In November, Asian Americans for Equality (AAFE) got a big boost from Bank of America () -- a $200,000 unrestricted grant. The 80-person nonprofit helps immigrants find affordable housing by providing financial education and guidance through the maze of government programs and bank rules. The group, which was launched in 1974 to focus on the needs of immigrants in Manhattan's Chinatown, now works throughout New York City's five boroughs.
As part of the grant, Executive Director Christopher Kui got to participate in the bank's management-training programs. What did BofA get out of the deal? Kui sees himself as a bridge to the immigrant community, which makes up 10% of the U.S. population, and to an important segment of the larger "multicultural" market that many banks increasingly court. A third of AAFE's clientele is now non-Asian, including the family of Jorge and Marta Morales, originally from Ecuador and now living in Ozone Park, Queens. The couple and their 16-year-old daughter, Leonela, had rented an apartment for 15 years in the small building that AAFE recently helped them buy.
Bank of America's efforts are typical of big banks, which are once again big givers in BusinessWeek's ranking of corporate philanthropists. Of the top 10 cash givers on this year's list, four are banks: Citigroup (), Bank of America, Wells Fargo (), and Wachovia (). Their giving has roots in the Community Reinvestment Act of 1977, which was meant to encourage banks to help meet the credit needs of the low- and moderate-income neighborhoods in which they do business. Banks get bonus points for community good works on the grading of their compliance with the Act -- but that giving has also become an important way to stay close to customers as the ever-merging, ever-larger institutions try to maintain local loyalties.
Because all four of these banks have strong consumer businesses, with more than 13,000 branches among them, they give locally as much as possible. Wells Fargo, for example, leaves the decision-making to its 60 regional contribution directors, with headquarters giving guidance and twice a year coordinating a national conference but otherwise stepping back. Wachovia has a similar grassroots focus. "The community needs to decide what they need help with," says Frank Addison, Wachovia's director for corporate philanthropy. At Bank of America, which made more than 3,000 grants in 2004, the decision about where money goes is made by managers at the local level. In Miami education is the top priority, with affordable housing and multicultural issues ranking second and third. But across the state in Indian River, Fla., arts and culture are the primary focus.
U.S. banks, which employ more than 2 million people, are increasingly using these employees to help direct their philanthropy and put it into action. Since Wells Fargo launched its financial-literacy program early last year, the San Francisco-based bank has trained 5,000 staffers to teach the program in schools and community centers. It's available in English and Spanish, for individuals on the Internet, via DVD, or on paper. Wells Fargo has sent packets as far away as China, Brazil, and India. That the bank has expertise in this area is to be expected. Less expected is that there are no ads trumpeting its efforts, even on the program's Web site, which, since January, 2004, has had more than 11 million visitors viewing an average of 112 pages per visit.
That's not to say banks aren't promoting their good works. It was important to Bank of America to paint itself as a good corporate citizen after it bought Fleet Bank, a longtime New England institution, in October, 2003. Managers immediately promised to put more than $100 million into New England charities from 2005 to 2010. Even though the bank has cut 17,000 jobs since the deal was inked, customers rate the bank more favorably than the old Fleet. It has gained more than 400,000 new checking and savings accounts and has seen a 20% rise in commercial loans. "It may be partly because of the [better] economy, but you would not have seen that kind of a trend if it felt like an abandoned market," says Anne M. Finucane, BofA's president for the Northeast. It's hard to find a set of numbers that would please a banker more.
By Nanette Byrnes in New York