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The Community Influence on Corporate Contributions

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  • Katherine Maddox Mcelroy
  • John J. Siegfried

Abstract

This article uses a managerial utility maximization model in which contributions enhance both the firms’ and the top executives’ public image as well as reduce the costs of doing business by helping to maintain a propitious environment for long-run profits. Contributions also are a direct expense. From an equilibrium model we derive testable hypotheses about the effect of community characteristics on contributions. Tests are based on data from 229 large companies in 14 major U.S. cities. The key findings are as follows: (1) Corporate profits strongly and positively affect corporate contributions. (2) Most corporate giving is directed to the headquarters city rather than to operating locations. However, as firms increase their total contributions, they direct an increasing proportion to operating locations. (3) A firm tends to increase its contributions when other local firms set an example of generosity and when its size relative to the community is larger.

Suggested Citation

  • Katherine Maddox Mcelroy & John J. Siegfried, 1986. "The Community Influence on Corporate Contributions," Public Finance Review, , vol. 14(4), pages 394-414, October.
    • Handle: RePEc:sae:pubfin:v:14:y:1986:i:4:p:394-414
    DOI: 10.1177/109114218601400402
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    References listed on IDEAS

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    1. Ralph L. Nelson, 1970. "Economic Factors in the Growth of Corporation Giving," NBER Books, National Bureau of Economic Research, Inc, number nels70-1, March.
    2. Ralph Lowell Nelson, 1970. "Introduction and Summary to "Economic Factors in the Growth of Corporation Giving"," NBER Chapters, in: Economic Factors in the Growth of Corporation Giving, pages 1-11, National Bureau of Economic Research, Inc.
    3. R. A. Schwartz, 1968. "Corporate Philanthropic Contributions," Journal of Finance, American Finance Association, vol. 23(3), pages 479-497, June.
    4. Ralph Lowell Nelson, 1970. "Appendices and Index to "Economic Factors in the Growth of Corporation Giving"," NBER Chapters, in: Economic Factors in the Growth of Corporation Giving, pages 91-116, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jennifer C. Chen & Dennis M. Patten & Robin Roberts, 2008. "Corporate Charitable Contributions: A Corporate Social Performance or Legitimacy Strategy?," Journal of Business Ethics, Springer, vol. 82(1), pages 131-144, September.
    2. Muhammad Umar Boodoo & Irene Henriques & Bryan W. Husted, 2022. "Putting the “Love of Humanity” Back in Corporate Philanthropy: The Case of Health Grants by Corporate Foundations," Journal of Business Ethics, Springer, vol. 178(2), pages 415-428, June.
    3. Hanwen Chen & Siyi Liu & Xin Liu & Daoguang Yang, 2022. "Adversity Tries Friends: A Multilevel Analysis of Corporate Philanthropic Response to the Local Spread of COVID-19 in China," Journal of Business Ethics, Springer, vol. 177(3), pages 585-612, May.
    4. Walker, Matthew & Parent, Milena M., 2010. "Toward an integrated framework of corporate social responsibility, responsiveness, and citizenship in sport," Sport Management Review, Elsevier, vol. 13(3), pages 198-213, August.
    5. Juelin Yin & Anusorn Singhapakdi & Yunzhou Du, 2016. "Causes and moderators of corporate social responsibility in China: The influence of personal values and institutional logics," Asian Business & Management, Palgrave Macmillan, vol. 15(3), pages 226-254, July.
    6. Steven F. Cahan & Chen Chen & Li Chen, 2021. "Do local social norms affect investors’ involvement in social activism? Revisiting the case of US institutional investors," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1957-1992, April.
    7. Christopher Marquis & Gerald F. Davis & Mary Ann Glynn, 2013. "Golfing Alone? Corporations, Elites, and Nonprofit Growth in 100 American Communities," Organization Science, INFORMS, vol. 24(1), pages 39-57, February.
    8. Laura Marie Schons & John Cadogan & Roumpini Tsakona, 2017. "Should Charity Begin at Home? An Empirical Investigation of Consumers’ Responses to Companies’ Varying Geographic Allocations of Donation Budgets," Journal of Business Ethics, Springer, vol. 144(3), pages 559-576, September.
    9. Card, David & Hallock, Kevin F. & Moretti, Enrico, 2010. "The geography of giving: The effect of corporate headquarters on local charities," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 222-234, April.
    10. Mary Ann Glynn, 2008. "Configuring the Field of Play: How Hosting the Olympic Games Impacts Civic Community," Journal of Management Studies, Wiley Blackwell, vol. 45(6), pages 1117-1146, September.

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