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FKI to launch `One percent club` in March

Posted February. 23, 2001 13:42,   


The news that some wealthy people in the United States opposed the Bush administration`s move to abolish the inheritance tax was rather shocking to most Koreans.

The reason given by 120 rich Americans, including William Gates Sr., Warren Buffett and George Soros, for their opposition was the undesirability of concentrating too much wealth in the hands of a few people. They rejected the idea on the grounds that removing the estate tax might discourage Americans from donating money to charity.

A number of business leaders here began donating more money to charitable causes in the 1990s. A survey conducted by the Federation of Korean Industries (FKI) at the end of 1999 showed that most of them made the donations in the names of foundations they had established. Funds contributed by businesses to their foundations increased from 411.5 billion won in 1995 to 1.7 trillion won. Most of the money was spent on promoting education, social welfare and academic activities; part of it went to assist the arts and sports.

Another survey conducted by the federation showed that more than half of the 147 companies surveyed gave over one percent of their earnings to charitable causes and that over 30 businesses donated more than five percent of their revenues. The number of their employees who reported doing volunteer work also increased.

The sum total of the money given to charities by local enterprises is substantial. Their donations accounted for some 60 percent of all donations made in Korea in 1998, compared to 25 percent in the United States. Many more businesses than individuals gave money to charities.

And yet, the public perception of business is hardly favorable. Why?

Samsung Economic Research Institute senior fellow Lee Sang-Mu says donations made by local enterprises lack spontaneity, consistency and specialization because they appear to be intended to deflect unfavorable public opinion or highlight the apparent generosity in the form of quasi-taxes of rich chief executive officers (CEOs).

Most businesspeople can hardly distinguish the public activities of corporate heads from their personal activities; therefore, they prefer donations through public service foundations to private donations. This tendency stands in the way of promoting donations for the public good.

The concept of a ``one percent club`` of leading industrialists, to be launched on March 14, is imaginative enough to prompt greater expectations. Asan Corporation, a business arm of the Hyundai Group, as well as Samsung, LG, SK, Pohang Iron and Steel Corporation (POSCO), Donga Pharmaceuticals, Hanhwa and Yuhan Kimberly will lead the 88 businesses joining the crusade.

Lee said the business community needs to formulate strategies to channel their charitable activities into some specialized fields. The purpose is to prompt Korean industrialists to view donations as investments and encourage them to donate money to education the way Microsoft founder Bill Gates does, to the cause of democracy as investor George Soros does and to the cause of environmental protection, which is a favorite of media magnate Ted Turner.

\"It is impractical to encourage donations under the present circumstances, when the necessary infrastructure for charitable donations has yet to be set up,\" said Park Hun-Jun, professor of business administration at Yonsei University. He added that legal institutions, including tax incentives for donors, are also needed. The existing business culture in Korea means that very few buildings or scholarships named after their donors can be found here, he said.