One Area Where Companies Can Make a Difference


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 how companies can make a difference when giving to charities, namely by giving to the less sexy, but necessary, aspects of charity like infrastructure development.

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.

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Brendan: These companies -- we mentioned Wal-Mart, Goldman Sachs, ExxonMobil (the top three donors in 2011 according to the Chronicle of Philanthropy) -- are they doing the kind of due diligence that individuals do not do, or do you find that they're throwing their money into all sorts of charities in much the same way?

Ken: It's actually a mixed story, with respect to corporations. I think companies tend to do a little bit better in terms of due diligence and effectiveness investigation or research than individuals do. It's interesting to see that people who are employees of companies actually do more due diligence in their corporate role than they do in their own individual role.

One example I know of that is with the American Red Cross. One of the challenges of the American Red Cross, one of the signature charities this country has, is that people are unwilling to invest in infrastructure, and they're really an infrastructure company. They're a supply line company.

Think of the other supply line companies -- FedEx, Wal-Mart, the United States Military -- put billions into that infrastructure. No one wants to give the Red Cross money for that. When a tragedy occurs, they want to get money to the victims but they don't ever invest for the next victim down the road -- but companies do.

The American Red Cross has actually been somewhat effective in getting companies to help them invest in infrastructure and help them prepare for the next disaster. Only companies, not individuals, because I think companies think a little bit differently than individuals do.

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Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. 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.

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