Give and Tell

Proposed measure would require corporations to disclose their charitable contributions to shareholders

Public companies should be legally required to tell shareholders what charities the corporations support and how much is given to each, says Rep. Paul Gillmor, an Ohio Republican.

“Shareholders have a right to know where their major contributions go because it is their money,” says Mr. Gillmor, who has introduced a bill in Congress to force companies to reveal that information. “A lot of corporations make that information available to shareholders. But there are a lot of companies that are very secretive about it and don’t want their shareholders to know who they’re giving their money to.”

The Securities and Exchange Commission, the federal agency that monitors corporate transactions, is studying the feasibility of Representative Gillmor’s proposal, H. R. 944, and is expected to release a report on it this month.

The commission is also studying a companion bill introduced by Mr. Gillmor, H. R. 945, that would require public companies to give shareholders a major say in deciding which charities receive corporate contributions.

Under current law, corporations that make charitable contributions out of their own pockets do not have to disclose anything about those gifts to shareholders. Companies that make gifts through private foundations already must list the recipient and amount of each grant on their federal informational tax returns, which they must make available to the public for 180 days after they publish a notice that they have filed the form with the Internal Revenue Service.

A Chronicle survey of the top 20 companies on Fortune magazine’s list of the 500 biggest companies found that only two — Chevron and Citicorp — now routinely provide all shareholders with copies of their giving reports. Ten others, however, say they will give such reports to any shareholder who asks for them. Three of the companies never release details about the gifts they have made.

Representative Gillmor says that his bill is not intended to create mountains of paperwork for companies. “They don’t have to compile new records,” he says. “There isn’t a company that makes a charitable donation that doesn’t have a record of who they gave to and how much.”

Mr. Gillmor says his legislation is not intended to require companies to report small gifts. He expects that the S.E.C. would eventually set a dollar threshold.

“General Motors isn’t going to have to report giving $100 to the Plymouth, Mich., Girl Scouts,” he says. “The idea is to have reasonable disclosure of major gifts.”

Charity and corporate officials have greeted Mr. Gillmor’s proposal requiring disclosure with mixed reactions.

Some non-profit groups say that companies have become increasingly secretive about their giving in recent years and that they need to be forced to make more information public.

Craig Smith, a senior fellow at the Conference Board, a New York organization that represents companies and conducts research on business issues, says a sign of the increased desire to keep corporate giving confidential can be seen in the long-term decline in the number of companies that complete the Conference Board’s surveys on giving.

“Not only do some companies disclose less, they disclose what they want to, so you get comparisons between apples and oranges,” Mr. Smith says. “Some companies have always fudged the numbers to make themselves look more generous. Or if they were decreasing their giving, they have little techniques to hide that.”

Requiring uniform public disclosure would “be helpful to everybody, except to stingy companies,” Mr. Smith says. “It could be a terrific boon for corporate contributions.”

But many company executives say it would be burdensome and expensive to have to round up their contribution data and publish it in whatever form might be required by a new law.

Some worry that, depending on how any disclosure law would be implemented, they might have to compile lengthy and complicated lists of donations that they make to match employee gifts to charity.

Texaco officials think the Congressman’s legislation would “create a burdensome regulatory layer that is not needed,” says Keelin V. Molloy, external-communications coordinator at the company. Texaco already issues press releases that describe the company’s major gifts, she says.

General Motors currently gets “very, very few requests” from shareholders for information about the company’s charitable gifts and would have to spend more on administrative costs to comply with the Congressional proposal, says Thomas E. Kimble, vice-chairman of the General Motors Foundation.

“The paperwork is already massive in a corporation, and I’d hate to see anything pass Congress that would add to that,” says William E. Simon, the former Treasury Secretary who is president of the John M. Olin Foundation.

Representative Gillmor’s measure has drawn support from numerous public-interest groups.

“Shareholders are the owners of these companies, and companies are working off their money. That concept has gradually gotten lost during this century,” says Joan Bavaria, co-chair of the Coalition for Environmentally Responsible Economies, which encourages companies to take actions that preserve the environment.

Charitable-contribution data is vital to understanding a company’s behavior, says Ms. Bavaria.

“For those of us who are trying to get a sense of the total ecology of a company,” she says, “one very important piece is where it chooses to donate money.”

When provided with such information, says Ms. Bavaria, “you occasionally find that companies are donating money to groups that have contradictory goals, or to groups that basically are working in a way that collides with some of the companies’ public statements around their environmental or other efforts.”

Representative Gillmor says putting corporate gifts in the public spotlight would help insure that companies avoided conflicts of interest in their donations.

“If a company president’s wife is a Hula Hoop dancer and his company gives $1-million to the Hula Hoop Foundation, he may not want people to know about that, because the gift is not in the interest of the company unless it happens to make Hula Hoops,” says Mr. Gillmor.

A mandatory disclosure law would make company officials think twice about making irresponsible or improper gifts, he says.

The Congressman insists that his bills do not reflect any hostility on his part toward company donors. “A corporation with a philosophy that the more fortunate among us have an obligation to help out the less fortunate should be commended and encouraged,” he says.

“My proposals in no way inhibit charitable contributions. They only serve to increase accountability of people’s money.”

Dan Morris contributed to this article.