Wednesday, May 10, 2006

Corporate Charity?

There is a remarkable parallel to this analysis in the Shulchan Aruch, the authoritative Code of Jewish Law. In chapter 248 of the second volume (Yoreh Deah), the Shulchan Aruch states that in general a guardian for minor orphans shouldn't give charity from their assets. The reason is that being minors, their judgment is not sufficiently developed for them to decide on charitable gifts. When they are grown up, the money will still be there, and they will be able to decide what to do with it. This is similar to the status of shareholders. The difficulty of reaching a consensus of shareholders is a disability not unlike that of minors, and like minors, there is no compelling reason for the "guardian" or manager to give charity since ultimately the money will reach the shareholder, in the form of dividends or proceeds, and then he will be free to use the money for charity according to his judgment.

However, there are two exceptions to this rule. One is that it is permissible for the guardian to give charity if this is for the benefit of the youngsters, by giving them a good name. This corresponds to giving charity on behalf of a firm when it will promote good will and advance their business objectives. The other rule is that it is permissible to give for urgent needs which these youngsters are particularly obligated in. The example of the Shulchan Aruch is if they have poor relatives in urgent straits. Of course the needs of poor individuals are the responsibility of the entire community, but close relatives have a higher degree of obligation. This corresponds to giving charity to the local community and for needs which the company is uniquely situated to help with.

If only Augustine had said something about this I could get a good dialogue going.

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