On The Equity Interests Of Our Corporation Donation Decision-making

The corporation donation has experienced a period of absolute prohibition, to limited allowing later, and then to appropriate incentives. It has already been proved by practicing that the activity of donation can satisfy the shareholders’requests for interests, and can help set up a good image for company that can do a favor to long-term development. But problems could be produced by such donations since they are free while a company is indeed a for-profit business. Therefore, a perfect corporation donation decision-making system becomes an essential issue in order to make interests balance in donation activities.Generally speaking, donation is a kind of special gift-giving, which requires both sending and acceptance. This is a bilateral legal transaction by a donor and a recipient. The goals of company donation may be from public welfare to charity, form scientific to educational purpose, thus these donations will be conducted in the name of the company itself. As a way for companies to take their social responsibilities, the company donation can be figured out as different types. Particularly for the differences in donating concepts or behavior patterns, there are self-interested donation, altruism donation and the donation of mutual benefit. Usually it is uneasy identify whether it is a self-interested giving or an altruism donation. Most companies are going in for mutually beneficial donation. With the development of donations, it comes out the theory of corporate donation, the theory of corporate social responsibility, the theory of corporate citizenship, the theory of corporate philanthropy strategy and so on. Company donations are becoming more and more accepted by countries by legislature, including China.A decision about donation is within relationships of interests of various parties like shareholders, company and public. It is so complicated that once a decision has been made, the whole company will be influenced. How to distribute the power of decision-making? Theoretical assumptions are provided trying to implement an ideal distribution. If we look into the current decision-making for company donation in China, no uniformed decision maker and no uniformed standard, together lead decision on donation to a state of disorder. Some decisions are made by stockholders’ meeting or the board of directors; while some other donations are decided by corporate representatives, and even some labor union and philanthropic foundation set up by the company are entitled to make the decisions independently. In the cases like "Vanke donation","Tianjin Rock check Steel Group Co. Ltd.","Educational Donation Scheme in Shenzhen Pinghu " and "China Red Cross v. Beijing Tong Kang biological Technical Developing Company", problems have been exposed that interests conflicts are incredible fierce in the process of donation decision-making in Chinese companies. The conflicts exist between shareholders and the company, the managers and the company, government and the company, creditors and the company, society and company.For interest balancing and maximizing the overall interests of society, openness should be followed as a prime principle when our companies are making donation decisions. It will be convenient for supervision to facilitate stakeholder, which shall help the company get a healthy development. A company should adhere to the principle of autonomy, show fully respect to market disciplines and company autonomy by separating the functions of the government from enterprise in reality. Good faith should not be ignored that money laundering or commercial bribery with the shield of donation is forbidden, neither cheating nor committing donation without real giving. Besides, when handling the allocation of decision-making power, we must start from coordinating the interests of parties through constructing a multiple decision system with shareholders’ meeting, board of directors, managers and labor union. The amount of money which is decided by shareholders should be limited to a certain level based on reasonable business judgmental standard.In addition, a double-level supervision system for donation decision-making may be established constituted by shareholders and the board of supervisors from inner, and bankruptcy administrator, recipient and creditors from outside.In order to encourage the enthusiasm to donating, China would offer more tax preferential policies for company donation activity. Following the tax legal principle, the force of law for donating tax preference should be increased and united. We can also let more recipient benefit from the donating tax preference. Meanwhile the government could improve the reputation rewarding system in which reputation rating determined by evaluation results to encourage positive donations from companies. So the scope of social recognition will be expanded. At the same time, the charity institutions shall keep on enhancing credibility for widening the company donation channels. Never forget that the important role played by media and it will be very helpful for creating a good public opinion environment. Companies can take advantages from that and we hope that with the guide of such public consensus, a positive trend of strategic donation activities could take place.