Wake Up, Corporate America: How Business Feeds the Mouth that Bites It

The Environmental Law Institute is a tax-exempt organization active in the field of public policy. Among its claims to fame is the legal rationale that allowed Exxon to be held criminally responsible for the Valdez oil spill off Alaska. Every year, astonishingly, the Environmental Law Institute receives a grant – generally around $5,000 – from Exxon to continue its work. And Exxon is not alone in this perverse behavior, as is amply shown in table 1.

To most Americans, large corporations are the embodiment of capitalism. It may come as a surprise, then, that American corporations are major funders of organizations that are decidedly anti-capitalist. Every year, corporate America gives tens of millions of dollars to non-profit advocacy groups that work against free markets and limited government, the two pillars of capitalism.

When corporations fund non-profit advocacy groups, two harmful effects occur. First, funding declines for genuine charities, those that deliver services to people in need. This effect is compounded when corporate philanthropy budgets shrink as they have in recent years. Second, American businesses sabotage their mission of profitability because, more often than not, corporations fund advocacy groups that are decidedly left of center. In essence, corporations are funding organizations that then turn around and use those same corporation’s donations to push for higher taxes, more government regulation of the marketplace and a continuation of our failed welfare state. These are policies that hurt American business. Yet, every year, corporations continue to feed the mouths that bite them.

This self-destructive corporate behavior is chronicled every year by the Capital Research Center in Patterns of Corporate Philanthropy,1 now in its ninth edition. Every year, corporate self-destructive donation patterns get worse. In 1993, the most recent year for which data are widely available, the 250 largest American corporations gave more than $4.00 to liberal and leftist advocacy groups for every dollar that they gave to pro-free-market groups. This represents a startling increase over the previous year, when pro-big-government organizations received $3.42 for every $1.00 that went to pro-market organizations.

What is more, among left-of-center groups receiving funding, the more radical organizations saw their corporate revenue increase, even as donations to advocacy groups as a whole decreased slightly. This increase came at the expense of more pro-market organizations, which lost about a third of their corporate funding. Surprisingly, even outright extremist groups received corporate funding. For example, Greenpeace, the direct-action environmental group that seeks a ban on all offshore oil drilling and the manufacture of chlorine compounds, received more than $1,000 in corporate money. People for the Ethical Treatment of Animals (PETA), an extremist animal rights group that opposes any human uses of animals, also received a $500 corporate grant from the aircraft company, Martin-Marietta. These amounts may not sound large, but their value is not only monetary. Recipients may use these well known corporate names in subsequent fund-raising activities with other businesses, thus perpetuating the self-generated, anti-corporate cycle.

Why does American business shoot itself in the foot this way? Many executives have a sincere desire to help what they consider to be good causes. They may not be aware of the true agendas of many groups with misleading names. For others, it is a more cynical attempt to buy influence and immunize themselves from attack by these activist groups. In short, it is like buying off their enemies. This may have an effect beneficial to corporations in the short term but, over the long haul, it is obviously detrimental to corporate interests.

No matter what the reason, the results are the same. Advocacy groups are strengthened. Traditional charities and the human needs they fulfill are weakened. And businesses lose the competitive edge that made the U.S. an economic world leader. If corporate America does not want to lose this edge, it must wake up to the realities of philanthropic giving.

Mr. Fulk is a research associate at the Capital Research Center in Washington, D.C. and author of the ninth edition of Patterns of Corporate Philanthropy.

End Notes

[Top] 1. Austin M. Fulk and Stuart Nolan, Patterns of Corporate Philanthropy, 9th ed. (Washington, D.C.: Capital Research Center, 1996).

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