Corporate Contributions: Altruistic or For-Profit?

Existing literature has centered on 3 rationales for corporate philanthropy: 1. through-the-firm giving, 2. corporate statesmanship, and 3. profit motivated giving. The relationship between giving and advertising expenditures is determined, to examine the profit motivation argument. Corporate philanthropy literature is critically discussed in this research, and the results of an empirical analysis that extends the understanding of this kind of corporate response to the external environment is reported on. Numerous rationales for corporate giving are considered, and finally the possibility that corporate giving is a complement to advertising, and thus a profit motivated expense, is examined. This argument is supported by the empirical analysis. The findings include: 1. Marginal alterations in advertising expenditures and marginal alterations in contribution expenditures are significantly linked. 2. Firms with more public contact spend more on advertising and contributions than firms with little public contact. 3. Changes in contributions, and changes in other business expenses usually considered to be profit-motivated, are highly correlated. Positive analysis of corporate social issues should come before normative discussions in this sensitive area.