Does corporate philanthropy raise unemployment?

In the wake of Steve Jobs’ resignation as CEO of Apple Computer, newly crowned successor Tim Cook is facing a number of difficult questions. The key one is how to continue to develop the novel, functional, and aesthetically pleasing products that Jobs has been doing for thirty years? Even if he does so for a year or two, can he extend Jobs’ line of blockbuster products decade after decade?

No business executive is perfect, so his or her successor always has room for improvement. As outstanding as Jobs has been with product development and corporate growth, he lagged behind most of his peers in the field of corporate philanthropy.

As Jon Carey and Courtney Martin pointed out in a piece on the CNN web site, “Apple’s charitable identity – or egregious lack thereof – disappoints us.” They discovered that Apple has not publicized a corporate giving strategy that stretches beyond making gifts of iPod Nanos, $25  iTunes gift cards and a new iPad cover.

Apple is hardly hurting for cash. The corporation is expected to be the first global company to achieve a net worth of one trillion dollars – that’s a trillion. Last year Apple recorded $14 billion in profits. However, its philanthropy paled in comparison to peers.

Billions of dollars of Microsoft profits have been donated to the Bill and Melinda Gates Foundation’s endowment. The current market value of the endowment is nearly $37 billion, and it is the source of nearly $1.5 billion in annual donations to non-profit organizations.

Bill Gates’ good friend Warren Buffett donated half of his net worth to charity, most of it to the Gates Foundation. While there are critics of how the Gates Foundation spends its money [too much money to large non-profits and not enough to the “garage inventors” of which Gates’ was formerly one], few can quarrel with the largesse of their giving.

Perhaps no community has a stronger base of philanthropy than Minnesota’s Twin Cities. For decades, large corporations such as Honeywell and Pillsbury have organized the community’s largest businesses to allocate 5 percent of their profits to charitable causes. A visitor to the Twin Cities cannot help but notice the large number of universities and cultural institutions, as well as special care for the environment in and around the metropolitan area.

The tendency is to criticize Apple for its minimalist approach to philanthropy. Pressure will be on Tim Cook to show greater generosity than his predecessor. However a somewhat unpopular argument can be made that neither Apple nor any other corporation has an inherent responsibility to be charitable. The reason is because charity begins where government responsibility ends.

While it certainly would be very beneficial to distressed urban school districts to receive dozens or hundreds of computer from Apple, the fact remains that wealthy suburban districts can afford to purchase the computers through tax revenue. The needs of the urban districts represent a failure on society’s part to properly provide for the less fortunate among us. Rather than asking Apple or any other company to donate computers, shouldn’t we remedy the way in which we finance our schools so that the public sector can provide funding for all basic educational needs for all students?

Bill Gates and Warren Buffett are to be praised for their generosity, if for no other reason than many of their peers ceaselessly work to increase their personal wealth. Gates and Buffett have a sense of a “greater good” and act upon that conviction. However, there is no mandate for corporations to make charitable contributions and presently there is talk of eliminating all corporate deductions, including expenses for philanthropy.

Buffett has gone a step beyond Gates and criticized the way in which the wealthy hardly pay their fair share to fund our government. He wonders why his secretary is taxed at a higher rate than he is. There is not good answer to this. However, some conservatives conveniently believe that the rich are wealthy because a God wants it to be that way, and the wealthy should be allowed to keep everything they have.

Before I criticize Steve Jobs for not contributing more to charity, I think that we need to think about the philosophy attributed (perhaps incorrectly) to President Calvin Coolidge, “The business of America is business.”

It seems plausible that there are companies that are charitable, but the portion of their budget that they allocate to philanthropy would otherwise be used to preserve the jobs of laid-off workers. If a hospital was given a generous gift from a corporation, should the inscription on the plaque thank the corporation for its generosity and also lament the plight of the workers who were laid off? We all know it doesn’t work that way.

However, it is quite possible that Steve Jobs can be honored not only for his creativity and innovation, but also because he put jobs ahead of philanthropy. Not his own job but rather those of his employees who otherwise might have been laid off because of donations to charity.

The bottom line is that only the government can fund our social needs. The private sector steps in only when the public sector fails. We need to make the public sector too good to fail.