“This issue around social justice is systemic in nature, and we understand that there has to be an ongoing commitment to these issues to impact change,” Austin said. “We’re not going to make change overnight. Sony understands that, and they made that commitment to stick in there and help make change over years.”Dr. Menna Demessie, who oversees Universal’s social justice fund as the senior vice president and executive director of the company’s Task Force for Meaningful Change, said that speeding up the fund’s grant-making process would be a disservice to the organizations it wants to help.
“In philanthropy, we tend to try to solve problems in three to five years. That's just not the way life works.”
Using a charitable contribution deduction, the Big Three will be able to donate money to charity they otherwise would have had to pay in income taxes, Hackney said. As a result, the net cost of making these donations is effectively smaller than it seems.“Maybe it costs them 70 cents on the dollar to make a $100 million contribution,” Hackney said. “The government is pitching in, in some part, because they don't have to pay tax on that money.”For example: Each year, Warner Music Group has to pay roughly 30 percent of its taxable income to the government—21 percent in federal income tax, and 8.7 percent in state income tax to Delaware, where the company is incorporated. Warner is donating $100 million through its social justice fund. Ordinarily, it would have to pay 30 percent of that—$30 million—to the government in income tax. But by donating $100 million and writing it off as a charitable deduction, Warner avoids paying $30 million in income tax it would have otherwise owed. Though the exact amounts may differ, the same general rule applies to Sony and Universal. “It doesn't cost them $100 million to give $100 million,” Hackney said. “They would’ve had to pay $30 million in taxes, state and federal. So they pay $70 million, but $100 million goes to charity.”
“Part of the story here is that behind those headlines, which get great PR, there’s a lot of fine print. And there’s a total lack of transparency.”