Charitable giving by U.S. corporations nearly tripled over the past two decades, increasing from $13 billion in 2003 to more than $40 billion in 2024. Philanthropy has become a central part of how large firms present themselves to stakeholders and communities. Yet we still know relatively little about whether, and how, firms deploy charitable resources strategically in major corporate decisions in which external stakeholders can directly impact performance, such as mergers and acquisitions (M&As).

​Targeted philanthropy around M&A deals

​In a forthcoming article in the Journal of Finance, “Targeted Philanthropy: Evidence from M&As,” I examine whether acquirers use charitable foundation funds to influence key stakeholders in takeover transactions. I study almost one million donations made by U.S. public acquirers in 6,067 M&A deals to examine acquirers’ donation patterns to counties in which targets operate establishments or in which target insiders are active in local nonprofits. I show that acquirers’ donations to target counties increase by 19% more in the two years preceding a deal announcement, compared to pseudo target counties matched on public status, headquarter (HQ) state, industry, and size. At the deal level, more than 1/5th of M&A deals by foundation-owning acquirers involves pre-announcement donations to target charities. On average, these donations amount to more than $1 million per deal, a level 40% higher than donations to pseudo target charities.

​This expansion in targeted philanthropy reflects a reallocation of funds away from counties that are less operationally important – especially distant counties without target operations, target-affiliated nonprofits, or acquirer establishments – and redirect those funds toward counties where the target is headquartered, runs major facilities, or where target insiders are active in local nonprofits. Exploiting the fact that not all takeover offers succeed, I document that acquirers reduce donations to target counties after withdrawing a takeover offer, even when considering arguably exogenous withdrawals following lost takeover contests and market crashes.

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