Corporate Philanthropy, Government and Blackmail

Corporate philanthropy has become a new fad in talk about the relationship between business and the community. But while philanthropy, the love of one's fellow humans, is undoubtedly a desirable trait, it is its manifestation in giving money away to deserving people or causes which is usually in mind when the term is used. There are clearly many valuable types of philanthropy in our community. When wealthy individuals donate large sums of their own money to a foundation which has as its purpose the promotion of either welfare generally or some particular worthwhile pursuit, such as the arts, nobody has any reservations about thinking better of them. Similarly donations to schools, hospitals, art galleries, universities and many other such institutions are thought useful and praiseworthy.

But even the motives of individual philanthropy are not always unmixed. The Gospels indicate that it is better for charity to be a private matter, not something to boast about to the world, to gain official rewards such as honours. Yet such aspects of public reputation are important to some givers. Many people prefer to give anonymously or without publicity, but the community sees praise and recognition as a useful way of encouraging philanthropy. However, there has been a new development in all this, which is the attempt to shame or bully people into giving money away to supposedly worthy causes.

The element of blackmail is especially clear in the matter of corporate philanthropy. It goes along with prattle about "good corporate citizenship", and the notion that particular corporations, like banks, have reputations which are determined by some kind of popularity polls. It extends to propaganda campaigns, like the irrational (even hysterical, or witch-hunting) spate of bank bashing in recent years, which are intended not just to persuade but to threaten corporations with loss of the confidence and trust they need in order to operate effectively. If it is a matter of corporate misbehaviour, breaking of the law or deceptive practices, there are already sanctions in place, however ineffectual they have proved to be in some notable cases, like HIH insurance (where corporate philanthropy was employed to gain personal honours for its chief executive). There is a very strong case for improving standards of reporting, and transparency. This requires a level of performance from the official regulators which was certainly not met by the Australian Prudential Regulatory Authority - it seems that the culpable executives are not even going to be sacked. Better corporate governance and better oversight are important, but have nothing to do with "good citizenship".

We are entitled to demand a high level of probity and respect for the law in our corporations. But why should they be expected to become philanthropists? The best they can do by the community is to produce high quality products and services, presented honestly and sold at prices which are determined in a freely competitive market. Any philanthropic activities in which they engage ought to be seen as merely a part of their advertising budget and corporate image presentation, and therefore worthy of neither reward nor praise. If they dispense largesse for any other reason, they are literally wasting the money of their shareholders. In the case of large corporations, this usually means that of the superannuation and similar funds which invest in them, and therefore they are taking money out of the pockets of the proverbial widows and orphans.

It is impossible to see why the charity of corporations should be considered morally superior or preferable to that of the people who own them and who derive their incomes directly or indirectly from them. Indeed, it is morally objectionable, since those who gain the kudos from such donations are not those whose money it really is. The villains in the piece, the blackmailers, are mainly Non Government Organisations who are even less transparent in their financial and other dealings than business, and all those who have a vested interest in begging for good or bad causes  like the universities, practitioners of the arts and literature, and followers of various political parties or causes. The universities are even setting up or running courses in corporate philanthropy  that is, they are teaching organised blackmail. Before anyone invests in or deals with a corporation proudly promoting itself as a good corporate citizen and a philanthropist, it is a good idea to look this gift horse in the mouth. And ask why it is paying protection money.

When it comes to government, it is impossible properly to speak of philanthropy in the allocation of taxes raised compulsorily from the community to be dispensed collectively on its behalf. This is the central function of government, and while there is room to argue about the size and intrusiveness of government, few would think of it as philanthropic, although it is often useful to speak of it as such. In a democracy the size of expenditures and their distribution is in the last analysis a product of the democratic process - people are taxing themselves - and it is open to anyone and any political party to campaign for a change in the direction or an increase in public expenditures. In our system the government of the day draws up a budget, like the federal budget every May, and the outcomes are the product of the myriad lobbying, pressure group, policy and other factors, including entrenched programs, which operate throughout the year. It is easy to criticise this process which is certainly not a matter of perfect democracy. (The theory of democratic budgeting is extensive, and was perhaps best formulated more than a century ago by the great Swedish economist Knut Wicksell, who proposed that each discrete expenditure measure should be voted on by parliament along with the tax which would finance it. It is pretty clearly an unworkable approach, though it remains attractive.) But overall the direction of expenditures and the choices between various goals are determined in an essentially democratic manner.

And this seems to be what the advocates of corporate philanthropy find distasteful. As with many areas of modern life the outcome of a rough democratic system is not satisfactory to those who would set priorities other than those to which the electorate gives its consent when it elects a government. In the context of government the articulate political class usually demands that priorities should be set other than by the democratic process. There is instead an amorphous collection of supposedly common, or at least especially important, expenditures which should not be determined by democratic processes, but by some process of informed consent - that is, by the opinion of the dominant strand of the political class. Undoubtedly there are some kinds of expenditures which are of value which will not necessarily be the outcomes of democratic voting. In principle it is easy to point to these, but in practice the high ideals usually go along with some very down to earth claims on resources and on tax revenues which are to be spent according to the priorities of certain groups who cannot obtain the consent of the majority directly through the political system.

The corporate philanthropy movement should be seen in this light, as an attempt to bypass the processes of democracy by exerting pressure on business to contribute over and above the taxes it pays to government and according to the priorities of the influential class which is unwilling to make such expenditures out of their own resources. In other words, it is a matter of conscripting other peoples' money to the priorities of the articulate minority.

The classical type of such spending is that on the arts. In this case we have a degree of organized governmental philanthropy, in the form of handouts to aspiring artists, performers, organizations dedicated to particular types of cultural activity, and so on. It is clear that not enough funds are being allocated to meet the demands of those who are the "consumers" of these "goods" through the Australia Council and similar bodies, hence the demand for corporate philanthropy. Not all of this is unwilling and under duress, but is seen as beneficial to the corporations concerned. Possibly one of the main contributors to the arts through corporate philanthropy is Telstra, a hybrid institution, which is particularly lavish in its expenditures on its public corporate image. Why should this be so? What benefits accrue to Telstra from this? A number of benefits are obvious. By buying for itself a public image as a good guy, and by attracting the support of the political class, Telstra has in the past been able to shore up support for the maintenance of its monopolistic position in telecommunications. That is, it buys the support of the articulate minorities who exercise a disproportionate (that is, far in excess of their actual public support) influence on telecommunications policy  money spent on, for example, the opera by Telstra is the purchase of support from the opera lobby. If this is not the motive, then the expenditures represent an improper disbursement of Telstra's shareholders' (including the government) funds. It is not the place of Telstra  or of any other major corporation  to set priorities against those determined by democratic processes, unless it is to the direct benefit of the corporation. When the purpose of the philanthropy is really to bring additional pressures on government to develop policy to the benefit of the philanthropist it might be considered a legitimate business expenditure, even if arguably subversive of the democratic process. But then it is not really philanthropy, but the cynical buying of influence in particular quarters.

It is true that there is always an element of diversion of government spending (tax expenditures) in true philanthropy when it involves donations by individuals from their own wealth to approved charitable or cultural purposes. Tax deductible donations involve the making of tax expenditures by government according to the priorities set by the individual donors. This at least has the advantage of ensuring that no pressure group can channel the direction of donations or set their priorities without directly persuading the individuals whose money it is. Such philanthropy can produce a diversity of priorities and preferences which will not necessarily match the desires of the political class or of the current leaders of fashion in arts, culture or welfare. The role of the great private sponsors of the arts (and sciences) in past centuries is well known to have produced some of the greatest of artistic and intellectual contributions to humanity. Not every Maecenas will have good taste, or the ability to pick genius, but the greater the diversity of such donations the better the chances.

By contrast, official philanthropy, whether governmental or corporate, tends to be captured by movements and fashions, the ruling orthodoxies of the political class, and the bureaucracies which are set up to administer them produce a culture of mediocrity. The Australia Council is an excellent example of this; it has grown up into a clumsy corporate structure with its own internal culture (in the anthropological as distinct from the artistic sense, which is notably thin), dominated as any funding body must be by elaborate systems of accountability which rarely in any sense reflect the quality of the outcomes which it pays for. It is always easy to pick on particular absurdities, since the official culture of the arts is dominated by the dusty old orthodoxy of avant-gardism and épater le bourgeois, admixed with a hefty dose of old fashioned hatred of business (and America). There is nothing unusual about funding the development of a computer game about escaping "asylum seekers" (that is, unauthorized entering non-citizens); to fund such a project as the Australia Council has done is no sillier than funding in Britain of exhibitions of dirty unmade beds or whatever. It is just more stupidly and explicitly political. To expect the Australia Council to find genius or even outstanding quality is as unlikely as to expect the well-known room full of monkeys with keyboards to write the works of Shakespeare - indeed, the recent experiment along these lines, funded with public money, was a classical example of how not to conceive or set up an experiment, reflecting only a misunderstanding of the original thought experiment. Inevitably bodies like the Australia Council will occasionally fund good causes (like Quadrant, which receives a small grant earmarked for poetry and literature) but usually only as a figleaf to hide their dominant political tendency.

When bodies like the Australia Council are criticized, or when large sums are disbursed for grand opera or similar minority interests, there is always a fallback to incontestable sentiments regarding the value of high culture and performance, the importance of maintaining standards of a kind which are necessarily elitist, and the quasi-religious qualities of great music, painting, and poetry. There is justice in all this. The same is true of universities, and knowledge generally. But most often this defence deteriorates into mere cant when what is being defended is not in fact the ideal but the increasingly grubby practice. No matter how high the standard of performances, there is a surrounding institutional structure which should never be treated as equivalent to the art itself. Even the best of opera remains an elite enjoyment not because there is not a wide potential community interest but because those structures necessarily become exclusionary and produce their own bureaucratic momentum. Nor, no matter how good a particular conductor, can the funding provided be extended indefinitely to suit his or her demands regarding the scale of performances.

Rather than talking about corporate philanthropy, which is merely a reinforcement of undemocratic minority pressures to fund activities and projects which are not funded adequately according to sectional preferences or vague and expensive "visions" of the ideal, it would be better to consider rebalancing the sources of funding away from collective provision (though there will always be a case for some of this) towards individual philanthropy. This has been the source of funding for many of the most significant foundations, endowments and gifts to the arts in the United States, and has promoted a diversity which is remarkable, though never fully accepted by those who believe state patronage with its accompanying apparatus of curators, directors, and bureaucrats who make their living out of pretending to know about "art", it would be far preferable to increase government spending by way of tax deductibility, that is tax expenditures, where the aesthetic and personal decisions, and even judgements about the degree and burdensomeness of accountability are variable in the extreme. Individuals are entitled to make their own judgements and take their own risks as to accountability in a way in which government funding bodies may not. Of course privately endowed foundations inevitably create their own mini-bureaucracies, but again diversity will work against the imposition of a common and stifling orthodoxy.

Padraic McGuinness . Quadrant  editorial . June . 2003

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