Some economic aspects of corporate giving

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Virginia Polytechnic Institute and State University


This study examines corporation giving for charitable and philanthropic purposes. There has been a substantial increase in the scale of this activity during the past few decades. Three alternative hypotheses have been advanced to explain the economic motivation of corporate giving. This study tests those motives using cross-sectional empirical data.

The study relies primarily on data collected from the Internal Revenue Service's Source Book, for the period 1968 to 1970. A multiple regression model of corporate giving is formulated to test the motives. The study includes comparative statistics to measure the variability of corporate giving between industrial sectors. In addition, a survey of United Way agencies was conducted to examine corporate motives for giving.

The results of the empirical tests indicate that corporate giving is profit motivated. There is also some evidence to support the hypothesis that giving represents through-the-firm utility maximizing by corporate owners and managers. Little evidence is found to support the social responsibility concept as a motive for corporate giving. A conclusion drawn from this is that observed socially responsible behavior is substantially equivalent to long-run profit maximization.