Hands off handouts.

• Author: Rock, Robert H.
• Position: Congressional proposal would require disclosure of corporate charitable contributions - Column

During a recent board meeting, my fellow directors discussed the congressional proposal that would require full disclosure and shareholder approval of corporate charitable contributions. We were both surprised and disturbed by the proposed intrusion of the SEC into corporate philanthropy.

At present, federal securities laws do not require businesses to disclose information regarding their charitable gifts or solicit shareholder approval of them. Paul Gillmor, a Republican representative from Ohio and vice chairman of the House Commerce Committee, has introduced two bills that would mandate such actions: H.R. 944 would require public companies to disclose the amount of each gift in their annual proxy statement; H.R. 945 would require public companies to poll their shareholders to determine which charities would receive corporate contributions. Although the pending legislation permits the SEC to make certain exceptions such as gifts to educational institutions and to local charities, its intent is to empower the SEC to oversee charitable giving by public corporations.

Corporate America is being called on to help nonprofit organizations provide for a wide range of societal needs. For several decades, managements and their boards have assumed that they would and should donate a portion of their profits to philanthropic causes. Over the past decade, this longstanding relationship has helped charities offset the loss of some traditional funding sources, government support in particular

According to the AAFRC Trust for Philanthropy, for companies...