Why Shall a Firm Consider Charitable Contributions Essay
Why Shall a Firm Consider Charitable Contributions
The strong philosophy of Ben & Jerry Homemade Inc is to the commitment of the social causes. This can be proved through the actions taken by the company, first is by buying milk and cream from small local farms in Vermont. Even though it is more expensive, this action is taken in order to support the local farmers in the industry. Secondly, 7. 5% of the company before tax income is donated to the charity and each of the company employees receives three free pints of ice cream each day.
Thirdly, even though the corporation has been facing declining in profit in 1995, they refused to sell their corporations to the Japanese market since that they were aware that the Japanese will not develop their products for the social causes. Fourth, after the acquisition made by Unilever, the stock price of Ben & Jerry Homemade Inc increase almost to 66%, however, this action is believed by the investors that the corporations had abandoned its original mission of contributing towards the social causes.
As a result, Ben & Jerry make several contributions to its foundation. The reason why a firm shall consider charitable contributions is because of tax reduction. In this scenario, Ben & Jerry Homemade Inc donated its income to charity before the tax is being implemented by the government. A corporation may have tax advantages such as paying expenses before paying taxes. By doing so, the final amount of tax that is being levied by the government can be minimized.
For example, a corporation earns, spends everything it can and is taxed on anything that is left. One of the way to spend is by giving out charity. The more a corporation earns, the more it will give out to charity in order to reduce their tax. For example, a corporations can set up their own charity foundation such as the Ben & Jerry foundation as a way to control their cash flow of money. In the end, the final amount that is being taxed by the government is the lesser amount than what the corporations actually earns.
The other reason why a firm should consider social responsibilities is to promote employee and customer engagement. In this scenario, Ben & Jerry Homemade Inc distributed three free pints of ice-cream to each of the company’s employee each day. This is how the company shows their appreciation towards their employees and by doing this, it would motivate the employee to work and would engage them with their work as they feel that they are being appreciated and promotes a sense of ownership as they feel that they are a part of the company.
In addition, by giving free pints of ice-cream, the company is indirectly promoting product control and encourages innovation among the employees in producing more products. Besides that, working for a company that supports charities and good cause would make the employee feel proud of the company and proud to be associated with the company that they work for and thus more motivated to work. For an example, an employee working for a company that produce beauty product (The Body Shop) that is against animal testing would feel proud working for as they know that they are not abusing the animals recklessly.
This is also supported by a survey carried out by Gallup whereby it had identified 12 factors that drive employee engagement and one of the factors is corporate social responsibilities. Apart from that, a company that supports or considers social responsibilities is to enhance the company reputation among their own employee and subsequently boosting their motivation and engagement towards their work. In the long run, by considering the social responsibilities it would increase the productivity of the company, reduce the turnover rate of the employee and increase the employee trust towards the company.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 20 October 2016
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