A time-honored way for unpopular companies to burnish their image is to dole out lots of money to charity. Now it looks like the new alternative, at least for financial services businesses, is to hand out big bucks to small companies.
Just consider this. On Wednesday, Citigroup announced the launch of a $200 million fund to boost small-business lending in low-income communities. It linked up with Calvert Foundation, a nonprofit investment management firm, and Opportunity Financial Network, a financial intermediary for community investments, to help with these efforts. The deal is that Citi will provide $199 million through a mix of equity and loans. The other two organizations will supply the rest.
"Too many small businesses, microenterprises, charter schools and community service institutions simply do not have access to credit, yet they are engines for economic growth," CEO Vikram Pandit said in an official statement.
That move follows private equity firm Blackstone Group's launch several days earlier of a five-year, $50 million program to encourage entrepreneurship in financially hard-hit areas. Through its charitable foundation, the firm is first granting $2 million to start programs based at Wayne State University and Walsh College, both Michigan-based schools. The programs target students and graduates, to help them create business plans; participants will be matched with businesspeople, who will provide advice.
Blackstone CEO Stephen Schwarzman's statement focused on the potential to create jobs.
And, last November, the most-hated company in America, Goldman Sachs, launched an initiative called 10,000 Small Businesses, a $500 million fund aimed at giving, yes, 10,000 small businesses access to mentors, money, and more. Just about a week ago, they announced that Laguardia Community College in New York would be the first community college in the country to receive funding to start a small-business education program.
Chairman and CEO Lloyd Blankfein's statement emphasized job creation, too.
Don't get me wrong. These are all initiatives with great potential. There's merit to all of them. And, nothing wrong with piggybacking on the popular high regard for that great American hero--the small business--to boost your own image. But, let's face it, all these companies could afford to reach into their pockets considerably more deeply.
Plus, since none of these organizations are known for small-business friendly practices, the moves are more than a little hypocritical.