Using the Million Dollar List dataset containing major corporate philanthropic gifts, we examine whether corporate philanthropy is associated with a firm’s cost of equity capital. On one hand, philanthropy is an allocation of shareholder returns to a third party with uncertain returns, thereby increasing business risk. On the other hand, corporate philanthropy may increase public perceptions of the firm resulting in higher and more certain cash flows, decreasing business risk. Given these competing predictions, the effect of corporate philanthropy on the cost of equity is unclear. We find that, on average, when firms make large philanthropic donations, they experience an increase in their cost of capital. However, this effect is mitigated among firms that are able to use corporate giving as a marketing tool and that have lower agency costs. Furthermore, our findings are robust to propensity score matching and Heckman’s two-stage procedure. Overall, our findings suggest that giving large individual gifts negatively affects a firm’s external financing costs.