Executives at Goldman-Sachs aren't known for their largess. But now, after the company and its powerful ties to DC have been dragged through the mud, officials may throw coin charity way. Sound good? Yes and no and maybe.
The donations are still being hashed out, but it goes something like this: the company will likely award a record-breaking $22 billion in bonuses this year, an extraordinary number considering the bank's role in the disintegration of the financial industry. Of those billions, the company may donate 10-15% to charity, a move that would make Goldman the biggest single-shot corporate giver in history, and would guarantee the bank loads of good press.
And that's just the point. An executive who's familiar with all the board room hand-wringing readily admits that Goldman considers this a "publicity stunt" and we're sure the American people will see it as such, which means then Goldman Sachs looks patronizing as well as greedy. Then the unwashed masses, still angry about the AIG bailout and golden parachutes and all of that, will have to decide whether they should be insulted by Goldman's self-serving donations or remember that the company is, in its own way, helping people.
Don't worry about whether or not to be inappropriately outraged and confused, though, because the plan's not finalized. Shareholders don't seem to keen on throwing away money on frivolous things like charity. And then there's Goldman's cash-loving culture:
Finally, there is concern over how to do this in a tax advantaged way. Goldman has a very low tax rate, thanks to its brilliant accountants. It is unlikely to be able to achieve much value by making a tax-deductible charitable donation, particularly if the donation goes to a charitable foundation Goldman controls. When asked if they realized that this sounded a bit silly, the former Goldman executive said that not giving away value was a point of pride for Goldman.
Perhaps the most advisable plan under consideration would be having bonus-receiving executives donate the money themselves, which means they receive a tax-deduction and we get to see which of Goldman's money bags actually care about the little people.