Corporate philanthropy: billion-dollar boost to education

Voluntary giving - generous in amount, recognized in law, and mutually beneficial - forges one of the strong links between business and education in the United States.

Shrewd corporate giving can make the most of tax incentives, public relations , and opportunities for future growth. No one, I think, confuses these motives with pure altruism. But to pragmatists, enlightened self-interest in philanthropy can generate the same happy results that it often has in business ventures: Everybody can gain something.

Today's pullout section looks at a few of the links between business and education - at some of the ethical issues of evolving relationships, at some of the success stories.

In 1980 the most recent year for which statistics have been tabulated, American businesses gave educational institutions

.03 billion. Colleges and universities received 71 percent of these corporate contributions through departmental and research grants, unrestricted gifts, capital grants, employee-matching-gift programs, student aid, and consortia.

Internal Revenue Service data for 1977 show that 90 percent of large corporations with assets in excess of $50 million reported making contributions to educational institutions. This figure does not include corporations (Alcoa is an example) which made no direct contributions, but relied upon their own fully funded foundations to do so. And 15 percent of small companies, many local and family-owned, also made gifts.

According to Hayden W. Smith of the Council for Financial Aid to Education in New York, in 1981 the largest corporate donations were made by Exxon, IBM, Arco, Du Pont, General Electric, and Shell - with Chevron, Gulf, and others following closely behind. Both private and public universities were among the major recipients: the University of Arizona, $20 million; Massachusetts Institute of Technology and Harvard University, about $16 million each; Stanford University and the University of Illinois, $15 million each; The University of Michigan and the University of Pennsylvania, more than $10 million each.

It is expected that increased corporate giving will be stimulated by the Economic Recovery Tax Act of 1981 (ERTA). With this legislation, the federal government has signaled its hopes to transfer more responsibility for financial support of education to the private sector. ERTA raises the ceiling on tax-deductible corporate giving from 5 to 10 percent of corporate income, and makes it easier for manufacturers to make gifts of equipment to universities and scientific institutes.

Responding promptly, IBM recently announced a $50 million program of support for manufacturing systems engineering education, four-fifths of which will be given in the form of computer-aided design and manufacturing (CAD-CAM) computers , says Charles R. Bowen of the company's University Relations Division. Likely recipients are leading graduate centers of research technology in engineering, management, and certain physical sciences.

The intended gift surpasses in dollar amount previous IBM gifts to educational institutions. It will relieve recipients of the financial burden of purchasing high-cost technology, and it will relieve the federal govenment of pressure to buy it for them with tax dollars.

At the same time it will benefit the donor, IBM, through reduction of corporate taxes and through the placement of the company computers in institutions where laboratory scientists will train on them, write research programs on them, and presumably acquire a familiarity with them - and perhaps a preference for them, thus building a momentum for potential future business. The gift is an example of how everyone involved may gain something.

Only fragmentary data exist on the origins of corporate giving to education in the US. In 1919 Du Pont gave money for student scholarships to some 30 colleges and universities. But the major spurt in corporate giving came in the 1950s after a court test involving the A. P. Smith Manufacturing Company of New Jersey established the right of corporations to make corporate gifts.

The founding of the Council for Financial Aid to Education coincided with the court decision. The business-financed council keeps track of the largesse of American industry toward academia.

Today institutions of higher learning, both private and public, rely heavily upon the generosity of individual and corporate givers for their economic survival and the expansion and improvement of their programs. Tax legislation recognizes and encourages it. Some consideration is now being given to extending this activity into the school system below the collage level.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.