Bloomberg has a piece out today that speaks to a topic I've wanted to write about for some time. Has increased government scrutiny of banks receiving bailout money affected their charitable endeavors? I assumed it would, and charities would be even worse off regarding bank donations than just the bad economy would have made them. Finding actual evidence to back up this theory was extremely difficult, since bank foundations tend not to publish all of their contribution data in a very timely manner. But Bloomberg provides some anecdotal evidence.
Apparently the John Deere Classic golf tournament has the bailout blues:
Wells Fargo & Co. and U.S. Bancorp are among those that didn't renew their sponsorship while under scrutiny for how they're using Troubled Asset Relief Program money, said Clair Peterson, director of the golf tourney that starts today. Moline-based Deere & Co. is the main sponsor of the event, which was sixth in fundraising among 44 PGA Tour events last year.
"A lot of it is just being paranoid about what Congress has said about the sponsorships," Zach Johnson, the 2007 Masters champion who serves on the Deere Classic's board, said as he left the 18th green after a practice round this week. "It's a misperception as to what really takes place and what the PGA Tour is about."
Charities benefit from the tournament's profits. As to what Congress has said, you might recall Rep. Barney Frank and others almost having puppies when they found out that Northern Trust Corp, a bailout money recipient, paid to have Sheryl Crow perform at a golf event a while back.
Unless Bloomberg's anecdote is an exception, it seems that the effect on charities and non-profits is being felt. I know that these banks' foundations are still giving out money, but I'd be shocked if they're giving as much as they would be without the government watching their every move.
I have mixed feelings about this. I am a huge fan of charity. Non-profits hold a special place in my heart, as I think they do very important work. I don't like to see them suffer because some politicians are on a witch hunt on Wall Street.
At the same time, however, I'm not crazy about banks using bailout money for charity. After all, from a business standpoint, the first money saving measure you'd likely take is not giving money away for free until things improve. And if charitable expenditures were the first thing to go at a bank, you could argue that the bailout money absolutely is being used for charity.
Clearly our taxpayer dollars go to causes that we might not be crazy about every day. I highly doubt everyone agrees with all of the spending Congress does. So should it matter if a few bankers on Wall Street dole out taxpayer-provided bailout money to a few of their favorite charities?
I think so, because there's an important difference: like them or not, we elected Congress. We didn't elect Ken Lewis (Bank of America's CEO) or Vikram Pandit (Citigroup's CEO). So we indirectly approve of the way Congress spends our money. You could argue, then, that we indirectly, indirectly approved of the way banks give to charity too, since our elected officials gave them the money, from us. That, however, seems a bit of a stretch.