Forbes columnists M. Todd Henderson and Anup Malani make a compelling case for corporate philanthropy:

There is a tax efficiency to corporate giving. Both Pfizer and its shareholders lower their taxable income when the company donates Diflucan to Africa. If Pfizer instead maximized its profits, paid corporate income tax and then let shareholders make charitable donations to treat AIDS-related diseases out of their dividend checks, the money available for charity would be reduced, given the current 35% corporate income tax.

That's certainly true. The tax code is, I would argue, one of the few compelling arguments for charitable giving on the part of public companies. Without the tax benefits, I would argue that companies should stick to their income-earning knitting, delivering strong returns to shareholders who can then use the money to support the causes important to them.

Until 2003, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) had an innovative giving program that I think was a model of good corporate governance: the company designated a chunk of earnings for philanthropy each year, and then allowed each shareholder to designate a charity for their prorated share.

I'm just concerned about companies donating money to causes that are objectionable to some of their shareholders. For instance, Wal-Mart (NYSE: WMT) is a leading supporter of the Salvation Army, which has a long track record of discriminatory treatment of the gay community.

The government should amend the tax code to make it more efficient for companies to give their shareholders a say in corporate philanthropy.

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."

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: