Like other corporations, banks have long sought to cast themselves as good corporate citizens by giving time and money to charities and community activities.
The commitment to charitable giving has not diminished at several large banks that merged in the last year, including Chase Manhattan Corp., CoreStates Financial Corp., and First Chicago NBD Corp. Nonprofit organizations like United Way and Covenant House have been beneficiaries.
But at the same time, the mergers and downsizings that have left thousands of bankers jobless raise questions about the responsibilities banks have to their employees and the communities where they do business.
Are well-publicized philanthropic programs intended to distract attention from unpleasant headlines about massive layoffs? What effect do downsizings have on corporate giving? What do banks hope to gain by encouraging their employees' volunteerism? In short, what do banks owe their employees and communities?
These kinds of questions have received national attention in this election year. From the political right, presidential candidate Patrick Buchanan railed against "corporate butchers" who lay off workers while giving themselves multimillion-dollar bonuses.
From the left, consumer advocate Ralph Nader attacked "corporate welfare." And President Clinton weighed in at a Georgetown University conference in May, urging corporate executives to "do the right thing" for their employees.
These comments are particularly relevant to banks, which are highly regulated entities that already are required by law to invest in areas where they operate.
Secretary of Labor Robert Reich said in a recent interview that he does not regard bank philanthropy as a smokescreen to obscure the impact of merger-related layoffs.
But he said charitable efforts' positive impact is sometimes offset by other corporate actions.
"What concerns me - particularly with public schools - is providing technical assistance, managerial help, and commitments to improve the schools," said Mr. Reich. "But many of those same companies are demanding tax breaks as a condition of staying in the community - and it's eating away at the budgets which are supporting the public schools. So the left hand often doesn't know what the right hand is doing."
Mr. Reich also noted that consolidation and globalization have altered the relationship between banks and the communities where they do business.
"The ties they had to any one community are becoming attenuated," said Mr. Reich. "That doesn't mean they don't have responsibilities to the community. Because we are becoming a global financial economy, the responsibilities of banks to their own community is even more important than ever."
Others note that acquisitions can wrest away control of local charitable giving by moving decision-making and budgeting authority to a bank headquarters in a distant city.
"If the purchased bank is engaged in corporate sponsorship for the community, that department is usually the first to go," said Thomas Aschenbrener, president of Philanthropy Resources, a Portland, Ore.-based consulting firm that advises corporations and foundations on giving programs. "But can the new owners responsibly understand the needs of the community?"
Mr. Aschenbrener said the banking industry has a track record of generous support for charity. The main motives of those efforts are not only charity's inherent value but also enhancement of their reputation and market position.
But some banks, he said, have less charitable motives, appearing to use financial support to "shoo away nonprofit organizations."
Nonprofit groups point to an unintended and unfortunate result of mergers and acquisitions.
Carter Echols, director of the Next Step program at Samaritan Ministry in Washington, D.C., said the pool of volunteers from banks dries up when a company is bought, as jobs are lost.
Next Step relies on people from the community to help the unemployed obtain a driver's license or Social Security card, prepare for job interviews, and get job references.
The group continues to get contributions from banks. About 12% of its donations come from institutions like Signet Banking Corp., Maryland National Corp. - which has been acquired by NationsBank Corp. - and the Federal National Mortgage Association.
Other nonprofit groups say there is no evidence that banks cut back on their giving after mergers or downsizings.
Ralph Dickerson Jr., president of United Way in New York, cited two institutions - GreenPoint Bank and Bank of New York Co. - that have maintained their support of his organization.
About 160 GreenPoint employees have participated in 14 United Way projects, he said. That commitment was not affected by its acquisition of Home Savings' New York-area offices, said Mr. Dickerson.
Similarly, Bank of New York's acquisition of Irving Trust was not accompanied by a cutback in charitable giving.
"It seems their corporate culture is defined more clearly," said Mr. Dickerson. "These two banks are not the type who are greedy enough" to seek higher profits at the expense of their longtime commitment to philanthropy. "They want to give. Not all organizations do."
Mr. Dickerson added that the combined Chase Manhattan and Chemical Banking Corp. has remained a generous contributor to United Way.
Mr. Dickerson said, however, that not all banks operating in New York have such a commitment. "European banks are not carrying their weight," he said. "These banks are not known for participating, and they are not comfortable with it."
European bankers, he said, do not understand homelessness in the United States and have been reluctant to support programs to ease the problem. They have a better track record in making donations for literacy programs and for handicapped children, he said.
The comment underscores Mr. Dickerson's idea that corporate philanthropy is an American invention. As he sees it, in many other countries, responsibility for social programs falls to the government, not to voluntary efforts by individuals and companies.
While that is the case in Japan, Mr. Dickerson said that banks based in that country have been generous in their charitable programs in the United States.
Though figures were not readily available for the banking industry as a whole, some large institutions that recently merged report their overall philanthropic budgets have increased.
First Chicago NBD said contributions budgeted for this year would be 10% greater than its constituent banks' aggregate giving last year.
Chase Manhattan also has boosted its giving above premerger levels. The total this year will be $41 million, up from $40 million last year, according to Carol Parry, managing director and head of community development.
Most of Chase's money supports job training programs, education, and cultural institutions.
"The bulk of the contributions go to the tri-state area" - New York, northern New Jersey, and Connecticut - said Ms. Parry. "Ninety-nine percent of the $41 million is in the U.S. - the rest is for international grants."
In addition, 15 so-called street bankers help coordinate nonfinancial support of nonprofit groups. "We donate furniture, computers, and free technical support to nonprofits, social services, drug and AIDS groups, to smaller local community organizations on a regular basis," said Ms. Parry.
Chase has also participated in a program with New York's Covenant House to find financial services jobs for young adults. Bankers Trust New York Corp., Morgan Stanley & Co., and National Westminster Bancorp. are also part of the Rights of Passage program that has placed 75 disadvantaged young people in entry-level clerical jobs.
"Ten years ago the local business community was looking for young adults between the ages of 15 and 18," said Bruce Henry, executive director of Covenant House New York and founder of the program. "About a third of the companies who participated were in the banking industry."
Secretary Reich applauds banks that have demonstrated such a commitment to their communities.
"A bank has very strong ties to a community," he said. "Every company does, but a bank has a unique position because it is lending to the community and taking deposits, and the community is dependent upon these lending institutions."
Philadelphia-based CoreStates has followed a formula for contributing to charities and nonprofit organizations since 1976. Noreen Casey, vice president of community development, said its donations total 2% of pretax annual earnings, a level that has not been altered through mergers, including the acquisition of Meridian Bancorp this year.
"Just because CoreStates funded a nonprofit organization and Meridian funded a nonprofit organization did not mean Meridian didn't get a CoreStates allocation this year," Ms. Casey said. "We would keep them both."
No charities were eliminated from the donation list of either bank after their merger, she said.
One CoreStates program involves a partnership with the Greater Philadelphia Urban Affairs Coalition, a nonprofit, to find jobs for homeless people. CashFlex and Transys - two CoreStates subsidiaries - have committed themselves to place up to 45 people each year for three years.
Bank employees act as mentors to the homeless, and job training is provided by another organization, the Women's Alliance for Job Equity. The first group of six men and women was graduated from the program this year and began work in March. A second group was expected to start working in June.
The program, begun in October 1995, expanded on two pilot programs - People's Emergency Center and the Opportunities Industrialization Center. These programs have placed 43 homeless people in full-time jobs.
But irony may be seen in CoreStates' finding jobs for homeless people while it is eliminating 2,800 bank jobs.
Thomas O'Rourke, a senior vice president, said, "We are not playing a zero-sum game."
The jobs taken by formerly homeless people in the two processing subsidiaries have long been plagued by high turnover and are difficult to keep filled, he said.
"We are responding to a need that the bank has," said Mr. O'Rourke, who is also a board member of the urban affairs coalition and co-chairman of its homeless program committee.
Executives at other banks that have laid off employees also say their chief responsibility is to shareholders, by keeping the company financially healthy and profitable. Without mergers and restructurings, banks couldn't remain competitive, they say, which would mean even more job losses and a decline in charitable donations.
