A Corporate Folly: Business Donates To The Ideologues Who Hate Markets

Philanthropy is a demonstration of good will toward one's fellow man, but the ability to give depends on the wealth, success a

Kemp Column in Investors Business Daily


Philanthropy is a demonstration of good will toward one's fellow man, but the ability to give depends on the wealth, success and opportunity of a free society. The corporations, foundations and individuals who endow our universities, support our museums and foster a healthy 'ideas industry' all depend on profits, dividends and wages generated by capitalism.

In America, giving closely tracks economic growth, with giving peaks set during the Reagan revolution and the new economy of the 1990s. Today 46% of all individual giving to charity comes from households with over $ 1 million.

Those who have reaped the greatest rewards of our democratic capitalist system should be strongly inclined to support free markets in the marketplace of ideas. Unfortunately, it's just not so.

Corporate giving in support of think-tanks and incubators of public policy ideas is heavily tilted in favor of the political left.

Odd Corporate Philanthropy

The Capital Research Center reminds us in its invaluable "Patterns of Corporate Philanthropy" that "Leading companies give more than $ 4 to pro-regulation and pro-welfare groups for every $ 1 they give to conservative and free-market ones," as Jim Glassman puts it in the report's introduction.

Many corporate donations are driven by public relations concerns, and some companies want to "buy off" interest groups that want more regulation or that oppose globalization of economic activity, in the naive hope that interest groups "on the take" will be less overtly hostile. Instead, left-wing groups use their corporate affiliations to cast themselves as "mainstream moderate."

The Pew Center on Global Climate Change, which claims that global warming is a man-made threat to the planet, brags about its Business Environment Leadership Council, which "includes various Fortune 500 companies and represents a diverse group of industries including energy, chemicals, metal, consumer appliances and high technology."

Even the business-oriented press buys the Pew line as often as not. In an amazing profile of the Pew Center's director, Eileen Claussen, the July-August 2001 issue of Worth reports – in a news story! – that despite the U.S. withdrawal from the Kyoto Protocol, "Eventually (emissions) regulations will be established," and that Claussen is teaching corporate America to welcome this inevitable trend.

No Strategic Thinking

In other words, Claussen and Worth can declare victory over corporate America, with corporate American cheering them on. In fact, it is rare for businesses or business journalists really to think strategically when supporting causes, institutions and ideas. But any firm worth its salt creates new markets, new products and new services while striving to create awareness of and demand for its wares.

If firms used the same approach to guide their charitable activities, they'd actively promote principles that foster the climate in which business prospers, wealth and jobs are created and both charitable and profit-making ventures flourish.

Bruce Sievers, a sometime critic of so-called "venture philanthropy," points out that "Nonprofit activity has a complex and often intangible range of aims." The lack of a bottom line makes translating business skill into strategic use of the nonprofit world a challenging task, at best.

Ensuring Freedom In Future

It takes a strong-minded leader like the late, great Bill Simon to escape the gravitational pull of the philanthropic status quo. In an interview with Philanthropy magazine early last year (just months before his untimely death), he said "corporations have this habit of supporting their own demise. . I have always believed that those who have been successful in business should aim to strengthen the system that made their wealth possible so that future generations will have the same freedom to create and compete. Some people have found this controversial. I can't for the life of me understand why."

Even Simon had a tough time convincing his friends and colleagues in the business community. We who seek to build on his example must make a better case why leaders of industry, innovation and the new economy should support with cash the free-market ideals that enable them to flourish.

Perhaps our most persuasive ally is the profound truth that businesses "do good by doing well." Business leaders who generate profits and create opportunity also give society the capacity to care for the neediest, build civic institutions, and support art and culture.

Business should support good works, but first and foremost they should be good businesses. They will be better businesses if they bolster those elements of the ideas industry that advance the cause of economic freedom.

This work is something the business world should celebrate and support and take credit for, rather than buying public relations points from their ideological enemies.

Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute.


Copyright © 2001 Investors Business Daily