Corporate philanthropy: The redefinition of enlightened self-interest

Abstract

Three events in the 1980's have caused the legitimacy of corporate philanthropy to be reexamined. The first two events—the election of Ronald Reagan and the subsequent election of George Bush—have resulted in a call for increased corporate giving to replace government cuts in certain social programs. The third event, the Tax Reform Act of 1986, provided reduced tax incentives for corporate giving. The result has been a renewed debate over the appropriateness of corporate philanthropy. The debate over corporate philanthropy is not new; it has existed for decades. What is new is how American corporations are now dealing with philanthropic activity. They are no longer content to justify their giving on the basis that they will receive some general, unspecified benefit from a grateful society at some time in the future. Many firms view their corporate giving as a form of investment, and they require a concrete, measurable return from their philanthropic activity. This article examines the reasons for the shift from philanthropic giving to social investing.