The New York Times on the Goldman Sachs Foundation, or WHY Can't We Acknowledge that CSR is Good for a Company??

The New York Times just posted to its website an article about the Goldman Sachs Foundation's most recent tax filing. The Goldman Sachs Foundation is interesting because it holds significant assets, like a private foundation. My understanding (I don't have the statistics to back this up, anyone know for sure?) is that many/most company foundations are pass-through entities ,with the company donating the next year's budget at the beginning of that year. As a result, as the Foundation's tax filing contains information about how its assets were managed, the article reports that it "...provides a glimpse of the legendary trading that has helped put the firm on track for its best year ever."

The article goes on to discuss what the reporter seems to see as Goldman's use of corporate philanthropy as a reputation management tool: "Given the firm’s anticipated profits and supersize bonuses, which have touched off public furor, it is no surprise that Goldman said recently it would increase its charitable giving. It has set aside $200 million to nearly double the size of its main foundation."

Interestingly, this article about the company's foundation also discusses giving by its executives. "After Mr. Whitehead (that's former co-chairman John C. Whitehead) challenged the firm to do more, it created a donor-advised fund that it hoped would reach $1 billion over a few years. The fund allows the firm’s 400 partners to put aside money for the charities of their choice." I know that companies often report on employee giving as part of their overall philanthropic efforts, but this isn't your typical employee giving campaign. While the company did make its own donation to the Goldman Sachs Charitable Gift Fund, it (like any donor-advised fund) primarily facilitates giving by the donors (to "the charities of their choice").

At first glance, this is a bit random - what interest does Goldman have in its partners' personal philanthropy? However, one of the big strategic issues that Goldman seems to be facing these days is managing its reputation in the face of that "public furor" over "supersize bonuses". As such, it makes a lot of sense that the firm would want to encourage and promote charitable giving funded by those bonuses. Actually, it's even more interesting given that the Fund predates the crises, or at least the worst of it, which suggests this is a relatively long-term concern for Goldman Sachs.

Here's an article about the creation of the Fund - though the article calls it by a different name, GS Gives - from November 2007. One interesting line from that article, in light of my above analysis: "Cynics who have watched the wealth creation at Goldman might think that the program is little more than a public relations effort to mask the gigantic bonuses it is expected to pay out starting in early December (to be paid next year). But few want to discourage charitable efforts. " I don't think that's cynical at all, though, nor do I think it takes anything away from the firms' - or its partners' - philanthropy. If the company is recognizing a risk, and utilizing philanthropy as one of the tools it uses to minimize that risk, that's good strategic corporate philanthropy.

It doesn't surprise me that some would see such activity (if that's even Goldman's intent, I could be assigning them motives that aren't there) as self-serving. However, I believe that it's only when we maximize the positive impact that CSR (including corporate philanthropy) can have on companies will we be able to maximize the resources that companies invest in CSR. As such, I WANT to see companies connecting their CSR efforts to public relations or any of the many other business needs that CSR can help serve. However, I often see comments like the one in the 2007 article, suggesting that there is something wrong with a company that seeks to use CSR as a tool to meet its business goals. Similarly (and probably because of those comments), I SO OFTEN hear CSR executives lay out some great, strategic ways in which their CSR activities fit into the larger business, but then say that the company really only gets involved in CSR because it's "the right thing to do". It may or may not be the right thing to do - I'd just as soon avoid Milton Friedman this late at night - but we WILL NOT achieve CSR's full potential if that's the best reason we can give for engaging in corporate social responsibility.

But how in the world do we get past this issue?? Please, if you have any thoughts or ideas on this, share them in the comment section below.