Companies Should Stop Donating to Outside Causes and Focus Philanthropy Within


Remember the Giving Pledge? The public pledge, launched by Bill and Melinda Gates and Warren Buffett, and now supported by 114 donors including Mark Zuckerberg and Michael Bloomberg? The one in which the world's wealthiest people pledge to give half of their wealth to charity?

We need a new giving pledge. One in which the world's wealthiest companies pledge to give half of their wealth back to their workers.

Let's face it: we've known for decades that companies are earning bigger and bigger profits while workers are receiving less and less. When public policies change to benefit workers, companies respond by tightening the screws like cutting employee hours to render workers ineligible for benefits, or shifting employees to the upcoming private exchange in order to avoid paying Affordable Care Act costs. Social service programs like food stamps and the private exchange were created to benefit the unemployed, yet it's equally likely that the currently-employed are using them.

It's time to change the story. Nearly all businesses contribute to some form of public philanthropy. Richard Zahn, former CEO of ZMG Construction, said, "These [charitable] organizations have the ability to optimize the use of the funds and volunteer work that they receive and they are able to achieve impressive goals because they, frequently, have the backing of major donors." 

Why can't this type of philanthropy be directed towards a company's employees? To quote Zahn again: "Business owners looking for a way to give back to their communities are always encouraged to do so in a way that will create a positive impact on the local population." Instead of creating a series of scholarships, why not give profits to staff to invest in 529 plans for their children's education? Instead of holding a food bank drive, why don't companies ensure that none of their current employees are on food stamps? 

Yes, philanthropy is sexy, and holding a charity auction or fundraiser gala is a highly visible way of drawing attention to a company's generosity. But so is committing to pay every employee a living wage, like Detroit fast-food restaurant Moo Cluck Moo, or guaranteeing every employee paid sick days and two weeks — or more! — of paid vacation. In this economy, doing anything more than the bare minimum gets you noticed.

With that in mind, I'd like to propose a new type of giving pledge: one in which the world's wealthiest companies pledge to give half of their profits back to their workers. Imagine how society would change if companies like McDonalds, which made $5.5 billion in profits in 2012, gave even a third of that back to its workers instead of giving out cheap advice like this year's McDonalds' "Practical Money Skills" guide that advises McDonalds workers to make rent every month by working two jobs and avoiding frivolous purchases like gum.

Imagine how companies would benefit if they signed that type of a pledge. They would suddenly receive the best and brightest job candidates, and would be rewarded with lifelong loyalty. Society as a whole would benefit as enrollment in food stamps, WIC, Medicaid, and other social programs would decrease. Increased salaries would mean increased tax revenue, and more money would flow into Social Security. 

Remember, this type of pledge wouldn't be for small businesses or companies just getting started, unless, of course, those companies also wanted to join. These would be for the big ones, the ones whose yearly profits are measured in billions. Even if you give half of a $5.5 billion profit back to your workers, you still have a yearly profit of $2.75 billion

Consider this my proposal for the global marketplace. Instead of directing your philanthropy outwards, direct it towards your employees. After all, charity begins at home.