How investment banks could promote more giving
11 January 2011
We are now in the bonus season for investment banks and the prospect of large pay-outs to staff is attracting a lot of comment and criticism. Some people have talked about forcing investment banks to make large donations to charity out of their bonuses (such as David Robinson, founder of Community Links, and Stephen Bubb of the Association of Chief Executives of Voluntary Organisations, acevo).
Investment banks often make positive noises about their roles in promoting philanthropy and casual anecdote suggests that some, and some bankers, are particularly active philanthropically. There are indeed clear benefits from the actions of some individuals. NPC is one such example – we were originally started by a couple of investment bankers from Goldman Sachs (though we have no links with and have had no support from the firm itself). And you can find individual investment bankers on boards and closely involved with a host of charities.
One area which gets little attention though is how these firms encourage their staff to be more generous. Like many large companies, investment banks usually have some system of ‘matched giving’ whereby the firm will match donations to charity up to a certain level. For example, Goldman Sachs will match donations made by an employee up to $20,000 per person per year, a significant amount of money.
Investment banks sometimes point to such schemes as evidence of their charitable work. This assumes the schemes are widely used. In our experience, many staff at investment banks in the UK know little about, or don’t bother to use, the matched giving programmes offered by their firms. Some can’t even find information about the scheme. This begs the question of whether investment banks can do more to promote them.
Some simple principles should govern a matched giving scheme run by an investment bank, as follows.
- It should be generous. Investment banks employ some of the highest earners in society. They should seek to promote high levels of giving by offering significant incentives to give generously.
- It should be clear. The rules for what is eligible and how to apply should be straightforward and easy to understand.
- It should be easily accessible. Accessing the forms should be easily done via the firm’s intranet with the minimum of fuss and few ‘clicks’.
- It should be uncomplicated to administer. The process of applying for a matched gift must not be onerous and should involve limited paperwork and hassle.
- It should be widely promoted. Employees should be told about the scheme when they start and at regular intervals during each year, including around bonus season.
- It should come with the offer of advice and support. There are a number of websites where you can access information about charities (including NPC). These should be promoted to staff.
- It should be championed. Employees who use the full matching amount should be applauded and held up as examples to others. A number of ways might be used to create competition between teams on amounts given.
- It should be transparent to the outside world, both in terms of details of the scheme and how it is used by staff. This could create pressure and competition between investment banks.
Arguably, all of these are obvious. But, it does not seem that they are always followed. This is presumably oversight on the part of investment banks rather than any unconscious desire to limit the amounts paid out in matched gifts. With a little more effort, these schemes could deliver more.
There is an opportunity for investment banks to make greater efforts to promote giving among their staff and, in the process, perhaps deflect some criticism. This would also help tackle the problem of low levels of giving among rich people in the UK. This is one of the causes of low overall giving, as I have highlighted previously. Responsible organisations which employ people on above average salaries should think how they can contribute to increasing giving, and should be encouraged in this by government. Investment banks should be in this category; ensuring the above principles are applied determinedly would help this.