5 Major Group Foundations' Donations Fell 14% Last Year... "Need to Increase Contributions to Public Interest Corporations Outside Group Foundations"

Decrease in Donations from Samsung Cultural Foundation and POSCO Education Foundation
Donation Income and Assets Remain at Usual Levels
"Donations Also Made to Public Interest Corporations Outside Group Foundations"

It has been revealed that the donation amount from the public interest foundations of the five major groups?Samsung, SK, Hyundai Motor, LG, and POSCO?managed by CMS decreased by 13.6% compared to the previous year. The scale of art donations to museums operated by the groups and support for school operating expenses temporarily declined.

According to donation data transferred from the National Tax Service to the private public interest corporation evaluation agency Korea Guide Star, 14 foundations under the five major groups donated 112.94 billion KRW last year. This is a 13.6% decrease from 130.68 billion KRW in 2021. The 14 foundations include Samsung Culture, Life Public Interest, Welfare, and Hoam Foundations; SK Korea Higher Education and Happiness Sharing Foundations; Hyundai Motor Automotive Parts Industry Promotion and Logistics Industry Promotion Foundations; LG Yeonam Academy Yeonam Culture, Sangnok, and Welfare Foundations; and POSCO Education and 1 Percent Sharing Foundations.

Citizens visiting the Samsung Foundation of Culture Leeum Museum of Art in Yongsan-gu, Seoul, touring the exhibition hall. [Photo by Hyunmin Kim kimhyun81@]

The reason for the decrease in foundation donations is due to reductions in art donations by the Samsung Culture Foundation and school support funds by the POSCO Education Foundation. The donation amount disclosed by the Samsung Culture Foundation to the National Tax Service dropped by 99.4%, from 3.8526 billion KRW in 2021 to 25 million KRW last year. In 2021, it supported 3.8526 billion KRW for artwork donations to the Leeum and Hoam Museums, but last year only contributed 25 million KRW for artwork donations to the Leeum Museum. The POSCO Education Foundation's donation amount decreased by 96%, from 6.46 billion KRW in 2021 to 260 million KRW last year. In 2021, the foundation provided cash support worth 6.4 billion KRW and in-kind support worth 60 million KRW for the operation of 12 elementary, middle, and high schools, including Pohang Steel High School, and kindergartens. Last year, it provided cash support worth 255 million KRW and in-kind support worth 1 million KRW for scholarships, student welfare, and student self-governance activities for students at seven elementary, middle, and high schools, including Pohang Steel High School. Donations from LG Yeonam Academy (580 million KRW → 330 million KRW, -42.9%) and LG Sangnok Foundation (1.45 billion KRW → 880 million KRW, -39.2%) also decreased.

On the other hand, donations increased for SK Happiness Sharing Foundation (9.71 billion KRW → 11.92 billion KRW, 22.7%), Hyundai Motor Automotive Logistics Industry Promotion Foundation (6.12 billion KRW → 7.27 billion KRW, 18.8%), LG Welfare Foundation (890 million KRW → 1.04 billion KRW, 17.2%), and POSCO 1 Percent Sharing Foundation (11.41 billion KRW → 13.01 billion KRW, 14%).

Soccer national team forward Hwang Hee-chan (Wolverhampton) visited Pohang Jecheol High School, his alma mater, on July 3rd to deliver a scholarship of 30 million won and took commemorative photos with the students.
[Image source=Yonhap News]

The business community views the decrease in donation amounts as a temporary phenomenon. This is because financial indicators such as annual donation income and accumulated assets of the foundations are similar to previous years. Donation income refers to money received as donations from group affiliates, external organizations, and individuals. It varies each year as it is measured annually. Assets include financial assets earned by the public interest corporation, other assets, stocks and equity shares, land, buildings, and liabilities. Accumulated assets are tallied from the establishment of the public interest corporation (public interest foundation) up to the previous year. The foundations' donation income decreased by 3.3%, from 132.39 billion KRW in 2021 to 128.09 billion KRW last year. Meanwhile, accumulated assets increased by 1%, from 6.6697 trillion KRW to 6.7345 trillion KRW.

However, there are concerns about the concentration of donations, where some large corporate affiliates contribute more than half of their annual donations to their affiliated group foundations. For example, in 2021, SK Hynix transferred 55% (30.8 billion KRW out of 56.4 billion KRW) of its company donations to the SK Group public interest foundation. Samsung Electronics transferred 39% (65.4 billion KRW out of 167.4 billion KRW), POSCO 34% (7 billion KRW out of 20.9 billion KRW), Hyundai Motor 12% (4 billion KRW out of 33.8 billion KRW), and LG Household & Health Care 2% (1.7 billion KRW out of 72 billion KRW).

Research also shows that public interest corporations that have undergone third-party transparency verification tend to donate more and increase their assets well. This means they use donations effectively. According to the transparency survey of 871 public interest corporations released by Korea Guide Star last year, 43 foundations, or 4.9% of the total, received the highest grade certification as 'Star Public Interest Corporations.' These Star Public Interest Corporations accounted for 38.9% (1.38 trillion KRW) of total donations and 9.2% (6.5 trillion KRW) of assets. This means that 4.9% of public interest corporations were responsible for 38.9% of donations.

Kwon Oh-yong, Executive Director of Korea Guide Star, said, "The era of delegated-level social contribution is over, and how companies select and collaborate with charitable organizations has become an important pillar of corporate governance. From a corporate perspective, directly finding nonprofit organization partners and conducting projects will help reduce uncertainties such as distrust in donations."