Good works is good business

By: Ray Pellecchia

File Under: NYSE

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Sometimes I think Colin Brayton of The New Market Machines blog is just checking to see whether I'm paying attention, or whether he can get my goat. I am, and he can. Actually, he's quite good at it.

Earlier this month, he posted this piece, "Charity Begins at Home." It mostly deals with the IRS, but veers off into the Big Board's direction. Excerpt:

. . . The IRS has also been cracking down on the political pulpit, threatening churches which endorse political candidates and platforms with loss of tax-exempt status.

I wonder if the same rationale will be applied to a project like the partnership between NYSE, Operation Hope and the Clinton Global Initiative to promote “financial literacy.”

Thirty NYSE Group employees under the NYSE Community Volunteers program will go into classrooms and educate low-wealth students in the Harlem area, using their technical expertise to provide information on financial management and investment that will enable youth to make solid choices and take immediate responsibility for their economic well-being through the “Banking on Our Future” program.

Euphemism of the week: the poor are now “low-wealth” rather than “low-income.” Good one.

Aren’t such efforts, some implemented as part of the SEC research settlement, angled to increase participation in fixed income and equity investments? Exchanges and brokers get paid for two things: transactions and data. So it’s in their interest to create more consumers for their products, right?

The line between ‘education’ and marketing gets blurrier and blurrier.

That tars us with an overly broad brush, and yet looks at the issue too narrowly. I happen to be a bit involved with the project, and I was going to just let Colin's post go, but I hate to see it sit unchallenged, and besides, that's no fun! So here's the story:

· Our program with Operation Hope is self-initiated, and has nothing to do with the research settlement (in which we were on the prosecution side, not the other side) or any other obligation NYSE Group has, other than a moral one.

· If the suggestion is that a charitable organization should lose its 501c-3 tax-exempt status because some of its volunteers are employees of a company with an organized volunteer program, that would rob charities of needed volunteers and communities of needed programs. If the employees wear company t-shirts while handing out turkey dinners, that's a sign of pride in the team, not advertising. I don't agree that it constitutes an improper state subsidy of private enterprise, because the value of any marketing "rub" the company gets is negligible. Volunteering is good for the company and its employees not in that narrow way, but in other important, larger ways. Let me explain:

· The program has everything to do with NYSE Group's Community Volunteer Program, which was established in July 2005 by our Diversity Council (of which I'm a proud member) and our Corporate Philanthropy and HR departments, with a boost from John Thain, who took a personal interest in the program. According to the program's 2005 annual report:

The program allows NYSE employees, individually and in teams, to regularly volunteer time serving a variety of local non-profit community organizations.

In 2005, we had teams of employees volunteer to help Thirteen/WNET, Habitat for Humanity, City Harvest, New York Cares and other organizations. The bell ceremony pictured above took place earlier this month, to honor the folks at New York Cares and some of the Big Board staffers who volunteered to distribute coats to the needy as part of a New York Cares program last winter.

· It's Colin's assertion that we're educating kids so that that we can sell them transactions and data that is the most provocative. He's both right and wrong. We have no illusion that lending our financial knowledge will bring us a single more share of trading volume. But he's right that we think it's good for business and the community, in a larger sense. Again, from our Community Volunteers annual report:

The NYSE believes in strong communities. A healthy, prosperous community is a good place to do business. And business has an obligation to help make its community healthy and prosperous. The NYSE Community Volunteers program puts a personal face on these corporate values. The Exchange and our employees do what we can to help people in need by supporting education, health and human service providers, and arts and cultural organizations.

The NYSE Community Volunteers program brings employees from different personal and professional walks of life together to work toward a common goal. This common cause builds employee morale and develops leadership and teamwork skills. The NYSE believes that valuing employee volunteerism and giving back to the community helps us attract and keep a diverse, high quality workforce.

So helping the community is good business, even if not in the way that Colin implies. When colleagues of mine read to students every week as part of Everbody Wins! Power Lunch, nothing directly accrues to our bottom line, nor the bottom line of John Wiley & Sons Inc. or the other publishers listed here. We don't volunteer for Habitat for Humanity to help sell tools for The Stanley Works. But are we in a larger sense strengthening NYSE Group as well as the community? Absolutely. There is such a thing as partnership between the public and private sectors, and it works to the benefit of both. It's a constructive force for our society.

· One last note, if you're still with me. I happened to write the news release Colin refers to, and I don't agree that "low-wealth" is a euphemism. I picked it up from Operation Hope's own self-description, and one of their staffers explained to me that the people they look to serve experience more than just low income. Income is just part of the problem: they have inadequate savings, little or no insurance, little or no retirement funds, and not enough knowledge about how to manage their finances and build their wealth. That's where we hope to help, sharing a little knowledge, helping both them and ourselves in the process.

Reminds me of something Chris Rock says: "Shaq is rich. The man who signs his check is wealthy."