ONCE UPON A TIME, THERE was a kind Fortune 500 corporation that donated millions of dollars to do good works in its hometown. It helped unwed mothers and underprivileged children. It built housing for the poor. It funded theater proj-ects and dance troupes. It was the community's No. 1 sugar daddy.

One year, though, the kind corporation ran into trouble. Sales and profits went down. And then a big, bad, faraway company threatened to take over the corporation, break it up and sell off the pieces.


News of the danger spread through the community. While townspeople wrung their hands, representatives of hundreds of non-profit agencies vowed to save the kind corporation. They descended on the governor. They beseeched their legislators. And they succeeded. Within 10 days, a new law was passed that all but prevented the hostile takeover.

The outside company slunk away. The kind corporation returned to its former profitability. The charitable donations flowed heavier than ever. And everyone lived happily ever after.


Brothers Grimm go Wall Street? Not at all. There is such a place where some companies are so beloved and so indispensable that the citizenry would rise up to protect them in their hour of need.

That place is Minneapolis, a city where corporate philanthropy is a deeply ingrained, historic tradition as much a part of Minnesota life as the long, cold winters.

"If you were to identify the city that is setting the standard for corporate philanthropy or corporate involvement it would probably be Minneapolis," says Scott Fosler of the Committee on Economic Development, a business research organization.

Whether corporate generosity in the Twin Cities grew out of the frontier necessity for mutual dependency in a hostile climate or the practice of tithing, a central tenet in the Lutheran and Presbyterian religions of the Twin Cities' founding fathers, it remains true that virtually every aspect of public life is touched by corporate philanthropy. Corporations in the Twin Cities -- an area with a population equal to Baltimore's -- have taken lead roles in underwriting the arts, redevelopment, poverty and education programs and the construction of athletic complexes.

They have adopted schools to purchase materials, provide tutors and reduce class sizes. They have dispatched hundreds of volunteers to fuel the Meals-on-Wheels program. They have built low-income housing and stocked food shelves for the homeless. They have erected downtown malls and theaters.

"There was barely a venture we undertook that didn't involve corporate or philanthropic involvement," says George Latimer, the mayor of St. Paul from 1977 to 1990.

According to the Foundation Directory, corporate and private foundations in the Twin Cities each year give almost four times as much money to charities as do their counterparts in Baltimore. At least 70 Twin Cities companies contribute 5 percent of their pretax profits to philanthropy, the maximum amount that can be claimed on federal tax returns for corporate charitable deductions. More than 40 others pledge 2 percent. The average donation by corporations in the United States is about 1 percent.

"Philanthropy got to be socially fashionable," says Kenneth Goodpaster, a professor of business ethics at the University of St. Thomas in Minneapolis. "The way you exhibit wealth and power here isn't to flaunt it in a self-interested way but to turn it back to the community. It's gotten to be a wonderful one-upmanship where one CEO would literally try to outdo another."


Newcomer executives are immediately indoctrinated into this ethic of giving and volunteerism. Years ago, the companies formed the Minnesota Project on Corporate Responsibility to educate new executives in the community's expectations of them.

"If you're going to fit in here," says James Shannon, former head of the General Mills Foundation, "thou shalt volunteer."

At the top of the list of corporate philanthropy in the Twin Cities is the Dayton-Hudson Corp., the company that was saved from a hostile takeover by the community in 1987. A dominant national department store chain, Dayton-Hudson began the 5 percent giving more than 40 years ago and later challenged other companies in the area to follow suit. That challenge led to the founding of the so-called "Five Percent Club" in 1976. (Baltimore once boasted its own club but it dissolved after a few years.)

This year, Dayton-Hudson, which expects to do about $18 billion in sales, has pledged to donate $30 million to charities. A third of that money will remain in the Twin Cities area. The rest will be spent around the nation where the company has stores.

If Dayton-Hudson is the pre-eminent corporate giver in Minneapolis, it is far from the only one. No fewer than 25 Twin Cities companies contribute more than $500,000 a year. In addition, 29 private foundations contribute at least that much.

Like a lot of other American cities, Baltimore doesn't come close to matching that record.


Certainly some Baltimore businesses are very generous but not enough of them to impress, among others, the author of the "Baltimore 2000" report, which examined Baltimore's prospects into the next century. "Active and continuous concern for the city as a whole has not been characteristic of broad segments of either corporate leadership or private wealth," the 1986 report concluded.

One reason Baltimore falls short is that its corporate wealth is only a fraction of the Twin Cities'. Only nine Baltimore companies were on Fortune Magazine's list last summer of the biggest American corporations. The Twin Cities area boasted 27 companies on the list. In other words, Minneapolis-St. Paul is a big-league corporate headquarters town. Baltimore isn't on the map.

For non-profits, the distinction translates into hundreds of millions of dollars. Corporate CEOs have the power and often the emotional attachments to commit resources to good causes in the cities in which they are based. Branch managers, who are often only passing through town on their way up the corporate ladder, lack both authority and loyalty to place.

Minneapolis-St. Paul may generate more corporate loyalty than any place in the country. Many of the big corporations -- Dayton-Hudson, Pillsbury and General Mills, for instance -- were passed through families for generations. By the time the companies left family control, the ethic of giving was already firmly in place.

Says Peter Hutchinson, the one-time director of the Dayton-Hudson Foundation and a former Minnesota commissioner of finance, "The expectation here is that if you're going to do business, you're going to do business as part of the community."