Granting Favors: Insider-Driven Corporate Philanthropy
Corporate charitable giving has long been considered a key tool in companies’ environmental, social, and governance (ESG) arsenal. Notably, in 2023, corporate giving in the United States is estimated to have exceeded $36 billion. And while corporate philanthropy can generate value for firms, their shareholders, and society at large, it can also act as a […]
Leeor Ofer is a fellow at the Harvard Law School Program on Corporate Governance and an S.J.D. candidate at Harvard Law School. This post is based on her recent article, forthcoming in the Ohio State Law Journal.
Corporate charitable giving has long been considered a key tool in companies’ environmental, social, and governance (ESG) arsenal. Notably, in 2023, corporate giving in the United States is estimated to have exceeded $36 billion. And while corporate philanthropy can generate value for firms, their shareholders, and society at large, it can also act as a channel for corporate insiders to increase their own benefit.
For instance, under CEO Jamie Dimon, JPMorgan Chase donated millions to the American Museum of Natural History, where Dimon’s wife served on the advisory council. Similarly, Enron contributed significant sums to the University of Texas M.D. Anderson Cancer Center, where two of its directors held leadership roles. Indeed, corporate charitable donations to nonprofits affiliated with directors (“conflicted grants”/”conflicted giving”) may well represent self-dealing at shareholders’ expense. Nonetheless, under U.S. law, shareholders are not entitled to vote on, or otherwise directly participate in, the decision-making process regarding corporate philanthropy. Furthermore, because companies are not required to disclose corporate charitable gifts in their filings with the SEC, and voluntary disclosure is severely lacking, most corporate giving flies below the radar.
