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Wal-Mart's charitable giving growth rate declines

Zac Bissonnette — Tue, 26 Feb 2008 17:32:00 EST

Filed under: Wal-Mart (WMT), Berkshire Hathaway (BRK.A)

Wal-Mart Stores, Inc. (NYSE: WMT) has done a lot to improve its image in recent months, but this latest bit of news might not help. In 2007, the Bentonville, Arkansas company increased its charitable giving 8% to $296.2 million. The company's giving grew 10% in 2006 compared with 19% in 2005, a spike inspired by Hurricane Katrina.

I'm sure Wal-Mart critics -- whom I frequently agree with -- will criticize the slowing growth, but I disagree. The problem with corporate philanthropy is that it's the shareholders' money. It would be far better, I think, if companies did little in the way of charitable giving, and focused on providing shareholders with strong returns, letting them decide what to do with their money.

Too often, philanthropy by public companies focuses on the pet causes of executives. To Wal-Mart's credit, the USA Today reports that "Most donations were made locally by the more than 4,000 Wal-Mart and Sam's Club stores to charities they pick. Wal-Mart said U.S. donations went to organizations including the National Teacher of the Year program, hospital aid group Children's Miracle Network, The Salvation Army, United Way and food bank America's Second Harvest."

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Milton Friedman was wrong about corporate philanthropy

Peter Cohan — Fri, 17 Nov 2006 09:54:00 EST

Filed under: Market Matters

As Michael Fowlkes points out, economist Milton Friedman recently passed away and his accomplishments have been lionized. But I disagree with Friedman's views on corporate philanthropy.

Specifically I think Friedman was wrong to argue that corporations have only one purpose -- to maximize shareholder value. Friedman thought that chief executive officers who talked about giving back to their communities were merely displaying one of their ''suicidal impulses.'' The notion that businesses should aim to avoid pollution, say, or donate resources to a neighborhood was ''pure and unadulterated socialism,'' Friedman wrote in 1970. Corporations, Friedman argued, had but one purpose: to increase profits as much as was humanly possible. If you're feeling generous, give the money to shareholders.

In Value Leadership, I argued that corporations have a vital interest in giving to their communities. Companies that contribute to the communities in which they operate display a commitment to others that makes potential employees and customers feel better about the companies. In particular, I found three key activities that match corporate donors and recipients in a mutually beneficial way:

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Milton Friedman was wrong about corporate philanthropy originally appeared on BloggingStocks on Fri, 17 Nov 2006 09:54:00 EST. Please see our terms for use of feeds.

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