Global investment bank Goldman Sachs proudly announced hitting a milestone. Six years ago, the bank created a philanthropic foundation for poverty stricken women around the world. The foundation recently provided funding to its 10,000th female entrepreneur.
To start, the World Bank and Goldman are right in offering women entrepreneurial opportunity that they otherwise might not have. Women looking to start businesses are often held back due to lack of collateral or legal challenges. The Bank estimates there is currently a funding gap somewhere in the vicinity of $300 billion. Another note to point out is Goldman does seem genuinely interested in earning the respect and admiration of its employees as much as the outside world’s. Goldman’s CEO, Lloyd Blankfein, has stated the bank’s philanthropic efforts will improve employee culture.
Another issue to note is Goldman’s announcement emphasizes how much philanthropy has changed. It wasn’t too long ago that bank “charity” entailed throwing money at a good cause. It’s actually a relatively new trend for banks and corporations to become heavily involved in the development and implementation of charity programs and providing logistical support. In its partnership with the World Bank, Goldman plans to do design work and provide intellectual capital and energy. In essence, the entire process has the feel of a Goldman transaction. The plan has leverage (turning a $50 million donation into more than $600 million through additional third party donations). It has both public and private sector interaction (as World Bank rarely collaborates so extensively with a private bank).
A $600 million fund may seem like generosity at its greatest depths but the truth is it’s not costing the bank much. Considering its net worth is somewhere in the $50 billion area, the idea Goldman is putting $50 million into the World Bank project could be construed as not particularly significant. (Imagine having $50 in your pocket and giving $5 to the fund.) Still, in 2012, Goldman was one of the five largest corporate entities supporting charities with donations totaling $240 million.
The plan is conveniently advantageous. Goldman will build relationships and place itself in the midst of huge information opportunities. This “deal” is undoubtedly an altruistic endeavor but it also has cultural and political leanings that work in Goldman’s favor and reputation on any number of levels.
It is quite likely that Wall Street critics that may be patting Goldman’s intentions on the back publicly are sniggering behind closed doors. There are definitely many old school bankers and experts that are cringing at this all this synergy. But none of them could fault the idea that poor female entrepreneurs deserve the opportunity that the Goldman venture offers. Nor would they object to the idea that rigid multilateral bureaucracies within the government should be taking notes. They have to be more inventive to those in need of aid like this. This is as important as the banks redefining their images in a post-crisis environment.