Bob Sommer wrote:
I am not trying to diminish the 1-million dollar gift. I have no
problem with it and in fact wish it were more and that more casinos
would do the same. But the Foundation is a tax write off for the
corporate entity. While they be giving this for the right reasons,
their bottom line and stockholders are not affected. They have
simply diverted some other donation to the relief effort.
There are several parallels between corporate giving and personal
charitable giving.
The fact that contributions are tax deductible does not mean that the
corporation/individual does not absorb the majority of the
contribution. All too often the phrase "tax write off" is used to
dismiss an expense that a corporation does bear in part.
Keep in mind that any legitimate expense borne by a corporation is a
"tax write off" -- including materials, supplies, and production
costs. In the big picture, charitable contributions are no different
(although when gifts of property are made, directly or indirectly,
such as through a foundation, special tax treatment applies ... and
this is true of individual giving as well as corporate giving).
Bottom line, corporations bear the cost of contributions in pretty
much every respect as you do when you give to your preferred religious
or charitable organization. Corporations, as the endowers of
corporate foundations, ultimately bear the cost of contributions even
when made via those foundations. Stockholders are definitely affected.
As far as the last comment you make ... there is a very strong
likelihood that Harrah's contributions will represent an increase in
giving this year. In advance of any year, corporate foundations make
pretty firm commitments of giving to the organizations that they
support. These organizations rely upon that commitment in arriving at
their operating budgets for the coming year. I very much doubt that
Harrah's will go to one or more of these organizations with a, "Sorry,
we had to cut you out this year".
Finally, touching on a previous comment of yours, while foundations
are indeed fully independent entities from the endowing corporations,
they act under very strong corporate aegis. It's most likely that a
good share of the directors on the board of Harrah's foundation are
also Harrah's corporate officers. Trust me when I say that I have
little doubt that Harrah's Board of Directors were the primary thrust
behind the decision to make a contribution in support of N.O. relief
efforts.
- Harry