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Business Ethics in the News
CHESAPEAKE ENERGY: Balancing Corporate Philanthropy with Employee Perks
Monday, Feb. 11, 2013
From sponsoring the city's basketball team to funding schools, food banks and art foundations, Chesapeake Energy has played a pivotal role in Oklahoma City's development. Amidst ongoing austerity measures, due to low prices for natural gas and rising drilling costs, Chesapeake announced plans to cut charitable contributions in half, leaving many local nonprofits worried. Meanwhile, construction on a fifth restaurant is underway at the company's headquarters, and newly appointed Chairman Archie Dunham confirmed that the onsite child-care facility, 72,000 square foot gym and company restaurants would continue operating per usual — save for a slight increase in gym fees. In tight economic times, how high of a priority should companies grant corporate citizenry relative to other expenses?
Patrick: Chesapeake is in the clear here. Short of reneging on legally binding pledges, Chesapeake is under no obligation to sustain past levels of giving. In tight economic times, companies must turn their focus to what drives growth - employees - without them, the very possibility of corporate citizenry is eliminated. Health centers, child-care facilities and campus restaurants have become commonplace and are justified in their ability to drive productivity and recruit top talent. Corporate citizenry comes after productivity, not the other way around.
Kirk: Come on, Patrick. You've bought in too heavily to the maximize shareholder value at all costs paradigm. Businesses are social institutions and are part of our societal fabric. It is clear that Chesapeake Energy has allowed a number local nonprofits to become dependent on their charitable giving, and sudden removal of those funds would create substantial harm. It follows that large corporations, while certainly not obligated to make charitable donations, are responsible for gradually stepping down the contributions they currently make. This is particularly true if they have highly visible projects like restaurants or fitness centers underway. A solution adopted by many large corporations is to create an endowed foundation to exclusively manage the company's charitable activities: which allows the company to step down contributions without taking more from earnings.