Giving back
Investment banks rank among the biggest charitable givers on the planet – but what they support and how they give varies greatly. Many are now tying their giving to their wider corporate strategy, while others have spotted an opportunity to use philanthropy to cement their ties with clients.
In early November, more than 700 of Goldman Sachs' junior bankers – those at the analyst level – gathered at the bank’s offices in central London to make what promised to be the most consequential pitch in their short careers. One by one, in groups of four or five, they pled their case before a panel that included David Solomon, the chief executive, and a roster of the firm’s most senior partners.
At stake wasn’t a role on the next big IPO, or a share of the bonus pool, but funding for a good cause of their choosing. Solomon and his team heard pitches from 150 different teams before finally awarding the spoils to the four winners: a sustainable energy project in Indonesia, a digital inclusion scheme for refugees in the UK, an AI tool for literacy, and software supporting numeracy and literacy.
It was the ninth iteration of the bank’s Analyst Impact Fund, which has made US$5m in grants since its inception – and just one piece of the wider Goldman Sachs Gives programme that was born out of the global financial crisis. For the firm, the annual event plays two roles: tapping into the competitive instincts of its bankers while instilling a culture of giving back across the firm.
“Through Goldman Sachs Gives every partner is able to nominate relevant and eligible charities,” said Charlotte Keenan, head of the international office for corporate engagement. “What that does, is that it instills at the highest levels of the firm that community matters. We wanted our partners to really lead, to demonstrate that that's a core part of our culture.”
Since 2008, Goldman Sachs Gives has deployed more than US$3.5bn globally, much of it focused on three main project areas – women, small businesses and the Black community – aimed at unlocking individual and economic potential. The first, called 10,000 Women, grew out of research showing the effect that supporting female-led businesses could have on the wider economy.
“As a firm there is a desire to show the impact and the support that Goldman Sachs can give on main street and how we can help communities by bringing to bear, obviously our capital, but also our convening power, our people, and our talent to help respond to some of the world's biggest challenges,” said Keenan.
Strategic shift
Such focused programmes mark a step change in the way that investment banks choose to give back to their communities. Until even as recently as the 2000s, giving tended to be sporadic and often depended on the whims of senior partners. But these days, banks see their philanthropy as part of the wider brand – as a way to promote their values, both inside and outside the firm.
“In the 1960s and 1970s and even later, it was more around partners and their spouses giving back to their local communities,” said Joan Steinberg, global head of philanthropy at Morgan Stanley. When the bank set up its New York Foundation in 1961, it was thanks to a US$250,000 donation from partners. Its London partners set up a foundation there in 1994. Both tended to donate money locally.
“I think that was true of all corporate philanthropy at the time – it was much more localised and wasn’t that strategic,” said Steinberg. “But the philosophy has changed in recent decades. These days, it’s entirely strategic – in terms of creating meaningful impact in your community, how your employees are going to be engaged or distinguishing yourself in your peer group.”
Deciding where to focus giving has become a way for banks to differentiate themselves – and to reiterate the priorities of the brand. Morgan Stanley has chosen children’s physical and mental health – which spans everything from food security to play areas and helping reduce child suicide rates. It has an innovation award each year that gives seed funding to scalable projects.
“There was one specific [US] statistic which stood out, which was that suicide was the second leading cause of death in kids over 10,” said Steinberg. “A quick Google search revealed there were almost no corporates funding youth mental health. It became clear to us that this was one of those opportunities where we could make a big difference just because there wasn't a lot of private sector funding.
“It was an interesting juxtaposition to have a classic investment bank talking about mental illness. It felt like its own storytelling, which is like: ‘Jeez, if Morgan Stanley can talk about it, I feel like we can.’ We wondered what could we do in our own channel, with our own voice, to spread the word and bring others on board around what's happening in children’s mental health.”
Historical roots
Barclays, which traces its history of giving back to its Quaker roots, devotes a sizeable amount of its philanthropy to skills and employability, with programmes that reached more than 3 million people last year. Through its LifeSkills programme, the bank has committed to up-skill 8 million people and get 250,000 individuals into work by the end of 2027. It also supports members of the armed forces with its Military & Veterans Outreach to help transition to civilian life.
Like its peers, BNP Paribas has also evolved the way it gives back in tandem with its corporate development. The French bank first became involved in charitable giving in the late 1960s, joining the Fondation de France – an initiative created by former president Charles de Gaulle to encourage private philanthropy. Paribas – as it was then – set up its own foundation in 1984 to better focus its giving.
In recent years, the focus of that foundation has dovetailed with the bank’s attention to green finance and sustainability. One percent of the bank’s profits is earmarked for its work, equating to about €100m a year, which has been put to work alleviating the damage caused by natural disasters – for example, the floods in Spain and earthquakes in Turkey and Morocco – and supporting scientific research.
“BNP Paribas is a leader in green finance and sustainability,” said Isabelle Giordano, who heads the foundation and oversees the bank’s wider corporate philanthropy. “And our philanthropy mirrors those priorities, to make a real and tangible commitment to these causes. Even if the foundation is independent, its actions are driven by shared values and a common vision.”
The bank tries to support areas that receive little from elsewhere: within its support for the arts, particular areas of focus include jazz, circus arts and contemporary dance. Since 2006, it has also pumped money into supporting underprivileged French suburbs – the banlieues – promoting access to education, employment and better communities. Each year it gives a prize to the best local scheme.
“When the foundation decided 10 years ago to help biodiversity and climate change, it was something very new,” said Giordano. “Before that, when we started Projet Banlieues, that was something very new in France, where foundations tended to only support big, nationwide programmes. More than ever, we will need innovative philanthropic solutions.”
In the US, giving back to local communities is required by law for those banks with a retail presence – under the country’s Community Reinvestment Act, which was brought in by the Carter administration in 1977 to help meet the needs of borrowers in all segments of their communities, including those living in low and moderate-income neighbourhoods.
Pro bono
Some firms have made a virtue of their specialisms in their giving. Rothschild, as an advisory firm, offers its services on a pro bono basis to charities and projects, as a way of helping them to better deliver on their programmes. It focuses its efforts in three broad areas: education; nurturing young minds; and advancing social and environmental solutions.
“We had the conviction that sharing our professional knowledge and skills was definitely one of the most effective ways to impact the charitable organisations we work with in the long term,” said Claire Kramme, an executive director for philanthropy at the firm. “Pro bono work has always been a core pillar of our philanthropy programmes. We have people dedicated to it globally.”
The firm also runs a “Venture Philanthropy” programme – a kind of private equity programme through which every year it identifies three startups and then injects equity and offers advisory services with a view to scaling up its reach. While Rothschild traces its legacy of giving back to the early 19th century, in 2021 it set up a new firm-wide foundation to pull together its fragmented philanthropy.
“Being international, we took the decision to align our various philanthropic initiatives into a single structure, under one team,” said Kramme. “One motivation was definitely to open opportunities up to everyone – but it was also to increase our impact and streamline our processes to make sure that decisions are made more transparently, and that grants are awarded in the same way.”
Some banks have strategically intertwined their own philanthropy with that of their clients as a way of encouraging them to give back and of deepening the relationship with them. UBS established its Optimus Foundation in the late 1990s as a traditional grant-giving charity. But in recent years it has evolved to offer advisory services and impact reports – and to co-invest alongside clients.
“We want to support our clients and advise them about how you might develop an impactful philanthropic strategy, what sort of vehicle you might use,” said Sarah Payne, the bank's head of social impact and philanthropy in the UK. “We think about insights, what good impact looks like, how to create a collaborative community. We also have an execution platform to make all of this happen.”
The foundation has a flexible budget – as donations from clients increase, so UBS also increases its own commitment. So far, the bank has convinced 270 of its clients – from corporates to billionaires to mom-and-pop investors – to participate, providing funds for 370 philanthropy programmes that have reached almost 7 million people worldwide.
“The UBS Optimus Foundation is not an endowed foundation – we are a client-funded foundation,” said Payne. “So, it is something of a Venn diagram, because what we’re doing is looking at the areas that our clients are interested in, and then trying to find the sweet spots where we can connect them to organisations that are really impactful, and partner up with them to do that.”
Deepening relationships
The bank employs about 130 people in its philanthropy department, with about a fifth working as programme managers specifically within the Optimus Foundation, working with clients, monitoring the partnerships with charitable programmes and producing impact reports. While bankers were initially protective of their client relationships, the results have been spectacular.
“We know from experience that partnering with clients on philanthropy is also good for business,” said Payne. “The better we know and understand our clients’ needs, the better we can support them in their goals. If we are talking to them not simply about their wealth but also about their concerns in the world at large, it's just a completely different type of relationship.
“We are set up to enable and facilitate our clients and take them on their impact journey. The ripple effect you can have through UBS clients and their wealth and resources dwarfs anything that the bank, even as a global financial institution, might do in its own right. By working together, you automatically magnify the impact that you have.”
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