Giving to local schools: Corporate philanthropy, tax incentives, and the ecology of need

Abstract

This paper extends work on corporate philanthropy by arguing that we need to look not only at legal and institutional factors that shape corporate philanthropic activity but also at the ecology of the “consuming” organizations toward which philanthropic activity is directed. We examine the forces that shape the philanthropic practices of corporations, focusing our analysis on corporate giving to local schools. The analysis draws upon a survey of the philanthropic practices of a representative sample of 2776 corporations in the United States in 2002. Two significant findings emerge: first, higher levels of state corporate taxation are associated with greater levels of giving to local schools. This finding fits well with established arguments about the relationship between tax write-offs and charitable giving—higher taxes provide greater incentives for increasing philanthropic activity. Second the proportion of private schools in a given state is inversely related to philanthropic giving to local schools. We argue that the ecology of the receiving organizations in this area shape the perceptions of need among corporate givers. Corporations that are in states that have more competition between schools and a healthier “market” for education demonstrate less commitment supporting the provision of social services in this area.