Reports from the U.S. say that Goldman Sachs, the bailed-out investment bank, could soon require its most handsomely compensated staff to give back to charity. Demands that bankers give a pound in flesh during good times have not reached the same pitch north of the border. In any case, highly-paid employees should endeavour to maximize their charitable giving.
Goldman Sachs' idea isn't new; Bear Stearns mandated donations of at least 4 per cent of incomes for its most highly-paid workers. The charitable giving plan is Goldman Sachs' second bow in two months to the public's anger over its employees' income (average annual pay, $595,000 (U.S.)); in November, the investment bank launched a $500-million small business lending program.
Public expectations of Canadian financial institutions are quite different. Banks in Canada did not receive direct taxpayer support in the same way as their American counterparts (some were compensated indirectly by the U.S. government's bailout of AIG). Canadian banks have their own foundations, large community-oriented giving programs, or both, and regularly appear at the top of the country's corporate social responsibility rankings.
Unfortunately, charitable giving has ebbed in Canada. Less than a quarter of those earning $80,000 or more donate to charity at all, while donations claimed on individual 2008 tax returns fell by $400-million from the year before. But not all well paid workers, a large source for charitable donations, have suffered. Bonuses paid out by the biggest six Canadian banks increase apace, up 18 per cent in the first nine months of the 2009 fiscal year, to $6.4-billion (some paid in stock). This is not to say that Canadian banks are neglecting to pull their weight; all Canadians have a responsibility to the charitable sector.
More giving is not only in society's interest, but also in the self-interest of the companies that employ the most highly-paid. The argument that a company's sole duty is its fiduciary responsibility to shareholders is a dated one, as Roger Martin, dean of the University of Toronto's Rotman School of Management, recently wrote in the Harvard Business Review; a focus on the needs and desires of the customer should be paramount. The recession has amplified the need for a company to demonstrate its social purpose as well as its business purpose, adds Paul Klein, a CSR consultant at Impakt.
Ultimately, charitable giving is still, and should be, a largely individual decision, and one that is assessed by its impact on the community, not just by dollars spent. It is unfortunate that Goldman Sachs feels it must set a mandatory standard for its highest earners. But if that is what it takes to have people fulfill their responsibilities to society, it is a message that should be heard around the world.