In the video below, Ken Stern, former CEO of National Public Radio, discusses the current state of the charitable sector, and gives his take on the reasons that companies give money to charity, and how they should donate going forward.
The full version of the interview can be found here, in which Stern discusses his new book, "With Charity for All." In the book, Stern takes on the charitable sector, which he says "operates with little accountability, no real barriers to entry, and a stunning lack of evidence of effectiveness." Stern discusses in detail what's broken in the charitable sector, how to fix it, and how Americans can best make a difference. Given Stern's unique perspective from his time at NPR, we also discussed with him the future of radio and the technologies that are disrupting it.
Brendan Byrnes: Let's talk about companies giving to charity. According to the Chronicle of Philanthropy, Wal-Mart, Goldman Sachs, ExxonMobil, Wells Fargo, and Chevron were the top five that gave the most cash to charities in 2011. What do you think is the main reason for them to do this? Is it self-serving, or do you think there are other purposes overall?
Ken Stern: First, let's put that in a little bit of context which is, corporate donations to charities accounts for about 1% of private citizen -- if you can call a company a private citizen for these purposes -- donations. It's actually not a big part of the revenues for charities.
I think companies do it for a number of reasons. One is because it's important to their employees; often we'll see that type of investment in their local communities. Secondly, it's often good public relations and good relationship-building for these companies. Third, I think a lot of companies now buy into the notion of social capital, "doing well through doing good."
I think that's why companies do that, and why I would expect and hope that companies will be putting more and more into community resources, community activities, whether it's through charities or otherwise in the future.
Brendan Byrnes owns shares of Wells Fargo. The Motley Fool recommends Chevron, Goldman Sachs, and Wells Fargo. The Motley Fool owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.