A major midwestern bank was a leading donor to a museum, and the CEO was one of the museum's directors.
Was this good for the bank?
The next CEO did not think so. He felt it only served his predecessor's ego, so he cut contributions and used the money to buy a fleet of minivans to take elderly and disabled depositors to the bank and shopping centers.
Giving to charity is always a complicated issue. And though donations can enhance a bank's image, it seems inappropriate to give away bank resources.
So what should bank policy be?
Often banks make contributions haphazardly, as people come in and ask for them. But that can lead to too much support for some groups and not enough for others. The same organization tends to hit each office several times a year.
A better approach is to survey employees on which groups to help, which includes everyone in the giving. Then, appoint someone to coordinate the payments.
There should also be guidelines on handling requests. Ask yourself: If the people asking for money are not supporting the bank, why should the bank support them?
When community leaders on fund drives are asked why they never do business where they are soliciting, too often the result is embarrassed silence-which should influence how you treat their requests.
There are good reasons to support local causes. One is that without a strong community, there cannot be a strong bank.
But instead of responding on the spot, the bank must determine how important each cause is to the community and to itself.
No decision-from buying Little League jerseys to sponsoring a symphony- should be based on the self-importance and satisfaction of bank leaders.
CEOs may get a lot of praise when contributions are announced, but the fact is, most people are privately thinking, "Remember, it's not his money." Mr. Nadler, an American Banker contributing editor, is a professor of finance at Rutgers University Graduate School of Management.