Big banks know no more about philanthropy than they do about making toast. They shouldn’t be advising customers on either.
1In olden days, when you opened an account at your local bank, they’d give you something like a toaster as a thank you. As the “financial services industry” evolved, they figured out they could give their customers services that would be mutually beneficial to the customer and the bank—free checking, credit cards with points, bill-paying … all of which kept the money in the bank so they could make fees while offering clients good services at low cost and high convenience.
So banks stuck to their expertise—investing. They wouldn’t tell their customers what checks to write, deny a customer the ability to use their charge card as they see fit, or contest a payment on a bill, because that wasn’t the bank’s business—it was the customer’s. Later, banks began to offer donor-advised funds as one of their benefits, and that worked very well for both the bank and the customer: customers could open a DAF with low fees, and the banks could still manage the investments and make money while the customers could use their DAFs to support any legitimate 501(c)3 charity. It was a symbiotic arrangement, and commercial DAFs exploded because they were a good deal. It was like the modern-day toaster, offering customers a motivating reason to use that bank.
That worked until recently, when banks, like the rest of the big corporations, became “woke.” Environmental, Social, and Governance (ESG) movements and their mandates infiltrated bank boardrooms and began issuing diktats to banks: follow our lead or we will crush your business. Banks capitulated as easily as France caved to Germany in 1940, letting bald-faced power brokers who had little to nothing to do with banking barge into their business and governance processes.
One of the diktats was to start monitoring what customers did with their DAFs. It began with some banks using subjective sources like the Southern Poverty Law Center (hardly a bastion of good governance itself) as a sort of Better Business Bureau for charitable giving. Customers who gave to charities that weren’t in line with the ESG movement’s motives were increasingly finding their grant disbursal requests denied with little or no rationale offered other than “the gift is not in line with Our Bank’s values.” The trouble is, a bank doesn’t have values—other than investing money. Banks are no more experts on individual philanthropy than they are at making toast: other than giving the customer a benefit at a low price, they aren’t useful advisors for charitable giving.
As the largest commercial DAF provider says on its website “With a Big Bank Account, you can give more than cash: you can give stocks, mutual funds and more, for an immediate tax deduction and the potential to reduce capital gains. You can even donate the rewards from your Big Bank Credit Card. Because your contributions are invested, your donations have the potential to grow tax-free and provide greater support to the charities you care about.” In other words, we get to keep the money (and make money off that money) until you decide how you want to give it away. At that point, you decide where to spend it. Or so you’re told and sold.
Conservatives are increasingly finding their requests denied and should be concerned. You wouldn’t let a bank tell you how to make toast, why would you let them tell you how to give to charity?