Stephen Hester, chief executive of the Royal Bank of Scotland, has said traditional corporate philanthropy does not have great depth of commitment or a scalable business case beyond giving in itself, and has said investing in communities is more meaningful.

Hester, who was speaking last week at the Acevo annual conference, said he supported the US ethos that if communities do well, private companies would also do well:

“Corporate philanthropy,” he said, “is a good thing and important. But the model does not have a lot of depth of commitment, or is scalable. Investing in communities allows you to give in a more meaningful way.”

His comments reflect a speech made this autumn by John Williams, a board member at Business in the Community. Speaking at the Charity Finance Leadership Forum, Williams said commercial “charity of the year” partnerships could die out as corporations move to a culture of sustainability and corporate social responsibility rather than charity and philanthropy.

RBS committed to third sector

In his speech to Acevo delegates last week, Hester said that RBS was committed to working with the voluntary sector:

“We’ve extend our multi-million-pound micro-finance fund,” he said. “And we’ve seconded staff to assess lending oppportunities for organisations who don’t meet traditional criteria for lending.”

Hester also said the bank had expanded its network of relationshis managers in its commercial banking arm for not-for-profits:

“There is currently one team in London supported by colleagues across the UK,” he said. “We will train 50 new relationship managers for the whole of the UK focusing on civil society.”

He added that RBS was exploring the feasibility of social impact bonds, and Big Society Capital initiatives.

Hester also said that more charities needed to become comfortable with the levers of finance: "We should both agree that we have to work harder to meet each other's needs. Then we will make progress."