As the holiday season approaches, individuals and corporations commonly consider charitable giving.\u00a0 Corporate officers should exercise care, however, in choosing both how much their corporations give and to which organizations they give.\u00a0 These decisions can open management\u2019s decisions to scrutiny \u2013 and even to allegations of malfeasance \u2013 from the corporation\u2019s shareholders.<\/p>\n
First, officers should be mindful that, despite the many benefits associated with corporate giving, gifts amounting to five percent or more of the corporation\u2019s total income can give a shareholder grounds to challenge management\u2019s business judgment because such large gifts may conflict with every corporation\u2019s overriding goal of producing profits.<\/p>\n
Although officers\u2019 decisions are protected by the business judgment rule, officers have a fiduciary relationship with their shareholders \u2013 the highest obligation that the law can impose \u2013 and must put shareholders\u2019 interests first.\u00a0 Even when given to worthy causes, the corporation\u2019s funds are the shareholders\u2019 and should be treated as such.<\/p>\n
Second, the eleemosynary organizations with which corporations choose to partner may invite scrutiny from shareholders.\u00a0 An officer\u2019s steering corporate funds to a charity with which he is involved may invite allegations of an interested director transaction.\u00a0 And gifts to divisive advocacy groups may sow disharmony among shareholders and management alike.<\/p>\n
It is disconcerting to consider that acts of altruism could invite skepticism.\u00a0 But keeping these considerations in mind can ensure that corporate charitable giving will be, as it should be, an entirely positive venture that helps a worthy cause, unifies the corporation, and strengthens the business\u2019s ties to the community.<\/p>\n","protected":false},"excerpt":{"rendered":"
As the holiday season approaches, individuals and corporations commonly consider charitable giving.\u00a0 Corporate officers should exercise care, however, in choosing both how much their corporations give and to which organizations they give.\u00a0 These decisions can open management\u2019s decisions to scrutiny \u2013 and even to allegations of malfeasance \u2013 from the corporation\u2019s shareholders. First, officers should […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,8],"tags":[27,50,23],"acf":[],"yoast_head":"\n