The growth and consolidation of the U.S. banking industry over the last decade and a half has benefited national nonprofits, but has taken a toll on local charities, a new report says.
The study, conducted by the National Committee for Responsive Philanthropy and funded by the Rockefeller Foundation, analyzes the charitable giving of seven major banking organizations, including Bank of America, Wachovia, Citigroup and SunTrust.
As banks began to embrace philanthropy as an important business strategy, the report says average annual giving for this “constellation” of banks quadrupled to $400 million in 2001 from $100 million in the late 1980s.
Community advocates, who have focused public pressure on banks and highlighted their obligation to comply with the Community Reinvestment Act by providing loans in their local areas, also can take credit for some of the growth.
Some of the banks in the study, however, have shifted their philanthropic aim toward national charities, the study says, resulting in less aid for local groups.
The South has emerged as the largest recipient of the banks’ charitable dollars, fueled both by philanthropic growth overall as well as cannibalization from other regions.
But the banks’ reporting of their charitable giving often is incomplete or inconsistent, the study says.
Most of the banks’ corporate foundations are not in compliance with IRS guidelines governing what information must be reported, with more than one in three containing contradictory financial information and one in five missing data.
At the same time, many of the banks’ websites contain information detailing their philanthropic efforts that cannot be verified by IRS filings or other outside sources, the report says.
The banking industry also seems to lack a firm definition of philanthropy, with some banks including in their giving totals the amount their employees donate or the cost of cause-related marketing efforts.
To improve and standardize banks’ reporting of their philanthropic efforts, the report offers several recommendations — that the IRS enforce existing filing rules; that Congress direct the IRS to mandate full disclosure of corporate philanthropy; and that banks adopt a standard definition of philanthropy.