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Within days of awarding $1million to a group of struggling Charlotte charities, Bank of America announced it is cutting back on matching contributions to nonprofits in the communities it serves.
The Charlotte bank is ending a program Jan. 1 that matched donations made by its retirees. It broke the news in a letter that retirees began receiving this week.
In the letter, the bank blamed "the unprecedented economic environment," and said it wants to ensure that it can keep offering the program to its growing ranks of current employees.
Bank of America retiree Charlie Berger, the bank's former deputy general counsel, said he is outraged.
"The company is making the retirees bear the brunt of the company's bad decisions," Berger said, adding: "The communities retirees live in will be harmed by this."
It's not clear what impact this will have on local nonprofits. Last year, the Matching Gifts Program, which is administered by the Bank of America Charitable Foundation, donated more than $25 million nationwide, and more than $3million in North Carolina.
The bank didn't share how much of that money came from retirees, but did say that only a very small percentage of retirees participated in the matching program. It doesn't share its number of retirees.
Bank of America is one of the biggest charitable engines in the Charlotte region. Jane McIntyre, executive director of the Charlotte-based chapter of the United Way, said earlier this week that the bank "is one of United Way's biggest supporters, if not the largest."
Her comments came on the heels of Bank of America's announcement that it would donate $1 million to seven Charlotte nonprofits that focus on emergency needs, including the Urban Ministry Center and Crisis Assistance Ministry.
In total, Bank of America's Charitable Foundation donated about $200 million last year, including $13 million in North Carolina. Bank spokeswoman Nicole Nastacie said the bank expects its national giving will remain on the same level. Earlier this year, the bank announced a plan to invest $2 billion in nonprofit organizations over the next 10 years.
She called eliminating retirees' matching grants "a tough decision." However, "we wanted to ensure that we could still offer this program to our associates."
Bank of America will match up to $5,000 per year for each employee's charitable giving. The bank has about 282,000 full-time employees, compared to 160,000 a decade ago.
It's been a tough year for the Charlotte bank, as it absorbs Merrill Lynch and faces rising consumer loan losses. It lost $2.2 billion in the third quarter, and it's unclear who will replace chief executive Ken Lewis and what kind of controls the government will exercise over it as it holds $45 billion in government loans.
Retirees are still eligible for other programs, including a scholarship program for their children and a volunteer grants program in which the bank donates $250 to a nonprofit when an employee volunteers 50 hours per year, and $500 when the employee volunteers 100 hours.
Wachovia, the former Charlotte-based bank now owned by San Francisco's Wells Fargo, does not match contributions made by retirees.
Wells is changing Wachovia's matching-gift program as well. The bank had matched up to $4,000 per year in donations, including up to $1,000 for non-education-related donations. Starting in January, it will match up to $5,000, but only for education-related gifts.
The change makes Wachovia employees eligible for the same benefits as their Wells counterparts, spokeswoman Mary Eshet said. Employees were told of the change in June. Together, Wachovia and Wells contributed $14.6 million in matching gifts last year.
Bank of America, in its letter to retirees, wrote that it "recognizes that your desire to contribute to causes about which you are passionate is an important factor contributing to the health of our communities."
"While we regret that the Foundation will no longer be able to match your charitable donations, we commend your civic engagement and hope you will continue your community support."
