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| Path: Main Street : NewsWeek : Op/Ed : Audience Opinions |
In a recent Globe and Mail column, social commentator Michael Valpy wrote:"Tying corporate philanthropy to corporate strategy is a way of saying that corporations are setting the social agenda with our tax dollars --- the charitable tax deduction. They decide which charitable donations are in their interest --- not necessarily the public's interest --- and they drag Revenue Canada along as an involuntary contributor."Is Valpy right? Are you concerned about this? On balance, is it a positive or negative trend? If negative, what's the solution?
One of the down falls of this medium is that much more is left unsaid than said as respondents to the question rush to get their ideas and responses onto the site. So I apologize in advance for my critiques of what I saw posted in response to Valpy's question. I also apologize for doing the same thing!My background is one of having a senior management position in a major nonprofit and now as President of a very capitalistic company, M4i Information Industries Inc. which produces dynamic systems models of such things as corporate donations and their wide range impacts and returns.
Given the level at which we have been analyzing the situation in Canada most respondent's remarks are frankly off the cuff and naive. Craig Stevenson's comments that corporations are non-caring is wrong. Corporations are BOTH caring and non-caring it depends where we focus our attention. The what, why, and how they care or don't care is the really interesting question. Being on both sides of the fence, I find corporations like individuals make decisions based on perceptions, motivations, self-interest etc.... much like if you or I were asked to be volunteers. Judging another's motivations does little if what is desired is to positively influence them towards your cause and your issues. Craig's comments are just too unspecific to have real meaning in a debate... To say, " corporate giving is better than no giving..." is do little beyond segmenting and judging philanthropic motives.
Ross Marsh is equally naive to state, "businesses are just groupings of people." Wrong Ross. Businesses are something quite other than a bunch of folks joining hands for a common purpose. Businesses are conduits of wealth and each of us that hold stock or mutual funds expect businesses to deliver on our expectation that they earn money. As a share holder, I could care less if the mail room had a common purpose with senior execs. Businesses are granted their own identity INTO which people come to help achieve the business goal. Clarity around business identity in fact strengthens the argument for sound community involvement by business - as our models show, businesses need resources, workers, and buyers in very particular combinations that vary over time. I would say that communities need to educate themselves on what would help business succeed (and therefore contribute) or fail (and therefore not contribute) in their communities.
I do agree with Ross that the small percentage charitable dollars moving from the corporate to nonprofit sectors is tiny. Indeed it is probably even smaller if we removed the donations to quasi-government organizations like schools, universities, and hospitals.
What really goes to grassroots organizations from the corporate sector is small... so why all the hoopla? The real issue, as my company has shown, is the consequence of public expectations related to the flow of wealth. We see corporations like banks making billions and perceive that some of that wealth should come back to you and I. If asked, however, would you rather see your personal bank charges reduced or a donation made to the needy, I wonder what most Canadians would select. I believe the flaw in all the comments is an unwillingness to come to grips with the fact that we have as a society adopted capitalism and unless you are willing to address fundamental changes to that system, you are not being realistic in suggesting changes at all.
Keith Seel
Yes Valpy's right. One problem with the tax deduction is that corporations fund what they like, what they agree with and not the rest. It's a cherry picker concept which undermines universality of social welfare and programmes. Some causes are more in, more 'sexy' than other causes. With the cuts to core funding of many programmes, and the de-investment by government in many social programmes, some think companies will pick up the slack. There is no evidence this is in fact happening.The second problem with the charitable tax deduction is that SOMEONE ELSE is picking up the tax that the company is not. So, if a big distillery let's say, is donating money toward an alcohol recovery programme and receiving the tax deduction, others -- undoubtedly wage earners -- are picking up the slack in their tax bill.
This is a problem. So what we find is that corporations are paying about 20% in taxes while individuals who are average earners in the workforce are paying at marginal rates of 33-38%.
I've just returned from a conference about nonprofit management and research in the US. There are tens of thousands of foundations in the US. It is well known that in exchange for a proper taxation system (US Taxes are very low), Foundations 'give' to worthy causes and set the political and social agendas of these causes.
Do we want private foundations (or corporations) setting our social policy agendas? I think not!
We used to have some semblance of social policy -- and social policymakers -- in this country. This meant that certain programmes were created for the common good. Universal access to these programmes were guaranteed. If we keep marching down the road toward the US's level playing field --- social policy and social good will be a thing of the past!
Judy Haiven
For once I agree with Michael Valpy. Usually he is too radical for me. I'm not altogether sure that the governments are ending up colluding with the corporate sectors by giving charitable writeoffs. But, I agree that since governments are no longer taking the time to fund charities, thereby designating charities worthy to fund, the corporate sector are not giving to those charities most deserving. The corporations give to charities in their own interests. The smaller community based social agencies who do all the work with almost no financial resources do not come to anyone's attention. Some of the charities who receive the largest corporate donations are really health organizations and special groups like boys and girls recreation/religious groups who really are more fun than helping to solve community problems.Joan Aaron
I believe that the growing reliance on the charitable sector is a bad trend. Corporations can indeed set policy with their donations. As for the charitable deduction any writer with the Globe should know that corporations have write-offs for everything: charity is only one deduction. If we are to worry about tightening this than we have a lot of loop holes to tighten.I suggest that sound government policy and higher levels of corporate taxation are preferable to charity from corporations. Let's tax the $ and then decide as a society how we will spend on services.
Shawn Lowe
I am most concerned about corporate $ directing the voluntary sector. The Government's funding of charities although it was punitive $$ (not enough and for the wrong reasons) was our only hope of some objective release of funds. Now the government insists that charity $$ must come from corporations or casinos. Unfortunately that opens the `charity' definition to any group that is not necessarily charitable. A clearer definition must be developed, not just concerning a group's deservability for $$ but designating how groups are managed, whether they are helping others or themselves, raising funds to operate like a baton or band group, whether they are sponsored by larger organizations like the guides and scouts, or whether they are managed by social workers for non profit/helping within communities. Many organizations deserve charitable $$, but are unknown to large corporations. Charities need regular funding to operate and they need to change so they reach everyone who needs help.Joan Aaron
I think Valpy is correct. This is precisely the problem in the US. There are literally thousands of charitable foundations in the United States which fund various hospitals, needy people, the homeless -- in other words charities of the foundations' directors' choice. In exchange for not having a welfare state, even a modified one, and having a low tax rate, corporations fund charities. Only some charities mind you and some social services and institutions and good works get funded because donations are made strictly at the whim of a corporation.In our country, though we have some universities with schools of public policy and public administration which take an interest in policy for the public good, it seems we are conforming more and more to the American model. We allow corporations to decide what they would like to fund with our tax money (because the corporation gets the tax deduction but the rest of Canadians are picking up the tab: someone has got to pay the taxes). Often the services or charities corporations select are useful to them or at least not antithetical to their interests. For instance it is well known that McDonalds chooses to give most of its charitable donations to its own charity, the Ronald McDonald Houses.
When corporations are deciding, there is no obligation or indeed any understanding of giving according to public policy or decisions for the public good. I don't think that's right. Instead, I think corporations should pay their fair share of taxes (and they are not now, many companies are paying at the 20% level or below -- and most of your readers' marginal tax rates are quite a bit higher I'm sure). Tax money from corporations should be spent on social services, medicare, education, libraries, human rights commissions, legal aid and other causes which affect all Canadians.
Judy Haiven
Corporations are non-caring entities whose existence depends on the flow of cash as opposed to the flow of blood (like you and I). When they make a charitable donation, it is with the intention of keeping that flow of cash going. So, what's wrong with that if it benefits a charitable activity?After all, the money will go to those organizations that enhance the image of the company in the eyes of their customers. Their customers vote with dollars (instead of ballots) if they agree with the company's decision.
Corporate giving is better than no giving at all. The company could have provided the same funds through an accounting entry to "Promotions" rather than to "Charitable Donations" and received the same tax break but without the same social benefit.
The bottom line is that I don't think that we need to be too concerned with corporations getting tax breaks for making charitable donations. Mr. Valpy's article, while thought provoking, is in the final analysis a tool for selling advertising space in the Globe and Mail.
Craig Stevenson
I disagree with Mr. Valpy's comment that Corporate Canada is somehow "calling the tune" on the nation's social policy agenda by tying Corporate Philanthropy to the interests of its business. Its a specious argument for a number of reasons, primary of which are:1. Businesses are simply groupings of people -- owners, employees, customers, suppliers, etc. who have come together for a common purpose. In this respect, they are no different from a lobby group or an advocacy group: they realize that they have a stronger voice as a group rather than as a cacophony of individuals.
2. Ultimately, social policy is controlled by the political system, which is controlled by the electorate, i.e. THE PEOPLE. Businesses do not decide who is granted charitable status, Revenue Canada does, on behalf of the government, on behalf of the people.
3. Individuals, foundations, and in many cases, interest groups, "use" the tax code to provide financial support to charities of their liking. Thus how could one justify denying the same treatment to business?
Mr. Valpy's comments smack of silly anti-corporatism, and are probably ill-informed. I wonder if he realizes how small a percentage Corporations are, in relative terms, of Canada's donor base.
Ross Marsh, Senior Consultant, Navion
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