An in-depth look at Goldman’s giving

A New York Times story over the weekend took a look at corporate giving at Goldman Sachs Group Inc. Once the poster child for greed and excess, Goldman is working to rehab its image by giving away more than $1.6 billion since 2008, the Times said.

It’s an interesting trend and the story takes a balanced look at the benefits and drawbacks of corporate philanthropy.

Here’s the beginning of the story:

Now Goldman executives say the firm wants to give something back. But Goldman also has been trying to polish its reputation with ordinary Americans and politicians in Washington. “Engaging wasn’t just the right thing, it was necessary, especially in the wake of the financial crisis when people said we weren’t doing enough,” said John F.W. Rogers, Goldman Sachs’ chief of staff, and a driving force behind the bank’s philanthropic efforts.

The shift is particularly noteworthy because Goldman — unlike most corporations with large charitable efforts — has no presence on Main Street.

And apparently some at Goldman as well as investors don’t like the generosity:

This has created bitterness among some employees — bitterness stoked by the favored status seemingly granted to Dina Powell, who runs the foundation. At a firm where pay is almost always tied to what money you bring in, Ms. Powell, who is in charge of giving money away, has made roughly $2 million annually in some recent years, according to people familiar with her compensation but not authorized to speak on the record. Her pay, which is considered high to some at the firm, is up there with some of the leaders of the best-paying charities, who receive between $1.8 million and $3 million, according to the Chronicle of Philanthropy. Those inclined to look for signs of status also note that the 20-year-old daughter of Goldman’s chief executive, Lloyd C. Blankfein, worked as an intern in Ms. Powell’s department last summer.

Then there is the way Goldman has been going about its giving. Goldman is a firm that prides itself on discretion, but it isn’t giving away its billions quietly. It has bestowed the Goldman Sachs logo — and hundreds of millions of dollars — on two splashy programs, one that supports women in developing countries and another that helps small businesses. “It’s run as if it’s a Broadway show,” said one Goldman employee who asked not to be named because of a firm policy against speaking to the news media.

Corporate philanthropy might seem among the least controversial of topics, but it does raise questions for some shareholders. Warren E. Buffett, whose holding company Berkshire Hathaway is one of Goldman’s largest shareholders, says he fully supports the work of the Goldman charities, but is troubled by the principle of large-scale corporate philanthropy. After all, most of the money comes out of the firm’s profits — out of shareholders’ pockets.

The Nonprofit Times reported in early October that the majority of large companies were keeping corporate giving the same or increasing it in 2014 indicating that Goldman is actually inline with the rest of the corporate world:

Of Fortune 500 companies that make charitable gifts internationally, 81 percent either increased or maintained giving levels this fiscal year, and 86 will either maintain or increase giving levels next fiscal year. Local communities’ needs was the most influential factor for giving, cited by 78 percent of survey respondents, followed by the company’s business operations or financial performances, at 52 percent.

Those were some of the results from a study commissioned by Alexandria, Va. nonprofit Global Impact and carried out by the Lilly Family School of Philanthropy at Indiana University. The report, titled “Giving Beyond Borders: A Study of Global Giving by U.S. Corporations, looked at data from the top 100 Fortune 500 companies, and administered a survey to 59 companies, according to Una Osili, Ph.D., director of research at the Lilly Family School. Not all respondents answered all survey questions. The research was conducted between January and August of 2013.

Respondents from roughly one in five companies said the firms would expand their giving to more countries or regions during the next fiscal year, with 60 percent maintaining their current geographic focus. The study found that 60 percent of companies give globally or without geographic focus, while about one-quarter gave in a highly focused manner to one or two geographic regions.

Education was the top focus, with 69 percent of companies giving to education-focused nonprofits. Next were disaster relief, recovery and preparedness organizations, with 58 percent of companies giving in that area, followed by human services and public and society benefit, both at 55 percent.

And Goldman is particularly generous, the Times reported:

In 2012, Goldman gave $241.3 million to charity, according to The Chronicle of Philanthropy, making it the fourth-largest corporate giver in America. That is vastly more than it gave to charity before the real estate collapse — in 2006, the company donated $47 million to charity — and comes at a time when the pace of charitable giving in corporate America has slowed.

Goldman’s giving last year represents 3.9 percent of its 2011 pretax income, according to The Chronicle. In contrast, Wells Fargo, the country’s largest corporate philanthropist — and another investment held by Mr. Buffett — contributed $315.9 million to charity in 2012. But its philanthropy represented just 1.3 percent of its 2011 pretax profit.

The story goes on to chronicle the two highest profile programs Goldman sponsors, 10,000 Women and 10,000 Small Businesses, both aimed at helping others achieve. While overall the article was balanced, I was surprised by how much of the argument against corporate giving was at the top. The story had a quote from Buffett questioning the amount near the beginning and closed with an anecdote from someone benefiting from the Goldman programs.

Covering corporate giving is an important piece of writing about a company. It would be interesting to compare the giving across industries. I do wonder if, for example, technology companies have stepped up giving as much as finance companies since 2008.