Banks Say They Gave More in ‘06
Donations rise more than earnings, but miss 1% benchmark
By Rick Rothacker
The Charlotte Observer
December 7, 2007
For the second consecutive year, Charlotte's big banks in 2006 saw their charitable giving rise
more than their profits.
Bank of America Corp. and Wachovia Corp., however, fell short of a philanthropy benchmark of 1
percent of their pre-tax profits, according to an Observer analysis of IRS filings recently released
by the banks' foundations.
In a year in which it acquired credit card issuer MBNA Corp., Bank of America donated $193.3
million through its foundation and MBNA's. That was 55 percent more than what the bank gave in
2005. In comparison, the bank's pretax profits jumped 31 percent in 2006 to about $32 billion
from the prior year.
The bank said it also gave away an extra $10 million through other parts of the company. That
put it above the $200 million in contributions it said it would give after buying the Delaware-based
credit card giant.
Wachovia's foundation donated $74.9 million in 2006, up about 24 percent from 2005. In
comparison, pre-tax profits climbed 21 percent. In addition, the bank said it gave away an extra
$5 million, for a total of nearly $80 million in giving.
In North Carolina, Bank of America said it donated about $18.1 million. Wachovia said it gave
about $19.5 million in the state.
Both banks are an important philanthropy bellwether because they are the city's biggest
corporate givers and among the largest in the U.S. Bank of America was the second biggest cash
giver behind Wal-Mart Stores Inc. in 2006, according to data collected by the Chronicle for
Philanthropy, which tracks charitable giving.
Bank of America and Wachovia are facing potentially down profit years in 2007 and a difficult
environment in 2008. But both said their giving would not drop off.
Bank of America spokeswoman Nicole Nastacie said the bank plans to donate $200 million again
in 2007 and more in 2008. Wachovia spokeswoman Aimee Worsley said the company expects
giving to increase year over year.
Quantifying Philanthropy
Comparing philanthropy among companies and industries can be difficult because corporations
often count their donations differently. According to a recent study by the Committee Encouraging
Corporate Philanthropy, companies reported a median increase of 4.8 percent in charitable giving
in 2006, counting data from corporations that disclosed contributions to the group in 2005 and
2006.The organization found these companies gave away 0.93 percent of pretax profits in 2006.
Financial firms, however, gave away less -- about 0.69 percent. Banks often miss the 1 percent
goal because they have large profits and typically give away only cash, instead of product
donations such as pharmaceuticals or computers.
Including the non-foundation contributions, Bank of America gave away about 0.64 percent of
pretax profits in 2006; Wachovia donated about 0.69 percent.
Companies often compare their donations to the previous year's pre-tax profits because that's
when they developed their foundation budgets. By that measure, both banks gave away about
0.8 percent of profits.
Nastacie said Bank of America was proud of the company's charitable giving in 2006 and pleased
with the increase compared to profits. Worsley said Wachovia's goal is to give away 1 percent of
the previous year's pre-tax profits.
Concerns amid Mergers
The wave of banking mergers and acquisitions in recent decades has raised concerns about the
industry's charitable giving, but a study this summer found donations actually increased amid
massive consolidation.
Seven major financial institutions, including Bank of America and Wachovia, saw their total giving
increase to $400 million in 2001 from about $100 million in the late 1980s, according to the
National Committee for Responsive Philanthropy. The South received the most grants from these
institutions, now more than $120 million annually, the group found.
Following last year's MBNA acquisition, many nonprofit organizations in Delaware were worried
Bank of America would give less than the credit card company to local causes. The MBNA
Foundation, however, saw its giving increase 35 percent to about $48.5 million from 2005,
according to its filing with the IRS.
Rashmi Rangan, executive director of the Delaware Community Reinvestment Action Council,
said Bank of America has given more to activities such as housing and small-business
counseling. Even though her group was critical of the acquisition, it has received $50,000 after
having never received a donation from MBNA in the past.
"From my perspective, they've made good progress," she said, but adding: "We're still concerned
about (the interest rates on) their credit cards."
Bank Foundation Giving
BANK OF AMERICA
• 2006: $193.3 million*
• 2005: $125 million
WACHOVIA
• 2006: $74.9 million
• 2005: $60.6 million
*Includes MBNA Foundation
SOURCE: 990 forms filed with the IRS
Wachovia also a Beneficiary
Wachovia's foundation saw its year-end balance increase more than six-fold to about $376 million
in 2006.
That's largely because of an unusual gift made by Golden West Financial Corp., which Wachovia
acquired last year. Shortly before the merger became official, the California-based mortgage
specialist transferred about $370 million in Freddie Mac stock it owned to the bank's charitable
arm.
The contribution was disclosed in an earnings report last year. Golden West had been an initial
shareholder in Freddie, the government-sponsored entity that buys mortgage loans.
"This gift will enable the Wachovia Foundation to maintain a consistent, generous level of giving
over time, through a variety of economic cycles," spokeswoman Aimee Worsley said.
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