Anti-Woke Bank: Corporate Social Responsibility and GloriFi

Corporate social responsibility, or the idea that corporations should consider the needs of the community as much as the needs of their shareholders, is nothing new. In the famous case of Dodge v. Ford Motor Co., Henry Ford declared the purpose of Ford was to benefit others including his community, his customers, and his employees. Any benefit to his shareholders was meant to be incidental. Ford would go on to lose that case, setting the precedent for years to come that shareholders take precedence in the long list of corporate stakeholders.

Many corporations today advance far-reaching and progressive social causes. For instance, some financial firms such as JP Morgan and Bank of America have put their money behind clean, renewable resources in an effort to decrease our reliance on fossil fuels.

Some firms, including a startup known as GloriFi. have decided to take the opposite approach. GloriFi was founded by Toby Neugebauer and Nick Ayers, with funding from Ken Griffin and Peter Thiel. GloriFi is a mission-driven financial technology company which specializes in banking, credit cards, mortgages, and insurance. The founders had one objective in mind: to be a force for American conservatism on Wall Street. GloriFi has financially supported causes including bolstering police forces, capitalism, gun rights, and traditional family values. At the Summer Conservative Political Action Coalition event in 2022, Neugebauer furiously rallied at what he viewed to be Wall Street’s ubiquitous liberalism. Metaphorically shaking his fist, Neugebauer declared that it was time to “deliver better products than the people who hate us.”

Within months, GloriFi was on the verge of bankruptcy, and its investors had nearly lost all their investments. The firm had launched products that became commercial failures, including an inoperable credit card with material incompatible with payment terminals. The firm consistently missed deadlines, laid off several employees, and failed to deliver on its promise to provide quality service emphasizing traditional values.

Before long, Neugebauer was facing demands from investors to resign. Neugebauer responded by blaming vendors, surrounding himself with yes-men and sycophants, and growing increasingly paranoid and distrusting towards his business partners. GloriFi’s failure cannot be explained purely by the firm’s founders’ ideologies, which put them at a deficit in an increasingly progressive Wall Street. GloriFi refused to understand that company profits are more important to shareholders than ideological spending, corporate responsibility, and effective Environmental Social Governance (ESG).

While corporations continue to maintain their own corporate social responsibility goals, this is secondary to the aim of increasing company value. Demonstrated by A.P. Smith Manufacturing, a fire hydrant manufacturing company, who argued before the New Jersey Supreme Court that their company benefitted from investment into their community. By funding universities and higher education, the company ensured its community would continue to produce skilled consumers and workers for the future.

If GloriFi expects to succeed, its management should reevaluate how they plan to increase company value. Management should follow shareholder advice and focus less on paying homage to “conservative values.” Glorfi must consider how their community investments contribute to the value of their company. Social responsibility is more than just personal politics and private vendettas, it means a greater effort to ensure the survival of the company through social investment and understanding.