September 15, 2018; New Yorker
Is much of corporate philanthropy just a smokescreen that masks corporate greed? As we have covered at NPQ, it is not uncommon for corporate philanthropy to be strategically charitable—the recent uptick in pharmaceutical company donations in the wake of the opioid epidemic being a case in point.
Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World, illustrates how these dynamics have played out in the banking sector. In a New Yorker essay, he asks us to consider the role of large banks in helping bring on the Great Recession alongside their major efforts as founders of charitable ventures.
In 2007, Goldman Sachs, a pillar of the nation’s investment banking sector, announced it was launching Goldman Sachs Gives (GS Gives) as an expression of the bank’s “ongoing commitment to philanthropy.” As cited by Giridharadas, the New York Times described the new venture as “part of a Goldman heritage that ‘discouraged ostentation and expected a level of philanthropy.’” The bank’s president, Lloyd Blankfein, told the Times, “We know we make a lot of money and we know that we live in this world and we have a responsibility to give something back.” Since its launch, GS Gives, a donor-advised fund pooling the personal contributions of Goldman executives, has been quite generous, “making $1.3 billion in grants and partnering with 6,000 nonprofits in 80 countries around the world.”
As GS Gives was launched, the nation’s economy was crashing. Fueled by a housing bubble and mortgage practices that exacerbated it, the Great Recession cost millions their jobs, homes, and savings. Since Goldman Sachs was kept from failing, its top executives have prospered and can continue to contribute to GS Gives and other charities. Its customers were not all so fortunate. According to Giridharadas, citing 2016 Federal Reserve data:
While the average American household was still 30 percent poorer, in net worth, than in 2007, the top 10 percent of households were 27 percent wealthier than before the crisis.…The Washington Center for Equitable Growth, has found that the average income of the top one per cent of American families soared from $999,000 to $1.36 million between 2009 and 2015, while the incomes of the remaining 99 percent crept up from $45,300 to $48,800.
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For its part, Goldman Sachs paid a $5.06 billion settlement for “serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” in the words of former acting associate attorney general Stuart F. Delery. Other major banks that were found to be culpable also paid large penalties. And, like Goldman Sachs, they, too, found the resources to be major philanthropists.
Wells Fargo also says it donated $286.5 million to more than 14,500 nonprofits in 2017. Bank of America…among other things, supports “organizations creating pathways to stable housing or homeownership through financial stability efforts such as homebuyer education, budgeting, savings, credit and credit repair including foreclosure prevention and loss mitigation.” JPMorgan Chase…gives back to the problem it helped to cause, through a hundred-and-twenty-five-million-dollar charitable project “to support locally driven solutions for revitalizing neighborhoods.”
Of course, nonprofit beneficiaries around the world have received needed financial support. But how do we view these donations when the nonprofits that benefit are often cleaning up after the problems that the donors helped cause in the first place?
From Giridharadas’ perspective, philanthropy has been used as a suit of armor to ward off the true costs of responsibility. And, for nonprofits, should we have gladly accepted the philanthropy we received, or should our sector have engaged more directly in advocacy that might have led to a different resolution to the Great Recession, one that would not have rewarded those who were at its root? As Giridharadas observes:
This is the shape our recovery has taken: some bailouts, some fines, some giving, and a net transfer of wealth from the many to the few…The stark fact about the financial crisis ten years on is that, in retrospect, it was a good deal for many of the people who caused it. Imagine what might have been: a recovery in which homeowners and indebted students had won relief from their loans, in which banks had agreed to pay a fairer share of taxes in exchange for the bailout help, in which they had been required to pump more of their capital into the real economy instead of swilling it around Wall Street. But none of that was to be, because…a little bit of generosity could be put forward as a plausible substitute for justice. Giving in millions has a way of erasing harm done in billions.
What do you think? Is the nonprofit sector colluding, or are we all pretending not to notice?—Martin Levine