Soaring Stock Market Makes It an Ideal Time to Press Companies to Give More

Corporate profits have been increasing, sending the stock market to ever more stratospheric new highs, but little of that money is going to charity. Even as companies have been getting stronger, the share of donations that comes from corporate America hasn’t budged in a decade.

Individuals have always been the most important source of funds for charities — 80 percent of last year’s $390 billion in donations came from them, according to the latest “Giving USA” report. But while foundations have been increasing the share they supply, reaching 15 percent last year, companies have provided a steady, anemic 5 percent over each of the last 10 years.

It’s time to question why we accept that year after year.

Almost every large corporation in the United States brags about its social capital, and many have appointed leaders to high-level positions overseeing corporate social responsibility. But while these companies benefit from scores of tax breaks, their giving remains stuck at paltry levels.

Charitable PR

One might hope this would change as companies become more dependent on the skills of millennials. A recent survey of people age 18 to 34 found that nearly 66 percent were at least somewhat more likely to want to work for a company that gave to charity than one that did not.

Those same millennials are also consumers, which raises the possibility that they — as well as their parents and grandparents — might demand that companies give more. But millennials typically look at an array of measures of a company’s social responsibility — hiring records, environmental impact, and other factors — before they make a decision to purchase or invest.

It’s not that companies are unaware of the importance Americans place on giving to good causes. After all, that’s why we see so many donation pitches at checkout counters. Such campaigns raised $441 million last year, giving customers a feeling that the retail and grocery stores they patronize are charitable. In fact, it was just the consumers who were.

Even more galling is that companies sometimes spend more to publicize their goods works than they give.

Philip Morris, the tobacco company, spent $115 million on charitable giving, but this was substantially overshadowed by its $150 million expenditure on TV ads telling the public about its contributions.

The slide in corporate giving has been building for a long time. As Ken Stern, the former chief executive of NPR, wrote in Slate in 2013, “Over the past 30 years, corporate contributions to charities in the U.S., as measured by the percentage of pretax profits, have fallen precipitously, from a high of 2.1 percent at its peak in 1986 to just around 0.8 percent in 2012.”

That is still real money, but it does look a little out of balance in an era when executive pay and corporate profits are skyrocketing.

Getting Past Friedman

We’ve seen largess from founders of America’s biggest companies, such as Bill Gates (Microsoft) and Mark Zuckerberg (Facebook), but this is generally individual philanthropy, not corporate giving. It does not make up for the lack of giving by America’s businesses.

Given that the Supreme Court has ruled that in some arenas companies can be treated as people, it seems legitimate to ask why we don’t demand the same kind of giving levels from business as we do from individuals. So why is nobody making this plea?

The argument runs that while individuals’ contributions to nonprofits are tax-deductible, there is no obvious net financial gain to shareholders and investors from corporate largess. As the economist Milton Friedman wrote, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.” Mr. Friedman was quite clear: A corporation’s responsibility is to make as much money for the stockholders as possible

That may once have been an acceptable response, but it seems less so in a world in which income disparity is growing and climate change and technology may soon change our entire way of life.

Add to that the Trump administration’s planned cuts in social spending (which could put new pressure on nonprofits) and regulatory changes that will likely affect many aspects of American life and the time seems right to start a new social-media campaign: #CorpGiveMoreThan5%.

Ann Lehman is a San Francisco-based consultant to nonprofits who specializes in governance and gender issues.