The Best Investment a Company Can Make

It's easy to blame corporate America for all of the economic difficulties the country's going through. But for all of the flak that businesses take for their pursuit of profits, many companies voluntarily give back huge amounts of money to the communities they rely on around the country.

For example, here's a list of the top 10 corporate grant-making foundations, by the amount they gave in the most recently reported year:

Corporate Foundation

Amount of Giving

Aventis Pharmaceuticals

$221.7 million

Bank of America (NYSE: BAC  )

$144.8 million

Wal-Mart (NYSE: WMT  )

$128.0 million

Wachovia (NYSE: WB  )

$96.9 million

General Electric

$88.3 million

JPMorgan Chase (NYSE: JPM  )

$79.9 million

ExxonMobil (NYSE: XOM  )

$75.2 million

Citigroup

$73.9 million

Wells Fargo (NYSE: WFC  )

$64.4 million

Verizon (NYSE: VZ  )

$59.8 million

Source: Foundation Center.

And those numbers don't include individual foundations set up by business owners, such as the Bill & Melinda Gates Foundation.

It's easy to understand why individuals and families give. But corporate entities don't have the same motivations. What drives corporations to give away their profits?

A win-win scenario
Inevitably, there's some self-interest involved when a corporation makes charitable gifts. After all, corporations have duties to their shareholders, so an action that provides no tangible benefits is difficult for corporate boards to defend.

Moreover, a lot of people think that corporations making charitable gifts are wasting shareholder money. They see money spent on charitable work as that much less money that falls to the bottom line.

But that's the wrong way to look at corporate giving. Instead, realize that the difference companies generate in their communities through their gifts makes average people more tolerant of corporate profits. Without those good deeds, you'd see many more initiatives aimed at curbing corporate greed.

Supporting the social contract
Corporate giving not only helps communities but also helps the businesses themselves. For instance, giving programs can:

  • Make customers loyal. If you support a cause your customers believe in, they'll want to do business with you.
  • Have better community relations. Often, how a business interacts with local government and business groups makes a huge difference in its ability to get well-qualified employees, obtain lucrative business opportunities, and capture valuable incentives.
  • Inspire employees. People enjoy working for a company that tries to make a difference in their community.
  • Build a qualified workforce. With skilled workers increasingly difficult to find, companies have to take steps to build skills within their local communities that will help them find good employees -- sometimes years down the road.

Why corporations need financial literacy
It's this last point that ties into the focal point of The Motley Fool's 2008 Foolanthropy campaign, which is centered on promoting financial literacy. Now more than ever, it's clear that the health of the entire economy hinges on the financial decisions ordinary people make every day -- and many of those decisions have been poor ones. Whether it's taking out mortgages people couldn't afford or overextending on credit card debt, it's easy to make mistakes that you'll regret for the rest of your life.

When workers have to deal with financial trouble at home, there's simply no way they can be as productive on the job. That's just one of the reasons so many employers support financial literacy initiatives -- because a financially secure worker is a strong, productive worker.

Nevertheless, it'll take a unified fight to overcome decades of neglect on the financial-education front. That's why we're asking for your help to pick one of four worthy charities with innovative ideas on how to make people smarter about their money.  

And as you're evaluating companies to see whether you should add shares of their stock to your portfolio, take a closer look at their corporate philanthropy programs. Overlooking the positive impact that companies make with their giving -- and the goodwill it generates -- is a huge mistake.

Foolanthropy 2008 is off and running! Learn more here:

Thanks for your support!

Fool contributor Dan Caplinger has worked with charities for more than 15 years. He owns shares of General Electric. JPMorgan Chase and Bank of America are Motley Fool Income Investor picks. Wal-Mart is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy gives you the gift of information.


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  • Report this Comment On October 31, 2008, at 3:40 PM, madmilker wrote:

    can't you'll put out one article without having tat company with the star in the name....

    People in America need to realize jus what got America in this shape..."cheap" yes so-call cheap items from a foreign land and now the largest company in America wants to make everything "green" but at the same time they put 95% made in China in their stores in China and support Chinese export...don't take my word...its on their China web page quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote! Now! if there be 182 country's making items for the world to buy and they have only 5% of the pie in China...duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there.... but with the "yuan" going up in value and the US dollar going down...all the foreign items that the American consumer buys thinking it is cheap has went up in price. People...its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the "we the people" have to turn to the "second" largest employer in America(Uncle Sam) to sell "we the people" debt in order to get all them dollars back! 50 years ago a foreigner would had given their left nut for a US dollar or a Hershey's chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think "MADE IN AMERICA.

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