Companies often spend considerable time and money building their reputation as generous community supporters -- a trait that many socially minded investors take into account when choosing an investment. But if a generous spirit is one of your criteria for portfolio picks, make sure you're evaluating a seemingly charitable company's donations in context.

The Chronicle of Philanthropy surveyed 162 of America's biggest outfits, finding that 11 companies gave away more than 5% of their 2008 income in 2009. Among the biggest givers:

Company

2009 Cash and Products Donated

Percentage of 2008 Pre-tax Profits

Pfizer (NYSE: PFE)

$2.3 billion

24.2%

Oracle (Nasdaq: ORCL)

$2.1 billion

9.3%

Wells Fargo (NYSE: WFC)

$202 million

6.2%

Source: Chronicle of Philanthropy.

Don't assume that Wells Fargo's offering is the relative pittance it appears to be, compared to Pfizer and Oracle's donations. Pfizer gives away many medications, while Oracle donates software. These gifts have real value -- but companies can inflate that amount by claiming the full retail list price for the goods they give away, rather than the much smaller cost of making those goods. Since Wells Fargo doesn't really have products to give away, its donations are most likely actual cash.

Whose money are they giving away?
Should companies even make charitable gifts in the first place? Sure, these wonderful donations can be a huge help to individuals and communities alike. But remember, a company's cash belongs to its shareholders, not to management. When management donates in ways that don't reflect shareholders' wishes, it's in the wrong. Donations gone awry can even be bad for business. Just ask Target (NYSE: TGT), whose recent donations to an anti-gay political candidate have earned the otherwise generous retailer a boycott and a PR mess.

Charlie Munger, Warren Buffett's partner at Berkshire Hathaway, recently opined that private investment in corporations may advance society more than charitable contributions do. He argues that companies such as Costco offer jobs and inexpensive products that benefit consumers. Munger has also called out McDonald's for its major role in providing jobs and training for a huge swath of American workers.

Companies can do good in many ways. When you're seeking benevolent investments, don't fixate too much on published dollar amounts.

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Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway, Costco, and McDonald's. Berkshire Hathaway, Costco, and Pfizer are Motley Fool Inside Value selections. Berkshire Hathaway and Costco are Motley Fool Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway, Costco, and Oracle. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.