|
Model
|
Pros
|
Cons
|
| 1.
Outright corporate donation |
Decisions
and disbursements are relatively fast. Corporations get
recognition for good citizenship in multiple venues. |
Corporate
earnings might more appropriately be returned to shareholders
for them to decide how much to give and to which charities. |
| 2.
Donating a % of sales |
Serves
a marketing function by allowing potential customers to
feel better about buying your product/service over competitors. |
Asks
customers to pay for the charity. (Assuming competitive
forces move prices to a long-term equilibrium where companies
make a fair return, either prices must be raised to pay
the donation, or earnings must be reduced.) |
| 3.
Donating a % of profits |
Same
as #2. |
Asks
shareholders pay for the charity—see note above. |
| 4.
Donating 100% of profits |
This
special case of #3 is essentially a non-profit competing
in a traditionally for-profit industry. It has the potential
of providing significant amounts of cash to worthy causes. |
Raising
significant equity capital is difficult if all profits are
given away. |
| 5.
Stock grant or pledge |
Can
increase sales, enhance employee satisfaction and productivity,
and create a stronger venture in numerous ways— see the
case for a stock-tithe. Unlike #4,
a case could be made that a 10% stock pledge is worthy,
even on a significant equity investment. |
Probably
a long-term proposition because it takes time for value
to be created in a new venture. It eliminates the "cons"
of #1-3 because the founding shareholders have decided the
recipient and amount, up-front. It could eliminate the "con"
of #4—see the case for a stock-tithe.
|
