CASE STUDIES IN BUSINESS ETHICS
Rabbi Jay Kelman CA
Corporate Altruism

The modern day corporation has as one of its primary features the separation of the ownership and management functions.  While shareholders may not escape moral responsibility of untoward acts carried on under their direction neither can the management team escape legal culpability for their actions.  Jewish law understands that the CEO of a publicly traded corporation has a fiduciary duty to maximize profits for the shareholders.  S/he is the agent of the shareholders whose main interest in the owning of stock is making money.  Acting beyond this narrow perspective would be a violation of management duties unless explicit shareholder approval would be granted for an expanded social role.  Being a good citizen is the responsibility of each and every shareholder but is not the mandate of the corporate entity itself.  In many ways Jewish ethics echoes Milton Friedman's famous comment that the business of business is business.  While it a wonderful mitzvah to give millions to charity one must do so with one's own money, not with that of the shareholders.  Even a majority of shareholders may not be able to force its philanthropic ideals on an unwilling minority as this non business activity violates its raison d'etre and is therefore unacceptable behaviour notwithstanding majority approval.  Similarly a CEO would be enjoined from listening to a board directive to pay bills late or pay substandard wages.  Such behaviour violates Jewish law and cannot be implemented even if "approved" by the corporate owners.  

Under the assumption that small charitable giving is the norm in the corporate sector it would appear that following the industry wide practice would be deemed acceptable.  A company may, if it chooses, incorporate itself on the premise that it donates a large portion of its profit to charity provided full disclosure of their wonderful goals is provided.

In today's business environment much corporate "giving" is in reality sophisticated, targeted advertising.  It thus falls under management purview and presents no moral issues of acting beyond one's mandate even if the amounts are substantial.  Thus a health care company "donating" millions to a hospital or a computer company donating thousands of computers to a local school board should present no moral issue.  The PR motive not only does not detract from the mitzvah done, from a corporate perspective it actually legitimatizes it.