4.In Ex. 18.B, p.404 - What was Goldman Sachs' motivation?Making a difference or buying redemption?Does it make a difference?

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Exhibit 18.B Goldman Sachs: Making a Difference, Buying Redemption-Or Both? What motivates companies to ramp up their charitable giving? A controversial case in point was the financial firm Goldman Sachs. Since 2008-the year that the financial crisis hit full force-Goldman Sachs has contributed $1.6 billion to charitable causes. In 2013 alone, it gave away $262 million, an increase of almost 9 percent from the prior year; this amount was 2.3 percent of its pretax profits. (Before the crisis, Goldman had given less than 1 percent to charity.) During this period, the company launched several high-profile philanthropic initiatives, including 10,000 Women, a five-year $100 million project to support underserved female entrepreneurs around the world. A 2014 study by Babson College researchers found that this project had enjoyed con- siderable success; participants in the program had increased their businesses' revenue, created jobs, and improved their leadership skills. "Engaging wasn't just the right thing, it was necessary, especially in the wake of the financial crisis when people said we weren't doing enough," said the company's chief of staff. Some praised Goldman's efforts. "I think Goldman's [philanthropic] programs are the best I've seen," said investor Warren Buffett (although he added that "I personally don't like the idea of giving away other people's money.") But others were skeptical of the company's motives, saying its philanthropy was just a way to buy back its tarnished reputation. A columnist for The New York Times offered this opinion: "Goldman Sachs helped to wreak havoc on the housing market, betting against the very investments it was pushing on clients. And then it took a sliver of its money and used it to provide money, mentorship and training to 'over 10,000 women.' But how many women saw their businesses implode or their pensions disappear because of the financial crisis Goldman helped to foster?' Sources: "Philanthropy Starts after Profits Are Tallied," The New York Times, May 12, 2015; "Goldman Sachs: Buying Redemption," The New York Times, October 26, 2013; and "Investing in the Power of Women: Progress Report on the Goldman Sachs 10,000 Initiative," September 2014, Babson College. Goldman Sachs' philanthropic initiatives are further described at www.goldmansachs.com/citizenship