It's all over the news that Wall Street and bank executives are expecting to receive huge bonus payouts this year while Joe Smith from Main Street can't catch a break. Hit with an economic downturn and growing unemployment, of course Joe Smith is going to be angry and upset.
The public is furious at the thought that their hard earned bailout tax dollars are being used to finance the plush lifestyles of the rich. As a result, Wall Street is scrambling to justify these payouts. How to do it? By requiring that that these tycoons give some of the money away to charity. Throw a little money to the feed the hungry, clothe the poor or help with Haiti Relief... "Do good" and all will be forgiven. Philanthropy is an American value that justifies all and would add a righteous sheen to these bonuses.
It was recently reported that Goldman Sachs is considering enforcing a requirement that all executives donate 4% of their bonuses to charity. This is a wonderful idea and other companies should follow suit. This concept, which is not new, is a way for a financial company to salvage its reputation and to "share the wealth" with the general public. It is an especially important thing to consider because this may be the last year that bonuses aren't regulated by the government.
Many of the exec and CEO's are balking at the idea that future bonuses might disappear because they view it as their bread and butter; the way they make their real money. They feel that the government should not be involved at all. This autonomy, however, is hard to defend when banks accepted federal bailout money and tax-payer dollars.
It seems to me that the way out of all of the negative press and bad feelings about these big bonus payouts is for the corporations to enhance their charitable giving profiles and take on "social responsibility" as a genuine tenet. Many executives already give plenty to charity, but 4% of a mega-bonus is not enough in this economic climate, especially if banks want to continue with this practice independently of government intervention. Surprisingly, most people seem to feel that it would be acceptable for company executives to make exorbitant amounts of money only if they do something positive with it to help make the world a better place. This is the only way Joe Smith and his middle-class friends can stomach it.
Call it the sign of the times, but Wall Street and bank executives need to actively embrace the concept that if you earn an excessively high income, you have a societal obligation to look beyond your personal wealth and to "give back". With this in mind, they will be able to look themselves in the mirror in the morning with a clear conscience. That is, right before they get in their Bentleys and head to the office.
Stephanie Risa Stein is the Founder & Managing Director of Philanthropic Capital Advisors, a global management firm that specializes in charitable investments and brings philanthropists, family foundations and NGO's together to do good.