Kantian Corporate Philanthropy

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Kantian Corporate Philanthropy

Kantian morality indicates that there exists what are called categorical imperatives, namely laws

that are rational and can be applied universally. Charitable donations can be considered a

categorical imperative because since everyone has benefited from benevolence in one way or

another, it is ones duty to give. A society where giving is not performed and the act of non-beneficence is a universal maxim would contradict the help and aid that most people receive at

least once in their lives (Ohreen, 369). An issue arises as to how much and how often one should

give. Beneficence is a perfect duty because to do otherwise and apply it universally would be

irrational and contradictory. However, how much or to whom beneficence is directed is an

imperfect duty, because it is impossible to give to everyone in need.

The amount that a corporation should give is complicated. There is a constant struggle between

investors who wish to maximize their own returns at the expense of corporate philanthropy, and

activists and consumers who want the corporation to be ethically responsible. If a corporation

gives too much, its investors will flee, and the corporation will be no longer able to function. If itgives too little, it risks alienating consumers who are becoming increasingly more socially

conscious. A utilitarian approach to moral laxity within the framework of Kantian ethics

suggests that if there are others suffering, and we can alleviate their suffering at minimal material

loss, then we should give until we experience material loss. Essentially we should give until it

hurts. Applied to a person, this is fairly simple. It would make sense to give to hungry children

but not to the point where you cant feed your own. However, a corporation cannot give until it

hurts, because its investors want a return on their investments.

A solution to this could be to have a mandated corporate philanthropy amount, which would be a

percentage of pre-tax revenue. This would treat corporate philanthropy as an expense, and itwould still be incurred even if there was a fiscal loss, thus protecting charities and nonprofits

during economic recessions. As a percentage of revenue, it would encourage the employees to

work harder and the managers to reduce costs and increase revenue to ensure a profit and

increase its philanthropy. Essentially, this system would create stability, because it would be a

predictable amount, and investors will not be surprised of this expense, and non-profit

organizations could reasonably count on future revenue. The exact percentage of revenue that

corporate philanthropy should account for will depend on the tolerance of the investors.

Applying Kantian morality, the companys corporate philanthropy level should be the percentage

that if it were to be increased by any amount, investors would sell their shares. So if two

companies A and B both follow this guide-line and their corporate philanthropy percentages are

15 and 5 percent respectively, then both companies would be acting ethically despite the

difference.

In the future, large companies such as General Electric should collaborate with other large

companies to create an industry standard rate that would be deemed as normal for fortune 500

companies. This would normalize corporate philanthropy by creating a corporate philanthropy


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percentage floor and investors would not be able to protest any increase to meet that floor

because all other companies would be donating at that rate. Also, companies who choose to

ignore the floor rate will be chastised for it in the media and by consumer groups, causing its

public relations image to decrease. In the minds of the public, there is no specific amount of

corporate philanthropy that is sufficient, or insufficient. When the public complains that a

company does not donate enough, they simply compare that company to other companies within

that industry. While this is not a flattering comparison, it is one that hardly will have any impact

on a companys image because there is no definitive rule. What the corporate percentage rate

creates is a categorical imperative and a perfect duty for companies to follow. A company must

give a specific percentage; to give less would be unethical.

However, this is a delicate number; companies in different industries experience different profit

expectations. Consequentially, companies in low profit industries may be adversely affected by

this. If this percentage is applied universally, certain companies will give far less with respect to

their gross profit, creating an imperfect duty. In addition, there should be a universal rate, and an

industry specific rate. For instance, the universal rate may be 5 percent, and the software industry

may agree collectively to donate 15 percent, so a software company should donate 20 percent.

The last problem with corporate philanthropy is what organizations companies should give to. In

Canada, there are 161,000 nonprofit organizations including 90,000 charities, and 71,000 other

types including foundations (Hall et al. 2005). Of these charitable organizations, the majority of

businesses (58%) provide financial support to the sports/recreation (33%), grant-making and

fundraising (15%), and arts and culture (10%) sectors, while social services, environmental, and

development/housing organizations, which make up 23% of non-profit organizations in Canada,

received just 9% of corporate donations (Ohreen, 372). Clearly, there is a preference for sports

programs and the arts. Applying Kants notion of imperfect duties, this would mean that

donating to recreational charities would count as much as donating to organizations helping the

homeless. Failure to give to organizations helping those truly in need is a problem of moral

laxity. Corporate philanthropy should begin on a needs basis, the non-profits who help those

most vulnerable should receive funding first. This approach contrasts with a utilitarian approach,

which would advocate non-profits that support the arts or sports and recreation programs because

they impact a larger group of people, thus donating to the arts or sports programs would cause

the greatest good. However even a utilitarian approach would have to contend with the

categorical imperative that if there are those that are suffering for no just cause, and there exists a

way to alleviate this, there is no excuse for not providing assistance.

This categorical imperative, while well understood by society, nevertheless is rarely

implemented in corporate philanthropy. Donating to cancer awareness, the arts and sports and

recreation benefit a wider demographic, and benefit those who are more affluent. Corporations

hope that by donating to these organizations, it will raise its image amongst consumers who are

brand conscious. Corporate sponsorships of non-profits are no different in nature than


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sponsorships of for-profits; the point is to create a correlation between a company and the cause

or activity that consumers support.

While this strategy may be completely different in approach from donating to charities and non-

profits that affect the most vulnerable, there exists overlap. By donating to diverse charities that

support causes such as the arts, sports, health care, research, social issues and the environment, acompany can send the message that it benefits the entire community in which it operates, not just

certain aspects. Also, the corporation cannot be accused of partisanship or advocacy; many

companies are criticized in the press for donating to non-profits that support controversial causes.

Consumers today feel that corporations that do business in their neighborhoods are a part of their

neighborhoods and should be responsible neighbors. Donating to a few national non-profits does

not make them responsible neighbors because these select non-profits do not directly benefit the

community in which the corporation operates. In essence, when it comes to corporate

philanthropy, a corporation should think globally, but act locally.

This also applies to corporate philanthropy in other countries. A comparative analysis of 34countries shows considerable cultural differences in regards to nonprofit funding and this could

be problematic in regards to whether an increase in corporate funding would be welcomed

universally. For example, in many Asian countries such as South Korea and China, social

welfare is the responsibility of the state (benevolent government), not philanthropy. From a

Scandinavian perspective (Sweden, Finland, and Norway), corporate expectations for engaging

in philanthropy are equally low given extensive state welfare systems, high levels of trust of

national companies, and the fact that managers already perceive themselves as being socially

responsible (Ohreen, 373). While corporate donations in those countries may not be deemed

necessary, consumers from those countries may view that corporations should engage in

corporate philanthropy elsewhere, in countries with less social benefits and impoverished

countries. This is especially true for corporations that are multinationals, such as General

Electric, because consumers in these countries do not approve of corporations that are

exploitative in other countries because consumers view human rights as a global, not local issue.

Moving forward, corporations not only have to determine what amount of revenue must be

contributed to corporate philanthropy, they must also determine which charities are most worthy,

while taking into consideration attitudes toward corporate philanthropy in other countries. Much

of a corporations image and reputation depends on this, along with the future of non-profits and

charities that rely on corporate philanthropy.

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Kantian Corporate Philanthropy