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Corporate profits and social responsibility: “Subsidization” of corporate income under charitable giving tax laws

Journal of economics and business, 1996-10, Vol.48 (4), p.401-421 [Peer Reviewed Journal]

1996 ;Copyright Elsevier Science Ltd. Oct 1996 ;ISSN: 0148-6195 ;EISSN: 1879-1735 ;DOI: 10.1016/0148-6195(96)00022-7 ;CODEN: JEBUDR

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  • Title:
    Corporate profits and social responsibility: “Subsidization” of corporate income under charitable giving tax laws
  • Author: Webb, Natalie J.
  • Subjects: Charities ; Corporate giving ; Corporate image ; Corporate profits ; Corporate social responsibility ; Corporate taxes ; Donations ; Economic models ; Gifts ; Government subsidies ; Nonprofit organizations ; Nonprofit subsidization ; Nonprofit tax laws ; Social responsibility ; Studies ; Tax legislation ; Tax rates
  • Is Part Of: Journal of economics and business, 1996-10, Vol.48 (4), p.401-421
  • Description: Private U.S. corporations donated approximately $6 billion to nonprofit organizations in 1994. Corporations may donate money both directly to charities and indirectly through a corporate-sponsored foundation. Tax and financial advantages, as well as differences in corporate image, arise due to policy differences in the treatment of certain gifts. This paper presents a new model of corporate giving, and examines the financial implications of both direct and corporate foundation donations. Important considerations are corporate and foundation tax rates, the occurrence of donations to non-U.S. (or other non-tax-deductible) charities, the sale of assets to fund corporate foundations, and the effects of contributions over time. Comparative statics from a two-period model provide theoretical motivations for making certain types of gifts in certain ways. The results show that tax deductibility, tax rates, amounts of gifts made overseas, and capital gains provisions for corporate and foundation use affect giving. In fact, use of a nonprofit foundation for making contributions often results in a “subsidization” of monies to be distributed for charitable purposes and, hence, more after-tax income for the corporation.
  • Publisher: New York: Elsevier Inc
  • Language: English
  • Identifier: ISSN: 0148-6195
    EISSN: 1879-1735
    DOI: 10.1016/0148-6195(96)00022-7
    CODEN: JEBUDR
  • Source: Alma/SFX Local Collection
    RePEc
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