[The Editors' Verdict] As Year-End Donations Pour In, How Can Corporations Become Warmer?

It is the end of the year, a season flooded with donation news. There are contributions for the underprivileged, volunteer work delivering coal briquettes or kimchi, scholarships, and disaster relief funds. Press releases from companies are filled with words like "coexistence" and "solidarity." In an economic environment where everyone says things are "difficult," donations are always welcome news. However, statistics raise a different question: Is this warmth truly making Korean society a better place?

According to the Ministry of Health and Welfare and the National Tax Service, over the past ten years, donations from individuals and corporations in Korea have increased by about 28%, surpassing 16 trillion won. However, during the same period, the proportion of donations relative to Gross Domestic Product (GDP) has actually declined, dropping below 0.7%. This means that while the economy has grown, the pace of giving has not kept up. By donor type, individual donations increased by 47%, while corporate donations decreased by 4%.This suggests that the increase in donations over the past decade has relied heavily on individual goodwill.

The cooling of corporate giving is also evident in the comparison between corporate performance and donation growth rates. While the cumulative operating profit of Korea’s top 500 companies grew by more than 13% in the first three quarters of this year, their donations increased by only 3.6%. This indicates that companies are not returning profits to society at the same pace as their earnings growth.

It is worth considering why, in Korea, corporate donations are more often one-off year-end events or marketing efforts to demonstrate social legitimacy, rather than a continuous practice of social responsibility.

In the United States, much of corporate giving is managed by foundations as part of long-term strategies. Donation structures that separate companies and founders, such as the Bill & Melinda Gates Foundation and the Ford Foundation, are well established. In European countries like the United Kingdom and Germany, corporate donations function as a supplement to public finances. In areas such as climate change, job retraining, and community revitalization, governments, corporations, and nonprofits divide roles. Corporate giving is not a one-time sponsorship, but rather part of social risk management. In the US and Europe, corporate donations are also directly deductible from corporate taxes or subject to higher tax-deductible limits, allowing donations to be structured as strategic investments rather than mere expenses.

In contrast, Korea's limited tax incentives are cited as a major reason why companies hesitate to donate. When a corporation makes a donation, it can receive tax benefits, but under current tax law, designated donations-which make up the majority of corporate giving-are only recognized as deductible expenses up to 10% of corporate income. Donations exceeding this limit are treated as expenditures without tax benefits. The more a company donates, the more disadvantageous it becomes from a tax perspective.If the limit is exceeded, companies may even have to face concerns about harming shareholder interests or allegations of breach of fiduciary duty. This is why internal resistance to donations is especially strong among listed companies.

In this structure, corporate donations naturally converge into one-off year-end events. Sponsorships for image management become a rational choice over long-term, large-scale social investments. In a system where increased donations become a disadvantage, sustainable sharing is hard to expect. For corporate giving to move beyond events and become a long-term social practice, we must rewrite the language of donations in economic terms. A society that treats giving as something to do only "when you can afford it" is not sustainable.