Chemical Bank: Corporate Contributions
17 Pages Posted: 21 Oct 2008
Abstract
Students have the opportunity to consider the role of corporate contributions in the operation of the branches and at the corporate level, and to determine the extent to which enlightened self-interest and philanthropic considerations merge or diverge. The case contains material that can lead into discussion of both Friedman's and Galbraith's criticisms of corporate giving. The new chief executive officer must decide whether to follow his three presidents' recommendation to cut Chemical Bank's 1984 corporate contributions as part of a general program of cost containment. The case describes Chemical Bank's extensive corporate giving and the rationale behind it.
Excerpt
UVA-E-0028
CHEMICAL BANK: CORPORATE CONTRIBUTIONS
In January 1984, Mr. Walter Shipley, chairman of the board of Chemical Bank, faced a difficult decision. The increasingly competitive banking environment had mandated strenuous efforts to reduce costs; Chemical Bank was responding by trimming expenditures in all departments and calling for savings and increased productivity. In light of these cost-cutting efforts, consensus had been achieved in November 1983 by the three Chemical Bank presidents that reductions should be sought in the 1984 contributions budget.
Chemical's long history of giving, which many regarded as a critical component of successful banking, complicated Mr. Shipley's decision. Moreover, the bank's extensive involvement in corporate philanthropy and community service had been developed under the guidance of Mr. Shipley's predecessor, Mr. Donald Platten, who had retired three months earlier. Mr. Platten's approach to corporate support of local and regional nonprofit and community groups reflected his belief that “it would be wrong for the private sector to turn its back on the public. [Giving] is the right thing to do, and it is easy to face yourself if you are doing the right thing.”
Chemical Bank
With $ 51.2 billion in assets and approximately 19,400 employees, Chemical operated nationally and internationally through 400 domestic offices in New York and 10 other states, as well as a network of overseas branches, representative offices, and subsidiaries. In terms of total deposits, Chemical Bank was the fifth largest commercial bank in New York and the sixth largest in the United States. Financial information is presented in Exhibit 1.
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Keywords: bank management, corporate social responsibility, ethical issues, social responsibility
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