Wall Street firms have intensified their corporate social responsibility efforts dramatically over the last two years, pushing their employees to volunteer more of their time to charity in an effort to combat fiercely negative publicity.
But Courtney Barnes, a reputation management expert and a vice president at Edelman Digital, an international communications firms, thinks the increase of corporate social responsibility efforts at finance firms' is a "reactionary response" to declining public trust -- and that people will see through it.
At Bank of America, associates logged 800,000 hours in volunteer time in 2009. This year, the bank has elected to increase that number with its "One Million Hour Challenge." The company's 280,000 employees have pledged to donate 1,000,000 hours of their time by the end of 2010. If completed, that will be a 25% increase in volunteer hours over 2008 and a 48% jump compared to 2007. Employees at the bank get two hours paid a week to volunteer.
Employees at Goldman Sachs have been busy, too. Employees at the investment bank spend one day a year away from their offices to volunteer with a nonprofit through the firm's Community Team Works (CTW) program, which puts volunteers to work for Ronald McDonald House and Habitat for Humanity, among other charities. In 2007, the company worked with 619 nonprofits. Last year, that number jumped 15% to 828.
Sidharth Kakkar, a former analyst at Goldman who will begin an MBA program at Northwestern University this fall, said that though nobody is forced, there is some not-so-gentle nudging to go out and volunteer through CTW.
"It's looked well-upon to do these things," he said. "And if something's looked well-upon, people will notice." He recounts that one vice president at the firm, a longtime employee, said he didn't feel like putting in time for CTW. "But the very next sentence, he said, you are strongly encouraged to go participate," said Kakkar.
This year, Goldman gave $500 million to Goldman Sachs Gives, a foundation that gives grants to charities handpicked by managing directors at the firm. When it launched it 2008, it had donations totaling $130 million. The firm did not respond to requests for comment on its social programs or the increase in spending.
Volunteering Your Way to the Top
Aside from potentially helping a company's image, volunteerism helps in enhancing employees' own images at their firms. Gray Schweitzer, an assistant vice president at HSBC, who has volunteered with the firm for the past three years, says it definitely helps junior employees "get noticed." At HSBC, volunteering is not explicitly tracked in performance reviews, he said, but "leadership is, so if I led a park cleanup of 100 people it's a way for me to check off my leadership box." Schweitzer estimated that 80% of his department has volunteered through the bank at some point.
At HSBC, more employees participated in volunteer programs in 2009 than in 2008, according to Robert Sherman, vice president of public affairs at the bank. According to Sherman, people who volunteer are "more engaged" with HSBC -- that is, committed to their job and proud of where they work -- than those who do not.
Some firms are making volunteerism part of an employee's workplace obligations. At KPMG, for instance, employees have to satisfy certain goals for their performance reviews –which can be fulfilled through volunteerism, according to Barbara Wankoff, national director of workplace solutions. She emphasizes though, that there are other ways of satisfying those goals, like taking part in diversity initiatives. At KPMG, volunteer hours have doubled since 2007.
Fannie Mae, the government-backed mortgage giant, saw 42% of its employees contribute 30,000 hours in volunteer activity in 2009. Many of them worked in communities hit by mortgage delinquencies and foreclosures, answered calls from homeowners at the company's borrower call center, and helped the homeless at soup kitchens and via an annual walk-a-thon. The company declined to release figures for previous years because of a 2008 reshuffling in their philanthropy program when Fannie Mae Foundation closed its doors. Still, both charitable giving and volunteer hours have increased, said Jennifer Farland, director of community relations. Volunteerism is not a component of performance reviews at Fannie, but "the leadership role employees take in volunteerism is noticed," said Farland.
Public Image Problems
Despite large increases in corporate social responsibility activity, the public's distrust of Wall Street continues to increase. According to Edelman's annual Trust Barometer, a measure of public trust in companies, trust in banks has dropped 39 points to 29% since 2007, despite the added efforts.
CEOs are aware of the problem. The results of PricewaterhouseCoopers' 2010 Global CEO survey, showed that a third of CEOs in banking and capital markets believed their industries experienced a "significant fall in public trust." Out of these, 50% said they had expanded their corporate social responsibility program in response to lack of public trust.
Barnes of Edelman Digital said that interest in corporate social responsibility -- an umbrella term that includes volunteerism -- has traditionally been the realm of industries like manufacturing and energy, sectors where there was some environmental issue at stake. However, after the Enron scandal, financial institutions became more aware of their increasingly negative image, and began to have an increased interest in nonprofits, she said.
According to Mindy Lubber, president of CERES, a think tank that works with businesses to address sustainability issues, there has been an exponential change in volunteerism efforts by finance firms since 2007.
"The fact that they're doing philanthropy is a good thing, but what about sustainability?" she said, pointing out that Wall Street has a long way to go to clean up its image entirely. Finance firms need to be more than "just nice guys," she added.
Less Money to Go Around
While big Wall Street firms are increasing their charitable spend, the money that now-defunct banks like Lehman Brothers and Bear Stearns used to contribute has disappeared along with the firms themselves. The recession has also caused other industries to reduce their corporate social responsibility efforts.
Junior Achievement of New York, a nonprofit that connects mentors from the corporate world with kids in the New York area, has experienced this trend firsthand. While JANY received a $1 million grant from NASDAQ OMX, and a $400,000 grant from Goldman Sachs this year, the organization is still coming up short in contributions compared to its pre-recession years.
In 2009, 20% of their volunteers, about 3,000 people, came from the financial sector.
"Like most nonprofits, JANY has experienced a decline in resources because of the economy," said Jacqueline Dolly, director of communications at JANY.
Because of the depleted influx of money, JANY has also begun to rely more on one-day volunteer events, where firms send employees out for a day to one of JANY's initiatives. HSBC launched JA More Than Money in 2007, which sent its employees into classrooms to teach lessons on fiscal responsibility. In 2009, 1500 HSBC employees in the U.S. took part. Overall, 20% of JANY volunteers, about 3,000 people, came from the financial sector.
JANY's board is packed with Wall Street bigwigs, including partners at Big 4 accounting firms and a vice president at NYSE Euronext. Sharon Joseph, an alum of the JANY program and a wealth management advisor at Merrill Lynch, is on the board along with them. She has noticed that corporations, especially on Wall Street, are supporting their workers with regards to volunteerism.
It may be a case of too little, too late. Barnes of Edelman thinks that the huge increase in volunteerism and community responsibility by financial firms was an over-correction, and "disingenuous." She said Wall Street is now in the process of pulling back from that kind of obvious behavior. "The recent years have been the wake-up call that Wall Street needed, so the best examples are yet to come."
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