Secretary of Commerce Juanita Krepps and Vernon Jordan, executive director of the National Urban League, today said that corporations would face declining profits if they failed to play a greater role in improving society.
Speaking to a conference of corporate executives sponsored by Duke University, Kropps said the Commerce Department plans to develop an index that would evaluate corporate contributions to society and "help bring about an improvement in the behavior of less progressive firms."
She said the index would describe corporate performance in fields ranging from environmental control to affirmative action.
Later in interviews Krepps and Jordan called for sharply increased corporate contributions to non-profit and philanthropic organizations. They urged that 5 per cent of pre-tax profits, the maximum charitable deduction for corporations, be set as a goal for corporate giving.
Last year corporations gave $1.4 billion in direct contributions to universities, foundations, cultural groups and other philanthropic organizations - amounting to 1.2 per cent of pre-tax profits, according to Jim Harris, director of public affairs for Allied Chemical Corporation.
Initial reaction to the 5 per cent goal from several executives was cool, with some saying that their programs for giving were already adequate.
John D. Harper, chairman of the executive committee for Aluminum Company of America, said that "without adequate profits, we are unable to give more." Aloca now gives 0.35 per cent of domestic profits to charity.
"We've got shareholders to think of," said O. Pendleton Thomas, chairman of B. F. Goodrich. "We can't give 5 per cent without being severely criticized."
John D. Rockefeller III, representing the foundation viewpoint, differed, saying that the private non-profit sector was in danger to take over by government if the support from business did not increase.
"Philanthropic giving has been going down," he said, adding that giving was less now than in $960. Business had, he said, developed a "habit of taking the (private, non-profit) sector for granted."
Jordan charged in his speech that the retreat of corporations from social issues during the recent recession indicated "the marginal role the corporate sector places on broad national social concerns."
Black unemployment results in loss of potential consumption, higher taxes, rising crime and endangered urban assets for business, Jordan said. He said he believed corporations could increase their giving substantially.
Krepps said that resistance by corporations to increased corporate giving may decrease within the next five years. Corporations will come to realize that long-run neglect of social concern will hurt profits, she said.
Krepps said widening of the corporate role in the field of social responsibility would increase profits in the long run, adding that, "the future of the corporation and that of the public are inevitably linked."
The conference was attended by about 70 chief corporate executives.