Yesterday, in my Google Alerts for Business Philanthropy, I got a link to an article on Rethinking Business Social Responsibility posted by DanS on Political Groove Forums. It turned out to be something I had already read sometime back but I think it is interesting to read, if you have not already done so. DanS provides a transcript of the dialogue that between Whole Foods CEO John Mackey and world famous economist Milton Friedman and Cypress (semiconductor) CEO T.J. Rodgers.
Mackey states, “there can be little doubt that a certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors. For example: In addition to the many thousands of small donations each Whole Foods store makes each year, we also hold five 5% Days throughout the year. On those days, we donate 5 percent of a store’s total sales to a nonprofit organization. While our stores select worthwhile organizations to support, they also tend to focus on groups that have large membership lists, which are contacted and encouraged to shop our store that day to support the organization. This usually brings hundreds of new or lapsed customers into our stores, many of whom then become regular shoppers. So a 5% Day not only allows us to support worthwhile causes, but is an excellent marketing strategy that has benefited Whole Foods investors immensely.”
Friedman stated, “I believe Mackey’s flat statement that “corporate philanthropy is a good thing” is flatly wrong. Consider the decision by the founders of Whole Foods to donate 5 percent of net profits to philanthropy. They were clearly within their rights in doing so. They were spending their own money, using 5 percent of one part of their wealth to establish, thanks to corporate tax provisions, the equivalent of a 501c(3) charitable foundation, though with no mission statement, no separate by-laws, and no provision for deciding on the beneficiaries. But what reason is there to suppose that the stream of profit distributed in this way would do more good for society than investing that stream of profit in the enterprise itself or paying it out as dividends and letting the stockholders dispose of it? The practice makes sense only because of our obscene tax laws, whereby a stockholder can make a larger gift for a given after-tax cost if the corporation makes the gift on his behalf than if he makes the gift directly. That is a good reason for eliminating the corporate tax or for eliminating the deductibility of corporate charity, but it is not a justification for corporate charity.”
So just a little tension, eh? They both had a lot more to say than the small pieces I pulled for you. Read the whole thing and see which parts of these positions resonate with you! Of course, I am on the side of strategic business philanthropy being an essential component of business social responsibility. I also believe, especially in light of recent issues on Wall Street, it is only good that there is rising peer and consumer pressure on companies to rethink their values and operating practices and give consideration to the Triple Bottom Line – not profit at any cost.