The Legality Of Corporate Giving

According to the Chronicle of Philanthropy, the top three corporate philanthropists (Wells Fargo, Walmart and Chevron) in 2012 gave nearly $900 million in cash in 2012.  At the most fundamental level, do corporations have the power to make donations?

For corporations governed by the California General Corporation Law, the answer is generally yes.  Section 207(e) of the California Corporations Code provides that a corporation has the power to “[m]ake donations, regardless of specific corporate benefit, for the public welfare or for community fund, hospital, charitable, educational, scientific, civic, or similar purposes”.  The power to make donations, however, is not without limits.  The introductory clause to the enumeration of corporate powers in Section 207 subjects this power to all of the following:

  • Any limitations contained in the corporation’s articles of incorporation;
  • Compliance with other provisions of the California General Corporation Law; and
  • Compliance with any other applicable laws.

Section 122(9) of the Delaware General Corporation Law provides that a Delaware corporation has the power to “[m]ake donations for the public welfare or for charitable, scientific or educational purposes, and in time of war or other national emergency in aid thereof”.  Delaware’s statute appears to be more limited than California’s – it doesn’t specifically mention community fund, hospital, or civic purposes.  It also doesn’t include the catch-all “similar purposes”.  Delaware also doesn’t expressly dispense with the requirement of a “specific corporate benefit”.   California, on the other hand, doesn’t mention donations of aid in time of war or other national emergency.  One wonders, however, why the Delaware legislature did not consider state or local emergencies worthy of mention.

Professor Bainbridge Takes On 44 Law Professors

The odds may not be as bad as those faced by King Leonidas, but Professor Stephen Bainbridge recently issued a reply to the 44 law professors who filed this amicus brief in the Hobby Lobby and Conestoga Wood cases that will be argued before the U.S. Supreme Court on March 25, 2014.  Professor Bainbridge declares that the law professors’ brief is “is replete with errors, overstated claims, or red herrings, and misdirection”.   His reply, A Critique of the Corporate Law Professors’ Amicus Brief in Hobby Lobby and Conestoga Wood, is available here.  Be sure to read footnote 50 where he cites this blog.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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