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The Special Case
of Corporate Charity The previous sections
indicated that transnational corporations can sometimes advance components of social
development. It is important to note, however, that there was no evidence in this
discussion that TNCs felt obligated to provide such benefits; instead, when transnational
corporate activities did further social development, these positive consequences were
merely unintentional by-products of TNCs' profit-maximizing activities. That
is, the provision of jobs, promotion of health through consumer products, transfer of
technology, supply of tax revenues and advancement of economic growth constitute only
unintended positive externalities of TNCs' true raison d'etre: the accumulation of money.98
This section discusses the primary methods by which transnational corporations may intentionally
undertake commitments to advance social development and integration: direct corporate
giving programmes and corporate-sponsored foundations.99
Although there do not exist data specifically examining
TNC charitable activities, the extent of such activities is evident in statistics based on
corporate charity in the United States, the country with the strongest tradition of
corporate philanthropy. In 1993, over 1,700 corporate foundations and over 600 direct
corporate giving programmes operated in the United States.100 Direct corporate giving totalled 6 billion dollars and corporate
foundations disbursed over 1.5 billion.101 Transnational corporations were responsible for a large majority
of these funds: IBM, the largest donor, disbursed 141.5 million dollars for grants and
gifts in 1992;102 Exxon's charitable activities totalled 73 million;103 the philanthropy of General Electric exceeded 66 million;104 Phillip Morris distributed 46.3 million dollars in grants;105 and the AT&T Foundation gave away over 31 million.106
Corporate charity focuses upon a number of important areas
related to social development and integration, including education, health, culture and
community development. TNCs have helped to build and operate hospitals; donated medical
and pharmaceutical products to health agencies; and trained health professionals.107 They have also helped to build schools;108 donated funds to minority education programmes;109 and contributed to educational institutions.110 Additionally, TNCs have fostered economic and community
development by supporting housing assistance programmes, recreational facilities, cultural
events and infrastructure systems.111
Although transnational corporations conduct some of their
charitable activities internationally, TNCs' host countries are the primary beneficiaries
of corporate philanthropy programmes. In 1992, for example, international grants and gifts
comprised only 22 per cent of IBM's charitable programmes,112 19 per cent of Exxon's,113 13 per cent of Mobil's,114 1 per cent of AT&T's,115 and 4 per cent of General Electric's philanthropic activities.116 Furthermore, most of this international corporate charity is
directed towards industrialized countries;117 developing countries receive very little.118
While the philanthropic activities of transnational
corporations can certainly advance social development and integration, there exist a few
cautionary caveats. First, the money TNCs dedicate to charity has been declining; US-based
corporate giving, for example, has decreased every year since 1987. While, in 1987,
American companies gave 7.01 billion dollars in 1992 inflation-adjusted dollars, they gave
only 6 billion in 1992.119 Second, although the aggregate totals of TNC giving might seem
impressive, these figures can be misleading. For example, they constitute only a minimal
proportion of TNC earnings; in 1992, American corporate giving constituted only 1.61 per
cent of pre-tax income.120 Furthermore, because corporate charity is tax-deductible in many
countries, the cost of philanthropy to TNCs is reduced. For example, companies may endure
only 5 million dollars in costs to donate 10 million to charity. Additionally, because
corporate-sponsored foundations do not access current corporate funds, grant making by
these foundations does not detract from current TNC profits. A third caveat is that
corporate philanthropy is often self-serving. For example, pharmaceutical companies might
train health professionals in developing countries so that these individuals will market
and distribute their goods; petroleum companies might assist with infrastructure systems
so that they can more easily transport their products; and chemical companies might
finance low-cost housing so that their employees can live closer to company plants, thus
spending more time working and less time commuting.
98 8. As the case study of the automotive industry in Brazil depicted, for example,
transnational corporations acted as unintended levers of social and political change in
this country. See the subsection on "Employment" in part 1 of this paper.
99 9. There exists an important distinction between direct corporate giving
programmes and corporate-sponsored foundations. While the former are based solely on
annual corporate funds, the latter usually derive from a seed grant, a portion of which
the foundation disburses each year. Some companies engage in only direct giving and others
possess only corporate foundations; still others conduct charitable activities through
both avenues.
100 00. Foundation Center, 1993, p. vii.
101 01. AAFRC Trust for Philanthropy, 1993, p. 106; Foundation Center, 1994b, p. 38.
102 02. Foundation Center, 1993, pp. 349-350.
103 03. This includes 55 million dollars in direct giving and 18 million dollars
through its foundation (TAFT Group, 1994, p. 464; Foundation Center, 1994a, p. 639).
104 04. This includes 46 million dollars in direct giving and over 20 million
dollars through its foundation (TAFT Group, 1994, p. 474; Foundation Center, 1994a,
p. 639.
105 05. Foundation Center, 1993, pp. 555-556.
106 06. Foundation Center, 1994a, p. 639.
107 07. McGuire, 1983, pp. 21-27.
108 08. In Zimbabwe, for example, Union Carbide helped to build a technical college
and nine other schools offering free education to students (ibid., pp. 29-32).
109 09. For example, AT&T donated 3.7 million dollars to the United Negro
College Fund, a American organization dedicated to the advancement of African-American
education (AAFRC Trust for Philanthropy, 1993, p. 111).
110 10. Japanese companies alone donated approximately 100 million dollars to
American educational institutions (AAFRC Trust for Philanthropy, 1993, p. 110). ARCO
Chemical Company donated 2,500 dollars to the Jakarta International School (TAFT Group,
1994, p. 659).
111 11. McGuire, op. cit., pp. 35-39. For example, IBM donated 190,000 dollars to
the Small Home Building Loan Fund in Johannesburg, South Africa (Foundation Center, 1993,
pp. 349-350).
112 12. Percentage calculated from figures in Foundation Center (1993, pp. 349-350)
and TAFT Group (1994, p. 491).
113 13. Percentage calculated from figures in Foundation Center (1994a, p. 639) and
TAFT Group (1994, p. 464).
114 14. Percentage calculated from figures in TAFT Group (1994, p. 515).
115 15. Percentage calculated from figures in Foundation Center (1994a, p. 639) and
TAFT Group (1994, p. 404).
116 16. Percentage calculated from figures in Foundation Center (1994a, p. 639) and
AAFRC Trust for Philanthropy (1993, p. 110).
117 17. AAFRC Trust for Philanthropy (1993, pp. 109-110); TAFT Group (1994, pp. 401,
491).
118 18. As notes 107-111 indicate, however, transnational corporations do sometimes
conduct philanthropic activities in developing countries.
119 19. AAFRC Trust for Philanthropy, 1993, p. 106.
120 20. Ibid.
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