Corporate Philanthropy in the Czech and Slovak Republics

Abstract

This study explores the characteristics of corporate charitable behavior in the Czech Republic and Slovakia. It is the first quantitative study for transition economies, analyzing data from two surveys for 577 and 162 firms over three (2001-2003) and five (2001-2005) years in the Czech Republic, and for 152 firms over four years (2001-2004) in Slovakia, and the first study that distinguishes different channels of support, namely, sponsoring and giving. The results show that tax legislation, specifically, the changes in the tax rates do not have any significant effect on corporate charity in neither country. The study fails to find a difference in the role of the tax rate for sponsoring and giving but documents differences in their use. It fails to support the usual claim that foreign firms give more than domestic ones but it suggests that foreign firms are better able to use the tax advantages of the various giving channels. We identify a significant difference between the two countries: Slovakia lags behind the Czech Republic in giving, the importance of large and international firms is higher, and more small companies behave in an adhoc manner. Importantly, the study fails to identify any significant decline in giving in Slovakia in 2004, contrary to expectations resulting from the radical changes in its tax legislation that made giving more expensive. It suggests, though, that foreign-owned firms shifted their support from giving to sponsoring.