CEOs and philanthropy have a long and rich history, from industrialist Andrew Carnegie, whose legacy of generosity includes public libraries across the English-speaking world and New York City’s majestic Carnegie Hall, to Facebook founder Mark Zuckerberg, who plans to make education and health-related causes top giving priorities. The Internet billionaire has also joined the ranks of such mega-rich moguls as Bill Gates, Warren Buffett and Reed Hastings in pledging half his fortune to charity.
Scores of CEOs from companies of all sizes commit to just as significant, if less publicly recognized, involvement in philanthropic endeavors. What prompts these business leaders to give? Reasons range from tax benefits and the hope of burnishing one’s reputation to a sense of moral responsibility and the urge to make a difference. Unquestionably, most CEOs are in a financial position to do so, even if they are giving at a more “modest” level than those who donate a large portion of their wealth.
As admirable as the pledges made by the Buffetts of the world are, the focus on the vast sums of money CEOs give to charity misses a large part of the CEO-philanthropy story. “After a while, the wealth won’t make a difference in their lives—either making more of it or giving it away,” says Marshall Goldsmith, an executive coach who has worked with hundreds of CEOs. “Their jobs are meaningful in that they are running companies and providing employment, but the actual output of their jobs may not be particularly meaningful.” That motivates CEOs to give more than money, for reasons more nuanced and complex than naming rights or noblesse oblige or even the satisfaction of having done the “right thing.” Philanthropy can be a calling of its own.
Steering a Solution
Bob Nardelli, who spent some 30 years at GE before becoming CEO of Home Depot and then Chrysler and, more recently, finding investment advisory firm XLR-8, describes the Savannah College of Art and Design (SCAD)—where he serves on the board of trustees and chairs the board of visitors—as a “magnetic true north, because it always pulls me to it.” Nardelli first became acquainted with the school when his oldest son was looking at colleges. His son was smitten by the array of academic offerings; the father was drawn by SCAD’s commitment to preparing students for careers in the arts.
In SCAD, the serial CEO saw an opportunity to leverage his business acumen and extensive contacts to help solve what he sees as a fundamental problem in American business: a lack of innovation and too narrow an understanding of what it means. He points out that innovation goes beyond thinking and making products. “There’s process innovation, organizational-design innovation [and] service design innovation,” he explains. “It’s about how you design a store, a product or a service and the experience people have with it. SCAD is now the center of design-based innovation, attracting increasing numbers of major corporations, entrepreneurs and retail business consulting.”
Continues Nardelli, “I saw design programs that have a real-world application to businesses that I’m in or am aware of. The energizing idea was advancing business by bringing connectivity between design and major corporations and retailers.” Nardelli says he gained a “tremendous appreciation” for the importance of design during his tenure at GE. “Items such as gas turbines and locomotives were designed in such a way that they could not only be built efficiently but easily maintained over a 30-year span. Design with maintenance in mind made it possible for GE to have a consistent revenue stream from long-term service agreements, which was a differentiator that allowed us to crush the competition.”
Nardelli is especially passionate about the College’s Collaborative Learning Center. The Center gives corporations and nonprofits the opportunity to have business challenges solved by teams of design students, often from multiple disciplines, who are led by professors with real-world business experience. “This helps businesses understand the benefit of design-based innovation, and it’s very gratifying to see the value these students are bringing to Corporate America,” says Nardelli. “This is not something you will learn at business school by going over spreadsheets. CEOs now have to be multidimensional.”
He hopes that his involvement and that of other business people through such programs as SCAD’s Collaborative Learning Center can help to bridge the innovation gap in Corporate America.
While Nardelli’s efforts focus on one of Corporate America’s fundamental business problems, Stephen Roell, CEO of Johnson Controls, is looking to solve critical problems at a more local level, namely, the Milwaukee area that serves as headquarters for the auto supplier, which had revenues of some $42 billion in 2012. Among the charities he is or has recently been involved in are Boys and Girls Club, Hunger Task Force, United Negro College Fund, Wheaton Franciscan Health Board and United Way, which he chairs.
“It’s been a conscious decision to focus on organizations that have a lot of impact on the community,” says Roell. “My predecessor as CEO made the very strong case with me that because we were so fortunate with our results and compensation, it was our role to help others less fortunate.”
Roell says he gets a great deal of satisfaction from his nonprofit work, but he also sees it as an opportunity to influence the kind of company Johnson Controls is and to attract like-minded employees with a shared value system. “How I use my time and set an example is critical to the culture we want to create,” he says. “My involvement helps our brand, but more importantly, when we or our people get acknowledgement for what they are involved in, it gives them a sense of pride.”
He cites his experience as community chair for United Way’s campaign in 2009 as particularly telling. “I had a chance to meet with a number of CEOs and get a sense of their commitment to the Milwaukee community,” he says. “Those who were philanthropic were able to create a culture that permeated through their entire organization. Those who weren’t then had a hard time getting their employees engaged relative to philanthropy.”
Roell has no such problem. He encourages the senior leadership at his company to follow his example and they do. “Between us, we are on 60 different boards locally,” he says proudly.
A Personal Appeal
Often the most fulfilling philanthropic endeavors are those motivated by a personal connection to a cause. That proved the case for John Bardis, the CEO of MedAssets, a $578 million supplier of supply-chain and revenue-cycle management solutions for the healthcare industry. A chance encounter with an injured Iraqi war veteran in 2007 stirred feelings in Bardis about the role the military has played in his family’s life and lingering guilt over the fact that the draft ended before he was called up to Vietnam. Later that year, Bardis founded Hire Heroes USA, which works to train and help find jobs for returning military personnel and their wives. Hire Heroes is housed at MedAssets’ Alpharetta, Georgia, headquarters, and Bardis serve as the chairman.
“A man came up to me when I was in Washington and reminded me that I had hired him 20 years ago when I was recruiting at Morehouse,” recalls Bardis. “Behind him I saw a young man without a leg sitting on a bench, and I struck up a conversation with him.”
The private had been injured five weeks earlier by stepping on a landmine. “You could tell he felt bad physically and had a tremendous amount of apprehension, yet he still had the dignity and humility to call me, ‘Sir,’” says Bardis. “I was the one who felt humbled.”
Bardis arranged to see the soldier the next day at Walter Reade Medical Center, where he would be doing five weeks of rehab. “That day, I met many men and women who had been wounded in service of our country, and I called my wife and told her, ‘We have to do something.’”
Bardis and his wife come from a long line of service people. His grandfather, a native of Lithuania, got American citizenship by serving in the U.S. Army. His own father served in both WWII and Korea and suffered from post traumatic stress disorder for the rest of his life. Numerous uncles on his mother’s side also served in the military.
His wife’s father lost a leg in the war, and Bardis calls him “the greatest man I ever knew, a source of inspiration.” Says Bardis, “That generation sacrificed to make this country great. In 1974, I had a high draft number and expected to be in Vietnam but the draft ended.” As a result, he says he always felt “a void” compared to what the men in his family had done to serve the country.
“When the opportunity came to do something about it, it became as much of a spiritual issue as it did a mission or a cause,” he says.
The young vet Bardis met that day became Hire Heroes USA’s first employee. The organization now has 18 full-time employees, two part-time employees and has placed vets in 800 jobs, thanks to MedAsset’s network of relationships around the country. “Our mission is very clear,” says Bardis. “Returning American war heros deserve the first places in the job line to participate in the American dream they protected. They deserve all of our respect but deserve and need their dignity like all of us do.”
All of the CEOs interviewed cited other unexpected pluses that came from their philanthropic work. “I became more aware of and sensitive to the arts overall,” says Nardelli of his work with SCAD. “Yes, I was interested in the business application, but I’ve been able to appreciate the arts in a much broader way.”
Roell says not being the expert has taught him to listen more, a skill he carries back with him to his own organization. “I do a better job managing my own organization as a result,” he says. For his part, Bardis says. “It gives me humility.”
That is a key point, according to Goldsmith, who points out that CEOs tend to live “in a bubble, a surreal world.” He recalls one client who hadn’t flown commercial since September, 2001 and was thus baffled by security procedures that called for him take off his shoes.
“This kind of work gives them perspective and helps to teach them how the other half lives,” he says. Patience, compassion and gratitude are among the most commonly cited fringe benefits of philanthropic work.
At the same time, warns Goldsmith, the effort can also bring frustration. “In the charity world, the sense of need is infinite,” he points out. “Realistically, you are often only making a small dent in a very large problem. That can be challenging for people used to solving problems.” CEOs are, after all, results-oriented; constantly looking for return on investment and conditioned to set, meet, and ideally exceed goals.
Overall, however, most people who undertake philanthropic endeavors find their efforts rewarding and their outcome meaningful—and CEOs are no different. Their gifts—of money, time, expertise and example—keep on giving, both to themselves and to others.
8 Steps to Finding a Philanthropic Fit
So you want to give your time, expertise or money—or more likely, a combination—to a worthy cause? Here are some tips on getting started from Paul J. Massey Jr., CEO of New York City-based investment property brokerage Massey Knakal and chairman of the board of the Lower East Side Tenement Museum.
- Decide what you are passionate about. You will give your best if your commitment comes from a desire to make a difference, not a sense of obligation.
- Identify and research organizations that serve the causes about which you care. Reach out to board members and investigate charities through resources like Charitywatch.org and Charitynavigator.org.
- Look for red flags. These may include things like a reluctance to speak about succession planning and unexpected or ill-explained management or board departures. Also, check on financial strength and integrity by checking tax returns and compliance practices.
- Meet with senior management. “Culture fit is just as important in the nonprofit world as it is anywhere else,” says Massey.
- Determine what skill sets you bring.
- Be prepared to give and raise money. If the organization isn’t overt about the financial expectations, ask.
- Think outside the board. Strong organizations have committees that are a mix of board members and non-board people.
- If you can’t find a fit, start your own. “Don’t assume all the good ideas and good causes are spoken for,” says MedAsset’s John Bardis, who founded Hire Heroes USA. “We had the right idea at the right time—a time when people were ready to think about returning veterans and how to help them.”