By Eduardo J. NegrónAt our most successful, banks promote economic development, innovation and social well-being. Unfortunately, too many people today perceive finance as an industry built on corruption, greed and fat bonuses. In this election season, politicians from both parties have run against banks, and movies such as “The Big Short” have wrongly portrayed banking as populated by colorful scoundrels and outright thieves.
Hardly anyone wants to stand up for the people who finance new businesses or home loans. As Peggy Noonan recently wrote in the Wall Street Journal, today’s young people “have never been taught anything good about capitalism and in their lifetimes have seen it do nothing—nothing—to protect its own reputation.”
Lost in this continuing backlash against banks is the enormous good we do for our communities. We need to talk about that more. We need to reassert our role as an economic engine, helping to support growth and alleviate poverty and inequality, and we need to prove it with our actions, not just words.
A crucial element of putting our best foot forward is to demonstrate the many ways in which we give charitably to our communities on top of the loans and services that fuel economic growth. According to the Chronicle of Philanthropy, five leading banks alone—Wells Fargo, Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup—contributed a combined $1.2 billion to nonprofits in 2014, and half of the nation’s eight largest corporate foundations are affiliated with banks.
Community engagement and corporate philanthropy is a top priority for banks of all sizes, too. As Banco Popular, we created a foundation that supports local educational and community development projects with a direct positive impact on our customers and neighbors. Since we launched the foundation in 1979, we’ve helped school teachers receive professional training, enabled students to continue in alternate schools after dropping out, provided members of disadvantaged communities with job training, and done much more to improve the communities we serve in Puerto Rico, New York, South Florida and the Virgin Islands. We’re proud that our work in financial education and community development has been recognized by the ABA Foundation’s Community Commitment Awards for two consecutive years.
Over the past 35 years, we have identified several key elements to building a successful bank foundation1. Foundations need the active support of the entire employee base, from top management to rank and file worker. At Popular, close to 80 percent of our 7,800 employees make voluntary, tax-deductible contributions to the foundation, as well as equally valuable contributions of time and “sweat equity.” Popular matches their contributions and provides the resources needed to run it. 2. To get employees involved, foundations must talk openly about social needs and encourage them to get involved in causes they can support. Because Popular’s community roots run deep, we know that giving money is not enough. What is more gratifying, and ultimately more effective, is that so many of our employees are willing to volunteer their time and talent. In our minds, the foundation is just a vehicle to help that happen. 3. It is critical that management itself not pick causes on its own. Because Popular’s employees are often deeply involved in the administration, governance and operation of many of the nonprofit organizations to which we contribute, they take the lead. They bring knowledge and business expertise that some nonprofit organizations, no matter how well-meaning, may lack. 4. As in the banking business itself, our foundation places a premium on accountability and rewards results. The Popular Foundation’s donations are based on an organization’s performance. If it substantially meets its goals, we donate more. 5. None of this will work if it does not start at the top. Our foundation’s board of trustees is chaired by Popular’s chairman, and includes our president, former directors of the board, employees, and community leaders. These trustees are busy people, but they know their contribution and involvement are extremely important. Their involvement sends a message throughout our organization that we are serious.
We hope that people will think well of us, and of bankers at large, when they hear about the Popular Foundation’s work. But that is not why we started it, or why it continues today. We think of the foundation as an integral part of our role as an economic engine. If we can help people become self-sufficient, they will save money, start businesses—and become our customers! The progress of our country is closely related to its economic and social development. We grow if the communities we serve grow.
It takes real commitment to make this happen. Our industry has its share of detractors, but at Banco Popular and other banks, our people genuinely strive to make a difference. Our foundation supports valuable causes, allows our employees to lend a hand, and connects us more closely with the communities we serve.
Eduardo J. Negrón is EVP and executive director for administration at Popular Inc. in San Juan, P.R.