Why Do Amazon and Google Actually Donate Their Profits?

Why Do Amazon and Google Actually Donate Their Profits?

Are you familiar with AmazonSmile? Google’s Donation Matching Program? Walmart’s £1 million Donation to Ukraine? 

In today’s day and age of ‘business on purpose,’ it seems like more and more brands are signing up to take their social responsibility and allocate some of their massive profits to do good for the world. But is the amount of money going towards non-profits and other charity organizations actually increasing, or is it just the marketing around it?


Companies Donate a Little, But Talk A Lot

As it turns out, the amount of charitable contributions by companies in the United States has actually been on a decline since the 1990s. And money talks. In 2020, for example, corporate giving decreased to just $16.88 billion, which was a 6.1% decrease from 2019 and a devastating loss in the midst of the pandemic. To put this in perspective, the amount of money donated from corporations is less than 0.1% of this country’s gross domestic product (GDP), and a small sliver in comparison to the amount of money that is given by individuals, which make up 69% of total annual donations.

This unfortunate trend makes a lot of unfortunate sense. With companies being bogged down by their shareholders and quarterly profits, it is only logical that they aim to minimize ‘non-mandatory’ expenditures, of which donations are considered. Plus, if a company establishes a reputation in donating to a particular cause or organization, their pressure to continue donating will mount, which could further eat away at their profits.


The Beginning of Corporative Giving

Most of these modern ‘donating deterrents’ were not even an iota of a thought at the time that corporate giving originated. The first recorded instances of this now commonplace responsibility occurred in Ancient Rome, where “businesses were expected to pay taxes to fund military campaigns (that were believed to be for the good of the Roman populace).” Over time, this government-centric philanthropy transformed into global awareness and voluntary community development and social responsibility, with George Cadbury of Cadbury confectionary being one of the first 20th century pioneers of this movement. 

Generally speaking, most “corporate giving” occurs at the will of company employees, who indicate the causes that they are interested in supporting, so in that way it is not very different from individual donation. 

At the same time, corporate donations are often muddled with CEO pledging and “philanthrocapitalism.” Essentially, philanthrocapitalism “grants corporations the moral right, at least within the public consciousness, to be socially irresponsible.“ Company executives ruefully allocate funds to good-doing organizations in a convoluted attempt to clean up the damage done by their business operations, which in turn allows them to feel okay about continuing to commit unethical and unsustainable acts.


Benefits of Philanthrocapitalism

Lessening the burden on executives’ consciences is just one internal benefit of donating amongst a slew of others. For instance, another benefit is that younger people in particular are interested in workplaces that offer volunteering, and they are twice as likely to rate their corporate culture as very positive if that is in fact the case. Logistically speaking, donating to charity also means that companies can decrease the amount they pay in annual income tax. Last but not least, and perhaps most importantly, corporate donation is an incredible marketing opportunity. Products with some sort of association to sustainability have had sales growth more than four times that of traditional consumer goods. And what more perfect way to demonstrate a commitment to the public good than by donating small amounts to worthy causes and then talking about it a whole awful lot?

When you think about it, this is a pretty complex moral dilemma. Surely, sparking conversations about donating to charities is a good thing and the fact that these companies are to some extent putting their money where their mouth is is a positive step. But the question is, what is the actual impact of corporate giving? If the case was that all this lip service was transforming the world of donation, then those ends would justify the means. But the real external benefits of corporate donation, it seems, are limited.

Sure, the act of donating may be great & give you a warm and fuzzy feeling. But is it actually making an impact?

Are Corporate Donations Really Just a Disguised Dumpster Fire?

On the one hand, corporations are promising vessels of philanthropy because their giving provides the opportunity for influence. These entities serve as touchpoints with a sea of consumers and they likely have access to far-reaching, winding communication channels. Simultaneously, if their marketing and communications is uninformed, this can come across as tokenization, greenwashing or pinkwashing (the LGBTQ+ equivalent of greenwashing).

Counter to the ineffectiveness of corporate donation, you may point to programs such as Apple’s employee matching program for donations, which brought in $78 million to charities through 2015. The devil, though, is in the relativity. $78 million is just an ant on a log of Apple’s profits annually, let alone their net worth over the lifetime of the company. So how can we applaud a company doing the absolute bare minimum when it comes to supporting social and environmental causes?

Another example of this is Philip Morris, a tobacco company that donated a total of $75 million in 1999 to charities, but then subsequently spent $100 million to advertise the fact that they had donated this money. If that doesn’t speak volumes about the true intent most companies have behind their donation schemes, then I’m not sure what does.

This is not to say that all companies are secretly corrupt and use donation as a facade to cover up the damage their company does on a daily basis or draw in philanthropists to patronize their business. And not all companies intentionally fail at donating effectively. Even if the amount of money allocated to charity is “sufficient,” choosing the most effective organizations to support can be difficult in and of itself. Nonprofits who receive the highest number of donations or highest praise are not necessarily the ones using the money most productively.

In any case, the main problem here is the intent behind donation and whether or not that intent can be channeled to make a reasonable difference. The Vice President of Brixio, a real estate software company, argues that “Not every company can be a social change company.”

Why Not Be a Vessel for Social Change?

Here at BOAS, our job is to ask: why not?

In 2022 and for years to come, there is enough good will to go around. We need to change the narrative of charity being the afterthought of innovation, and instead build and reform businesses that are not living within a vacuum. We need to understand that business is a part of life, and that supporting businesses intentionally can provide us the opportunity to save lives. Then, and only then, will “corporate giving” and “philanthrocapitalism” hold any meaning.