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#502 - America Needs a Law Prohibiting All Corporate Donations, 10-Jul-1996

Corporate civic, charitable, and educational "donations" of all kinds
should be banned. They strangle open public debate, and contribute to
the corporate colonization of our culture. Life-or-death environmental
issues are obscured, distorted, and trivialized by this waste stream of
corporate dollars.

Yet, we often hear the praises of corporate contributions. Consider the
headline, "Companies praised for making world better."[2] A PR person's

The article goes on to name names. One corporation (soft drinks) helps
minorities and women; another (soap) donated more than half a million
dollars for projects like buying a dance floor for an arts school; a
third corporation (shoes) teaches young people to read and clean up
trashy lots; yet another (photography) has an AIDS education program; a
big pharmaceuticals corporation is helping preserve Central American
rain forests. All five corporations are recipients of America's
Corporate Conscience Awards.

Media corporations constantly remind us of corporate "largesse" to
everything from art museums to zoos, child care programs to senior
citizens' conferences, war veterans to peace monuments.

With all this giving and giving and giving, why isn't the world a
better place than it is?

When there's an accident at the plant, or a conflict between management
and labor, or a request for yet another corporate tax break, or a
dispute about environmental hazards --who will speak out against the

Proponents of logical and overdue societal change are too often
paralyzed by the fear that if they speak out, they will be left high
and dry as corporate donation policies shift to favor more pliant
constituencies. Grassroots activists --many whose issues have not been
blessed as showcase causes by national or mainstream groups --run into
this whenever they try to build support and make alliances. People who
are even partly dependent on corporations are hesitant to rock the

It seems that they have us by the pigtails, so to speak.

Corporate leaders are not unaware of the effect of a well-aimed
sprinkling of corporate donations. Read any management textbook and you
will see how it coaches would-be corporate officers to shamelessly
court community support and pre-empt citizen criticism. Or, glance
through the excellent TOXIC SLUDGE IS GOOD FOR YOU! by John Stauber and
Sheldon Rampton[3] for a detailed analysis of how corporate PR
specialists manipulate their public personas.

We have succumbed to a Good Cop-Bad Cop routine where the government is
the Bad Cop and corporations always play Good Cop. The government
collects taxes and enforces regulations: Bad Cop. Then the corporations
step in with violin music, sponsoring nature walks for the mentally
retarded, and awarding plaques to conscientious recyclers. Obviously,
Good Cops.

Back at precinct headquarters we would learn that government
enforcement of corporation operations is lax to nonexistent, and that
corporation tax rates are unconscionably low in view of their real
income. This being the case, corporation expenditures for good deeds
are a pittance that discombobulate the public's ability to take a
critical stance.

For a historic view of how corporations fought for and won the right to
contribute freely to community coffers, we can review court cases in
which corporate lawyers eloquently pleaded their case.

Contrasted with corporations' never-ending struggle to pay low (or no)
taxes, deny workers their constitutional rights, reduce wages and
benefits, cut corners on health and environmental standards, and wring
financial "incentives" from municipal governments, the history of their
pleas to be allowed to make charitable and civic donations makes
interesting reading indeed.

We the People, acting through legislatures, once prohibited
corporations from doing anything not specifically allowed in their
charters.[4] In fact, if you read back to the early corporate charters
granted by your state, you will find to your amazement that they were
set up to address a specific public need. Further, these corporations
were to carry out their activities under the supervision of the
legislature on penalty of charter revocation if their directors stepped
out of line.[5] The prohibition against exceeding their chartered
purpose included prohibiting donating money or things of value. It was
intended to discourage two things: the excessive or inappropriate
influence of corporations on public policy, and the waste of
stockholder resources.

Only in 1935 did Congress begin allowing corporations a tax deduction
for charitable contributions.[6] But until the 1950s, a corporation's
right to donate to this and that at will was not firmly established.

In a 1953 case widely accepted as the final word on the matter, a New
Jersey fire hydrant manufacturing corporation had decided to donate
$1500 to Princeton University (another corporation).[7] Several
stockholders objected to this dissipation of their assets, and sued.
Testimonials from the President of Princeton University and a former
Chairman of the Board of U.S. Steel eloquently pleaded for a
corporation's right to be "socially responsible," as they put it, and
help out community institutions. It was also noted that closer to the
bottom line, such contributions benefited the corporation indirectly by
improving public relations and gaining favorable publicity.

In its ruling, the New Jersey Supreme Court set aside stockholder
complaints and commended corporations for their contributions to the
general social and economic welfare.

Court cases like this one discussing the appropriateness of corporate
donations do not fail to note large-scale changes occurring in the
American economy.

One such change is the dramatic shift in wealth during the first half
of this century from individuals to corporations, and a concurrent
decline in the amount of charitable contributions coming from
individuals. A second change noted is the increasing strain on
government to provide for its citizens' social, educational, and
economic needs.

Corporations' manipulation of elections, the legislative process, the
regulatory agencies and the courts has led to both of these problems.
And yet in an underappreciated irony of massive proportions,
corporation representatives swept in to offer themselves as selfless
saviors, dabbing charitable salve on the very social, economic, and
environmental wounds that they both inflict and profit from.

In the nineteenth century corporations got their way through outright
bribes of public officials. That's why political contributions and
other corporate donations were forbidden in many state corporation
codes. But in the U.S.A. today, corporations use a kinder and gentler
strategy. Since the 1950s, all state corporation codes contain an odd
phrase specifically authorizing corporations to make civic, charitable,
and other donations.[8]

The strategic use of corporate "donations" has so muddled the issues
that face us today that rarely if ever is a public policy decision made
on the basis of the merits of the issue at hand. Coupled with the
impact of corporate political donations (made legal by means of PACs),
the willingness of citizen groups and community organizations to accept
corporate "donations" has made a mockery of the democratic process.

But in the end a bribe is a bribe is a bribe.

A legislative package designed to put an end to the corporate bribery
that is so debilitating to our democratic process would include:

1. A ban on all corporate donations.

2. Expansion of tax breaks and other incentives for charitable and
civic donations by individuals.

Other tax reforms, such as taxing individuals' and corporations' real
income, would work well with these proposals.

Those who would predict the imminent collapse of civilization as we
know it should such a ban (on corporate donations) be enacted should
note three points.

1. A law banning all corporate donations need not disrupt daily life
rhythms. It could be designed to take effect gradually over, for
example, a five-year period during which time a baseline corporate
donation amount would be reduced by 20% annually. In this manner,
recipients of such donations could plan alternate funding.

2. This nation scraped by until the 1950s without the massive amounts
of legalized corporate bribery that corporations want us to conclude we
can't survive without.

3. If we taxed corporate income fairly, stopped throwing money at
corporations through "incentives" and other surrenders to corporate
extortion, and prevented corporations from ruining our environment (and
making costly programs like Superfund necessary), we would not feel the
need for corporate "charity."

Corporate apologists will claim, as they have for over a century, that
corporations have certain "rights," including the "rights" to free
speech, due process, and the like --in short the rights of PERSONS. But
corporations are instrumentalities set up by the sovereign people to
perform specific functions. They no more have intrinsic rights than
wheelbarrows do. A nation that has an ongoing legal debate on whether
Mexicans are PERSONS should ask itself why we don't give a second
thought to the idea that corporations have constitutional rights.

Is banning corporate donations a good idea? Try the ultimate test.
Suggest it to a few corporate CEOs and they will cringe and fight
against it tooth and nail. It is a good idea, counterintuitive though
it seems at first.

Corporate donations are a brilliant strategy to frustrate discussion of
underlying issues. They work as a carrot to encourage simplistic and
short-term decisionmaking, as a stick for retaliation, and as a
careening cart that so churns up our social terrain that we can't see a
way out of the rut we are in. Too often we are left fighting each other
over the scraps doled out by the Company (Corporation) Store.

Day care centers and art museums are things that citizens might choose
to fund with taxes (from both individuals and corporations). If
corporations paid their way through fair taxes and exemplary behavior,
citizens would be able to use the democratic process to make such
decisions in a rational manner.

Why should aid to a battered women's shelter free corporations of the
need to pay workers fairly? Why should corporations be allowed to
pollute our air, land, and water because they support the Girl Scouts?
Why should corporations pay less than their fair share of taxes because
they give computers to the community college?

We the sovereign people should allow corporations to exist if they
serve public needs. We the sovereign people need laws and regulations
to direct corporate behavior. We the sovereign people do not ask for
their charity, but demand their obedience.

We want corporations to gain the respect of communities in the old-
fashioned way: we want them to earn it.

by Jane Anne Morris[1]


[1] Jane Anne Morris, a corporate anthropologist, is the author of NOT
IN MY BACK YARD: THE HANDBOOK (San Diego: Silvercat Publications
[phone: 888-299-9119], 1994). She currently lives in Madison, Wisconsin
and is working on corporation issues as part of Democracy Unlimited of
Wisconsin, 29 E. Wilson, Ste. 201, Madison WI 53703 -(608) 255-6629].
This article originally appeared in the Winter, 1996, issue of
by the Gateway Greens in St. Louis; phone (314) 727-8554.

[2] David E. Kalish in an Associated Press story appearing 6-9-95 in

[3] Common Courage Press [phone: (800)497-3207], 1995.

[4] This concept is discussed in corporation law under the term ULTRA

[5] A discussion of this and related issues can be found in TAKING CARE
by Richard L. Grossman and Frank T. Adams, 1993, available for $4 from
Charter, Ink., P.O. Box 806, Cambridge, MA 02140.

[6] Aug. 30, 1935, Chap. 829 Sec. 102(c); Vol. 49 Part I., Public Laws
U.S. 1016; See IRS Code, Sec. 170 (1958).

[7] A.P. SMITH MFG. CO. v. BARLOW, 13. N.J. 145 (1953).

paragraph 2939.

Descriptor terms: jane anne morris; corporations; legislation;

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