The Strategic Management of Corporate Philanthropy
Abstract
Many companies make regular contributions to a variety of charities. For privately held companies, this is a reasonable activity since the managers are the owners. It is their own money that they are giving away giving. This is not the case for publically held companies. The money the managers are directing towards charities belongs to the shareholders. If the goal of managers is to maximize the value of the firm for the shareholders, then there must be some connection between corporate philanthropic activity and additions to firm value. In addition, this suggests that there is some optimal (value maximizing) level of corporate giving.