Tuesday, February 28, 2006

Corporate Philanthropy

Below is a graph that I have been sitting on for a while. I have been thinking about writing a comprehensive article on the conditions when corporations should engage in corporate philanthropy, which I loosely define as any outlays that are not incidental to doing business. Donating to the Red Cross would qualify while salaries or a Christmas part would not. Upgrading a public road to improve logistics to a facility would probably not qualify either although it certainly would benefit others.

My thesis is that corporate philanthropy can only be justified if it can generate increased value for shareholders, which is the sole mission of corporate officers.

As the graph shows, some non-zero level of outlays in support of philanthropic causes will increase share holder value. However at some level, those outlays cease to increase value and become a waste of the shareholders money. Where this inflection point occurs will vary from firm to firm and perhaps industry to industry and can only be determined based on the individual executive's judgment. I hope to elaborate on the considerations of this process in future posts.

Nonetheless, at this point I will comment that philanthropy should not be used as a kind of insurance policy. Corporate philanthropy should be used in cases where corporate and philanthropic objectives align, not to curry favor with the public in the event of a scandal. The best insurance policy against a scandal are strong internal accounting controls and a culture that promotes ethical business dealings.

Ski Selection

A while back I mentioned that I was looking for a new pair of skis for this season. Well I may be a little late in providing an update, but better late than never. For the past couple of months I have been riding Dynastar's Legend 8000. They are really a great ski for the style of skiing that I enjoy most i.e. able to make quick turns across the fall-line or through a mogul field but also able to float in the power. I really got a good chance to learn about my new ski's performance in the powder while skiing in Whistler, BC. They had a ton of fresh powder three of the five days that I was out there. Although the 8000's did not float as well as a true powder ski they held up very well and certainly will perform better than any powder ski in New England ice! I highly recommend these skis to anyone interested in a great all mountain ski.

Congratulations Sgt. Wasilewski

My friend Josh Wasilewski has recently been promoted to Sergeant in the Ocean City Beach Patrol, where I work part time in the summers. This is a picture that I took of Josh last summer before we went to work.

Here is another picture of Josh on the OCBP's website along with his biography!

Also congratulations to the other three newly promoted Sergeants: Ryan Cowder; Jamie Falcon, and Nick Thompson.

Imagine That A Contested Election

It seems like this might actually be old news, but it appears that the Republicans is actually going to run a candidate against Edward Kennedy in this year’s senatorial election. Four years ago, John Kerry did not have a Republican challenger in his election even though the Mitt Romney was running a strong campaign for governor. This year, Kevin Scott plans to challenge Kennedy. I doubt that Scott has much of a chance to beat Kennedy, but it will at least be nice to have a choice of candidates on Election Day.