Compassionate Shareholders
From the Australian Broadcasting’s news site: Shareholders’ group opposes tsunami donations.
The Australian Shareholders Association has expressed disapproval at companies pledging money to the tsunami relief effort in Asia, saying they have no approval for their philanthropy.
Association spokesman Stephen Matthews says firms should not generally give without expecting something in return.
Unless Australian balance sheets are extremely different than American balance sheets, which I doubt, there is an asset line titled: “Good Will”. For large, long established corporations, this is often a very large amount, and reflects the value of the corporation’s image. This isn’t funny accounting, corporate image is the reason for public relations departments. Does anyone think that WalMart is running ads on NPR because it thinks its customers listen to All Things Considered?
It is easier to explain in the negative: Ford Motor Company will never name another car line “Edsel”, there will never be another “New Coke”.
The corporations who are donating to tsunami relief are getting tax breaks and adding to their “Good Will” account. Corporations may also benefit from renewed interest from socially conscious investors, including some large pension plans.
Australian companies would naturally do a lot of business in the affected region, and companies that don’t donate will be noticed. If Mr. Matthews and his group don’t understand these business realities, they should shift their money to passbook savings accounts.
