America Needs A Law Prohibiting Corporate Donations (1996)

by Jane Anne Morris

Bribery makes the discerning man blind
and the just man give a crooked answer.
(Exodus 23:8)

Corporate civic, charitable, and educational “donations” of all kinds should be banned because they strangle open public debate, and contribute to the corporate colonization of our culture. Life-or-death environmental issues are obscured, distorted, and trivialized by this waste stream of corporate dollars.

“Companies praised for making world better.”1 What a headline. A PR person’s dream.

The article goes on to name names. One corporation (soft drinks) helps minorities and women; another (soap) donated more than half a million dollars for projects like buying a dance floor for an arts school; a third corporation (shoes) teaches young people to read and clean up trashy lots; yet another (photography) has an AIDS education program; a big pharmaceuticals corporation is helping preserve Central American rain forests. All five corporations are recipients of America’s Corporate Conscience Awards.

But the Superbowl ring of PR coups would go to another corporation that made a $5 million donation to preserve tiger habitat. It’s not every day that a corporation can bask in good vibes like those that radiate from the newspaper article entitled simply, “Exxon, friend of tigers.”2

Media corporations constantly remind us of corporate “largesse” to everything from art museums to zoos, child care programs to senior citizens’ conferences, war veterans to peace monuments.

With all this giving and giving and giving, why isn’t the world a better place than it is?

When there’s an accident at the plant, or a conflict between management and labor, or a request for yet another corporate tax break, or a dispute about environmental hazards — who will speak out against the corporation?

Proponents of logical and overdue societal change are too often paralyzed by the fear that if they speak out, they will be left high and dry as corporate donation policies shift to favor more pliant constituencies. Grassroots activists — many whose issues have not been blessed as showcase causes by national or mainstream groups — run into this whenever they try to build support and make alliances. People who are even partly dependent on corporations are hesitant to rock the boat.

It seems that they have us by the pigtails, so to speak.

Corporate leaders are not unaware of the effect of a well-aimed sprinkling of corporate donations. Read any management textbook and you will see how it coaches would-be corporate officers to shamelessly court community support and pre-empt citizen criticism. Or, glance through the excellent Toxic Sludge Is Good For You! by John Stauber and Sheldon Rampton3 for a detailed analysis of how corporate PR specialists manipulate their public personas.

We have succumbed to a Good Cop-Bad Cop routine where the government is the Bad Cop and corporations always play Good Cop. The government collects taxes and enforces regulations: Bad Cop. Then the corporations step in with violin music, sponsoring nature walks for the mentally retarded, and awarding plaques to conscientious recyclers. Obviously, Good Cops.

Back at precinct headquarters we would learn that government enforcement of corporation operations is lax to nonexistent, and that corporation tax rates are unconscionably low in view of their real income. This being the case, corporation expenditures for good deeds are a pittance that discombobulates the public’s ability to take a critical stance.

For a historic view of how corporations fought for and won the right to contribute freely to community coffers, we can review court cases in which corporate lawyers eloquently pleaded their case.

Contrasted with corporations’ never-ending struggle to pay low (or no) taxes, deny workers their constitutional rights, reduce wages and benefits, cut corners on health and environmental standards, and wring financial “incentives” from municipal governments, the history of their pleas to be allowed to make charitable and civic donations makes interesting reading indeed.

We the People, acting through legislatures, once prohibited corporations from doing anything not specifically allowed in their charters.4 In fact, if you read back to the early corporate charters granted by your state, you will find to your amazement that they were set up to address a specific public need. Further, these corporations were to carry out their activities under the supervision of the legislature on penalty of charter revocation if their directors stepped out of line.5 The prohibition against exceeding their chartered purpose included prohibiting donating money or things of value. It was intended to discourage two things: the excessive or inappropriate influence of corporations on public policy, and the waste of stockholder resources.

Only in 1935 did Congress begin allowing corporations a tax deduction for charitable contributions.6 But until the 1950s, a corporation’s right to donate to this and that at will was not firmly established.

In a 1953 case widely accepted as the final word on the matter, a New Jersey fire hydrant manufacturing corporation had decided to donate $1500 to Princeton University (another corporation).7 Several stockholders objected to this dissipation of their assets, and sued. Testimonials from the President of Princeton University and a former Chairman of the Board of U.S. Steel eloquently pleaded for a corporation’s right to be “socially responsible,” as they put it, and help out community institutions. It was also noted that closer to the bottom line, such contributions benefited the corporation indirectly by improving public relations and gaining favorable publicity.

In its ruling, the New Jersey Supreme Court set aside stockholder complaints and commended corporations for their contributions to the general social and economic welfare.

Court cases like this one discussing the appropriateness of corporate donations do not fail to note large-scale changes occurring in the American economy.

One such change is the dramatic shift in wealth during the first half of this century from individuals to corporations, and a concurrent decline in the amount of charitable contributions coming from individuals. A second change noted is the increasing strain on government to provide for its citizens’ social, educational, and economic needs.

Corporations’ manipulation of elections, the legislative process, the regulatory agencies and the courts has led to both of these problems. And yet in an underappreciated irony of massive proportions, corporation representatives swept in to offer themselves as selfless saviors, dabbing charitable salve on the very social, economic, and environmental wounds that they both inflict and profit from.

In the nineteenth century corporations got their way through outright bribes of public officials. That’s why political contributions and other corporate donations were forbidden in many state corporation codes. But In the U.S.A. today, corporations use a kinder and gentler strategy. Since the 1950s, all state corporation codes contain an odd phrase specifically authorizing corporations to make civic, charitable, and other donations.8

The strategic use of corporate “donations” has so muddled the issues that face us today that rarely if ever is a public policy decision made on the basis of the merits of the issue at hand. Coupled with the impact of corporate political donations (made legal by means of PACs), the willingness of citizen groups and community organizations to accept corporate “donations” has made a mockery of the democratic process.

But in the end a bribe is a bribe is a bribe.

A legislative package designed to put an end to the corporate bribery that is so debilitating to our democratic process would include:

  1. A ban on all corporate donations.
  2. Expansion of tax breaks and other incentives for charitable and civic donations by individuals.

Other tax reforms, such as taxing individuals’ and corporations’ real income, would work well with these proposals.

Those who would predict the imminent collapse of civilization as we know it should such a ban (on corporate donations) be enacted should note three points.

  1. A law banning all corporate donations need not disrupt daily life rhythms. It could be designed to take effect gradually over, for example, a five-year period during which time a baseline corporate donation amount would be reduced by 20% annually. In this manner, recipients of such donations could plan alternate funding.
  2. This nation scraped by until the 1950s without the massive amounts of legalized corporate bribery that corporations want us to conclude we can’t survive without.
  3. If we taxed corporate income fairly, stopped throwing money at corporations through “incentives” and other surrenders to corporate extortion, and prevented corporations from ruining our environment (and making costly programs like Superfund necessary), we would not feel the need for corporate “charity.”

Corporate apologists will claim, as they have for over a century, that corporations have certain “rights,” including the “rights” to free speech, due process, and the like — in short the rights of persons. But corporations are instrumentalities set up by the sovereign people to perform specific functions. They no more have intrinsic rights than wheelbarrows do. A nation that has an ongoing legal debate on whether Mexicans are persons should ask itself why we don’t give a second thought to the idea that corporations have constitutional rights.

Is banning corporate donations a good idea? Try the ultimate test. Suggest it to a few corporate CEO’s and they will cringe and fight against it tooth and nail. It is a good idea, counterintuitive though it seems at first.

Corporate donations are a brilliant strategy to frustrate discussion of underlying issues. They work as a carrot to encourage simplistic and short-term decisionmaking, as a stick for retaliation, and as a careening cart that so churns up our social terrain that we can’t see a way out of the rut we are in. Too often we are left fighting each other over the scraps doled out by the Company (Corporation) Store.

Day care centers and art museums are things that citizens might choose to fund with taxes (from both individuals and corporations). If corporations paid their way through fair taxes and exemplary behavior, citizens would be able to use the democratic process to make such decisions in a rational manner.

Why should aid to a battered women’s shelter free corporations of the need to pay workers fairly? Why should corporations be allowed to pollute our air, land, and water because they support the Girl Scouts? Why should corporations pay less than their fair share of taxes because they give computers to the community college?

We the sovereign people set up corporations to serve public needs. We the sovereign people devised laws and regulations to direct corporate behavior. We the sovereign people do not ask for their charity, but demand their obedience.

We want corporations to gain the respect of communities in the old-fashioned way: we want them to earn it.

********

(First published in Synthesis/Regeneration: A Magazine of Green Social Thought, Winter 1996; reprinted in Rachel’s Environment & Health Weekly #502, July 11, 1996; reprinted in Earth Island Journal, Fall 1996; reprinted in The Chronicle of Philanthropy, Jan. 9, 1997.)

Notes

Corporate “Social Responsibility”: Kick the Habit (2000)

by Jane Anne Morris

What to expect next from corporate sponsors of the WTO? There’s a well-thumbed page in the corporate playbook, ready to go. Whether or not it works depends on us.

The last time there was a scuffle as worrisome as the Seattle demonstrations,” Richard Milhous “Tricky Dick” Nixon was in the White House. Nearly everybody else was in the streets.

We were millions, and we demanded freedom, justice, equality, peace, clean air and water, and the right to choose our own hairstyles. We knew the joy of thinking it was all possible.

We also knew the raw fear wrought by the pop of tear gas canisters, the glint of sun on gunmetal, and the meltdown of a peaceable crowd being attacked by the forces of law and order.

But it is only at a distance of a quarter century that I begin to recognize the depths of another fear, just as visceral. As I pore over the writings by and about the corporate elite of that day, a simple fact stares out at me: they were scared witless.

While we wove our hopes into songs, and scrawled our demands onto placards, they spelled out their fears in journal articles and speeches at chambers of commerce.

The corporation was “under attack as never before,”1 subject to a “tidal wave” of “dissident groups, structured into onslaught vehicles of unrelenting social action,”2 according to corporate literature. The future looked “grim.”3 Corporations were about to “lose their autonomy, power and influence.”4 Some managers doubted that large corporations would even be “permitted”5 in the future. The significance of profit margins shrank as the CEO of one of the U.S.’s largest corporations wondered whether “the corporation as we know it…will survive into the next century.”6

For those whose greed commanded the rudder of the ship of state, the sight of people in the streets — and not for shopping, mind you — was terrifying.

What a difference a generation makes. Corporate managers have more than survived the tumult of the Nixon era. Today, a tiny fraction of the human population, in its role as corporate managers, has been exceedingly successful in using the legal fiction of the corporation to expand its autonomy, power and influence. How did they accomplish this?

While we huddled in coffeehouses and church basements debating strategy, corporate managers plotted in board rooms. Their diagnosis unfolded into a plan. From their perspective, a Great Danger threatened: Government action spurred by public demands. A tried-and-true strategy beckoned: Make a show of voluntarily Doing Something and publicize it shamelessly.

Presented to the public, this was a plan with a thousand faces: corporate social responsibility, the corporation as a good citizen, voluntary codes of conduct, corporate executives as “trustees” for the public interest, corporations as “good neighbors,” the civic duty of the corporation, and so on.

There were three pillars to the corporate plan. First placate, then co-opt, then re-frame issues so that in the future, people would “demand” something that corporate managers want to “give.”

Corporate donations and other forms of mostly lip-service “corporate social responsibility” pacified portions of the community by softening the edges of some of the most egregious or the most visible corporate harms. In a quasi-behaviorist twist, they rewarded “good” behavior and disadvantaged “bad” behavior on the part of showcased community and charitable organizations. But most of all they enabled corporate managers to reshape public “questions” so that the “answers” were to come not from a self-governing people but from “corporate good citizens.”

Corporate executives were advised that they “should…be able to gauge with some accuracy the degree of social responsiveness that will satisfy the community….”7 “If corporations fail to exert considerably more social initiative, they will be compelled to do so…”8 “The less voluntary social action U.S.companies take, the more it will be imposed by big government.”9 There were fears that public pressure would “compel legislative response.”10 (Heaven forbid that this should ever occur in a democracy.)

Targets of “corporate social responsibility” were selected for maximum effect. Corporate managers who lent financial support were well aware that they were “ingratiating themselves with recipients, or pacifying a pressuring public. A corporate gift can be a bribe, paid in return for a gadfly group’s promise to keep still and refrain from criticism of corporate policies.”11 On the other hand, “…some business givers have…withheld grants from groups identified with causes they consider to be too militant, or unfriendly to corporate interests.”12

For some, the success of another round of “corporate social responsibility” was a foregone conclusion. “The social responsibility payoff has been attested to time and again. The most patent cost justification is a simple matter of good stickmanship — sidestepping the penalties of social irresponsibility.”13 The judicious distribution of corporate money “has allowed the managers to become brokers of social power, deciding which programs are supported and which are not.”14

The language is vivid. “Bribe.” “Ingratiate.” “Satisfy the community.” “Payoff.” “Brokers of Social Power.” How much plainer can it get? In all cases, control was the goal; control not just of groups or movements, but of ideas and debates.

Coupled with brutal suppression, this three-step strategy — placate, co-opt, re-frame debate — was used early and often. It worked after the sixties-seventies wave of public uproar; before that it worked in the 1950s ; it worked during the Depression; it worked during the wave of “unrest” immediately after World War I. In the late 19th century, an early version of it worked after corporate strategists got a glimpse of the Knights of Labor and the Populists.

The notions of corporate trusteeship, the civic duty of a corporation, corporate citizenship, corporate social responsibility and the corporate social audit — all originated in the desire of corporate managers to thwart unionization, forestall revolt, avoid government action, and above all retain control by shaping public debate.

Each time corporate managers hiding behind the increasingly powerful shield of the legal fiction of The Corporation took another step toward becoming a more powerful “semi-autonomous managerial elite,” they cranked up the public relations machinery to boast of The Corporation’s deep concern and caring for the community. Increasingly, they doled out goodies — always on their terms, and in their terms.

So successfully have these terms become part of our political language that they often go unnoticed. Why is it, for instance, that when a government (using money collected for the public good) aids needy citizens, they’re on the dole, a supposed disgrace, but when corporate managers give away other people’s money to a soup kitchen, it’s philanthropy ? (La-dee-dah.)

If you doubt that corporate managers and not regular folks define the terms of public debate today, you might ask yourself these questions. Who defines free trade? What about welfare reform? Or those dubious twins, tree harvest and deer harvest ? Remember jobs-versus-environment , a golden oldie that never seems to fade away? These terms, and the terms of the debate, were all brought to us by corporate managers.

Corporate managers are willing and eager to participate in the democratic process, but only on the control end. When it comes to being subject to it, they balk, and are in fact willing to do anything, anything — even give away a little precious corporate money — in order to avoid losing control over the way issues are framed and thus becoming subject to the democratic process.

Corporate managers of the seventies warned their comrades that failure to act would have horrific consequences.

“The alternatives are not attractive. The likeliest possibility is the wholesale substitution of public for private goals, strategies, and actions…”15

The options were clear: Either institute the three-point plan, or the country will succumb to… (I hope you’re sitting down)… a people’s democracy.

As night follows day, corporate managers experienced great surges of “corporate social responsibility” following each historic episode of social unrest. Such bouts of “corporate good citizenship” are voluntary, calculated, expedient, cheap and temporary. Far from reflecting democratic control, they frustrate it. Meaningless, unenforceable “side agreements” are not concessions to democracy on the part of corporate managers, but concessions to lack of democracy on the part of a not-sovereign people.

So it must be an especially sweet moment for corporate managers looking up from their Courvoisier-glazed snifters — to hear people clamoring for “corporate social responsibility,” that strategy-with-a-thousand-faces that has served to solidify the grip of the corporate elite through a century of citizen protests.

With the echoes of “WTO Week in Seattle” still rumbling in our ears, we have another opportunity to firmly reject the “corporate social responsibility” ruse. A small but growing core of people is demanding not goodies or favors or good deeds but real self-governance. They know that receiving goodies from worried corporate managers is the real “dole,” while a self-governing people controlling their community’s resources in the interest of society as a whole — is democracy. La-dee-dah.

****************

Originally published in By What Authority, Vol. 2, No. 2 (Spring 2000); reprinted in Defying Corporations, Defining Democracy

Notes