Mellon pledges that deal will bring increased charitable giving
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On a day when Mellon Financial Corp. announced it was changing its name and its headquarters address, it also sought to reassure the Pittsburgh community that its charitable works would stay put. And to win over skeptics -- history is riddled with promises that weren't kept -- it even said it will up the ante.
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As part of the unveiling of its merger with Bank of New York, Mellon announced the creation of a new $80 million Mellon Financial Foundation that will give out twice as much money to southwestern Pennsylvania as the previous foundation did -- $4 million a year, double the previous $2 million. It also pledged that the $1 million that it currently spends per year on area sponsorships and nonprofits will not change.
The announcement brought kudos from the Allegheny Conference on Community Development, itself a creature of a Mellon -- in this case, Mellon heir Richard King Mellon -- and relief to recipients of Mellon's philanthropy.
"We were concerned," said Randy Krakoff, chief financial officer of the Pittsburgh Partnership for Neighborhood Development, which has received money from Mellon since its founding in 1983. "Our contacts at Mellon have told us that they're still committed, and they don't see any changes in community development. They are not moving away."
But some banking and philanthropic experts cautioned that despite Mellon's promises, Pittsburghers should be wary.
"Every bank says that because it's the right thing to say," Ken Thomas, a Miami-based banking expert, said of Mellon's stated commitment to local philanthropy. "But if A buys B, A calls the shots. Their primary goal is to serve the shareholders of the Bank of New York, period, and not in other markets."
Mr. Thomas said that institutions such as the Orange Bowl parade and the University of Miami noticed drop-offs in financial support after SouthEast Bank was acquired first by First Union, and then by Wachovia.
"It's not just the philanthropy," he said. "When you lose a lot of chief executive officers and board members, their role in the community drops some. They lose some of their stature."
It is a lesson Pittsburgh has learned time and again, as several former Fortune 500 companies have exited the region over the years.
From the United Way of Allegheny County, which has had to extend its appeal to a broader swath of smaller players to drum up funds, to the Allegheny Conference on Community Development, which no longer can rely on just a few Fortune 500 CEOs to get everyone in line with its mission, the loss of headquarters and the civic leaders that emanate from them is obvious.
And there are more measurable impacts as well. In the years after Cleveland-based National City Corp. acquired the city's third-largest banking company, Integra Financial Corp., for $2.1 billion in 1995, it cut 1,500 local jobs.
Andrew Seibert, who follows Mellon as a senior portfolio manager for S&T Wealth management, Downtown, believes something similar will happen with Bank of New York.
"They are going to shrink the size of the operations here because they don't need it."
Those concerns, in large part, help explain why Mellon Chief Executive Officer Robert P. Kelly went out of his way to pledge that the merger would benefit Pittsburgh, both in jobs and in the combined company's involvement in to the region.
As part of that commitment, Mr. Kelly noted that a Western Pennsylvania advisory committee is being created to make sure the company stays on course locally. This committee will include the existing board members at Mellon who collectively approved the Bank of New York-Mellon transaction, which was code-named "Project Cider."
"This is about growing our commitment to the city," Mr. Kelly said.
First Published December 5, 2006 12:00 am