Here's how the bankers can win back the public

Grilled: bank bosses Lloyd Blankfein, Jamie Dimon, John Mack and Brian Moynihan
12 April 2012

Tomorrow the gloves will come off for another round of banker bonus bashing. JP Morgan and Goldman Sachs have had stellar years, despite the downturn: once again, pictures of their leading players will be everywhere — with estimates of how much they stand to receive.

Arguably, the attacks never ceased: yesterday four bank bosses — Jamie Dimon of JP Morgan, Brian Moynihan from Bank of America, Morgan Stanley's John Mack and Goldman Sachs' Lloyd Blankfein — were made to parade as if they were criminals and subjected to aggressive, public interrogation before a special commission set up by the US Congress.

At Goldman, the bank is working on a plan to devote more money to good causes. However much it hands over, it is unlikely to be enough. The firm's London chiefs, Michael Sherwood and Richard Gnodde, should steel themselves for more photographs and rehashed details of their private lives.

Like their senior colleagues, they already give large amounts to charity — Sherwood, for instance, is a major supporter of Greenhouse, which helps disadvantaged schoolchildren. But their generosity will pall alongside predictions of their earnings. Meanwhile, politicians from all sides have now decided that in the run-up to the election, bankers are fair game, to be kicked at will.

There is a way out for the bankers: to make a grand gesture, to give so much cash that the rest of us are forced to nod in admiration and to give thanks. I've suggested before that Goldman could rid itself of the "great vampire squid" nickname that it acquired in the US, if it chose two projects in New York and London (where its main operations and its critics are located) and backed them to the hilt. Here, if it fully funded Great Ormond Street Hospital, say, it would suddenly be the "bank that pays for Great Ormond Street" rather than the "bank that pays itself filthy bonuses".

Goldman argues that it already gives to charity, and that it's worldwide and can't be seen to be choosing one body. And when all is said and done, it's a business mandated by its shareholders to make the highest returns it can, not a branch of the Church of England. But this is baloney. After all, Goldman's worldwide boss, Lloyd Blankfein, is on record as saying they do "God's work".

And so the flak goes on. The bankers suppose that eventually their critics will grow tired and choose another target. So far, there is precious little sign of this. Still they go to dinner parties, mumble that they're bankers and wait for the inevitable abuse. My conversations with many of them disclose a real hurt: they're genuinely fed up with the stigma.

For our part, though, if we're not prepared to tackle the underlying problem — which is bankers' ability to make so much money so easily — and to change the system, then our constant knocking is getting us nowhere. We can take more off them via taxation, although that runs the risk of driving them away completely and damaging the economy.

Or we can encourage them to give more of their wealth to charity. For that to occur, we must set in place the instruments to foster greater philanthropy.

In this same week that the bonuses furore is set to rear up again, Arts & Business, the independent organisation that promotes closer links between the private sector and the arts, reported a seven per cent drop in private sector donations for the arts last year.

Public funding (Arts Councils, government, local councils, National Lottery) accounted for 53 per cent of arts income, ticket sales and merchandising brought in 32 per cent and donations from businesses, individuals, trusts and foundations came to 15 per cent. But that former, highest figure is set to plummet as public expenditure cuts bite. So far, no figure can be put on the reduction in public arts spending but it is likely to be severe. "You can't cut universities and care homes and not the arts," says Colin Tweedy, chief executive of Arts & Business.

So we have got to nurture an atmosphere in which increased corporate and private donating is actively encouraged. That means more efficient use of existing higher-rate tax breaks and the introduction of new ones. It also goes deeper. We need to dispel the old-fashioned notion that public money is somehow good and private capital is somehow bad.

Don Foster MP, Liberal Democrat culture spokesman, says: "Philanthropists and private sector organisations are the unsung heroes of arts and culture. Their helping hand deserves greater recognition. The Prime Minister and his Cabinet colleagues should publicly celebrate and thank them for their contributions."

Ignoring the fact that Foster speaks for a party that is highly critical of bank bonuses, there is merit in what he says. In essence, he is suggesting that we have to become more American in our approach. There, philanthropy is both applauded and regarded as akin to a duty. As a result, their charities benefit accordingly — in the UK, private sector investment in the arts in 2008/09 was £655 million; in the US, it was £2 billion.

At the same time, our charities need to learn from the US — and be more proactive in soliciting private gifts. In Scotland last August, Mona Webster, a rich widow, died leaving £4.5 million to New York's Metropolitan Opera and £4.4 million to the Wildfowl and Wetlands Trust. Her passions were the opera and birds so the donations to bodies in those areas were not a surprise. But why the Met, when our own Royal Opera got £100,000 — and especially as she last went to New York in 2000? The answer was that the Met made it its business to find out her other interests and each year sent her a gift to do with birds.

In terms of public acclaim and recognition, little beats large-scale philanthropy. How many tourists associate Sainsbury with a supermarket rather than the National Gallery or Sir John Madejski with Auto Trader magazine and not the Royal Academy? Right now, the director of the Tate, Sir Nicholas Serota, is seeking the finance for the Tate Modern's extension. The Sherwood Wing would sound good. Who knows, Michael, you might even receive the praise of all the party leaders for funding it, which for a banker in this climate would be remarkable. And Lord Sherwood — now that has quite a ring to it.

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