Stern: First, let’s put that in a little bit of context which is, corporate donations to charities accounts for about 1% of private citizen — if you can call a company a private citizen for these purposes — donations. It’s actually not a big part of the revenues for charities.
I think companies do it for a number of reasons. One is because it’s important to their employees; often we’ll see that type of investment in their local communities. Secondly, it’s often good public relations and good relationship-building for these companies. Third, I think a lot of companies now buy into the notion of social capital, “doing well through doing good.”
I think that’s why companies do that, and why I would expect and hope that companies will be putting more and more into community resources, community activities, whether it’s through charities or otherwise in the future.
Byrnes: These companies — we mentioned Wal-Mart Stores, Inc. (NYSE:WMT), Goldman Sachs Group, Inc. (NYSE:GS), ExxonMobil — are they doing the kind of due diligence that individuals do not do, or do you find that they’re throwing their money into all sorts of charities in much the same way?
Stern: It’s actually a mixed story, with respect to corporations. I think companies tend to do a little bit better in terms of due diligence and effectiveness investigation or research than individuals do. It’s interesting to see that people who are employees of companies actually do more due diligence in their corporate role than they do in their own individual role.
One example I know of that is with the American Red Cross. One of the challenges of the American Red Cross, one of the signature charities this country has, is that people are unwilling to invest in infrastructure, and they’re really an infrastructure company. They’re a supply line company.
Think of the other supply line companies — FedEx Corporation (NYSE:FDX), Wal-Mart Stores, Inc. (NYSE:WMT), the United States military — put billions into that infrastructure. No one wants to give the Red Cross money for that. When a tragedy occurs, they want to get money to the victims but they don’t ever invest for the next victim down the road, but companies do.
The American Red Cross has actually been somewhat effective in getting companies to help them invest in infrastructure and help them prepare for the next disaster. Only companies, not individuals, because I think companies think a little bit differently than individuals do.
Byrnes: A couple of the individual charities, or at least individual charitable sectors you talk about — one is D.A.R.E., another one is the water charities in Africa and Latin America — could you talk about those specifically, and what’s going on with them? Maybe more than meets the eye.
