughts Series, entitled "Corporate Philanthropy and Company Value," is now available to download for free. In this edition, we break from our series on social impact measurement and look at whether corporate philanthropy actually improves company value. Authors Ronald W. Masulis and Syed Walid Reza conducted several analyses to test the popular belief that corporate philanthropy is good for business. The results might surprise you.
Introduction from "Corporate Philanthropy and Company Value"
Although companies regularly give away a large amount of money to charity, there is no clear evidence that such donations improve company revenues, performance, or shareholder wealth. Proponents argue that corporate giving is consistent with shareholder value maximization for a variety of reasons, including improvement of a company’s reputation among customers and enhancement of its standing with regulatory agencies and legislators. Counterarguments suggest that corporate giving often reflects conflicts of interests between shareholders and managers if managers support charities with corporate funds based on personal preferences or to enhance their personal reputation and social networks. This Giving Thoughts Series article seeks to assess the impact of corporate giving on company value and performance.
Limitations of the research
In a previous blog post, I mentioned that focusing the research on 1997-2006 stopped analysis of corporate giving at a critical juncture in the field's development. Since then, corporate donations have increasingly been made to align with business priorities, rather than simply the preferences of CEOs and other leaders—a major finding in this report. The annual Giving in Numbers reports, published by CECP in association with The Conference Board, verify this observation. Nonetheless, there are important lessons to be learned from this research, particularly for CEOs and other leaders. We hope you enjoy it, and we would be delighted to hear your thoughts.
About the Giving Thoughts Series
The Giving Thoughts Series is a free online publication in which The Conference Board engages corporate philanthropy experts in an open dialogue about topical issues of concern to member companies. To download the latest editions, please click the titles in the right-hand column of this website. To see our archive, please click here.