October 4, 2011; Source: Christian Science Monitor | In the annals of corporate philanthropy, Starbucks is doing something distinctive and noteworthy—partnering with advocacy-oriented social change nonprofits. Franchisees of the Starbucks chain in Harlem in New York City and Crenshaw in Los Angeles have pledged to donate at least $100,000 to the Abyssinian Development Corporation and the Los Angeles Urban League respectively. Starbucks chairman and CEO Howard Schultz told the Christian Science Monitor that the plan was to “[partner] with two organizations doing heroic work to address the economic, social, and education challenges in their communities.”
Starbucks also announced a plan to solicit $5 from each of its 60 million U.S. customers which would be donated to something called “Create Jobs for USA.” Each $5 donation is anticipated to leverage $30 more in financing for local businesses through the Opportunity Finance Network. Donors of $5 or more will receive a red-white-and-blue armband with the word “indivisible” on it.
Savvy marketing? In some ways, yes, of course, because all corporate philanthropy contains a marketing element, attracting customers and buyers who attach importance to socially responsible companies even if they have to pay a slight premium for the product or service—and there is a premium cost for buying Starbucks coffees.
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But there’s more to this strategy. Schulz has been publicly critical of the stumbling and bumbling efforts of both political parties’ Beltway politicians in addressing the jobs and budget crises. And putting money into Abyssinian, the Urban League, and the Opportunity Finance Network is hardly standard-fare corporate philanthropy.
The Opportunity Finance Network is the national association of Community Development Financial Institutions (CDFIs) that lend to small businesses, nonprofit organizations, affordable housing developers, and microenterprises in or benefitting disadvantaged populations. We have written admiringly many times of the Network (here and here and here) and dozens of times about CDFIs. As an industry, CDFIs have done a lot better than the nation’s commercial banks, with fewer delinquencies and foreclosures despite concentrating all of their investments in projects that address the nation’s poverty-stricken urban and rural communities. We also know Abyssinian quite well, having written about this impressive CDC affiliated with Dr. Calvin Butts’ Abyssinian Baptist Church and having watched some of its more impressive accomplishments, notably a 64,000-square-foot shopping center anchored by a desperately needed inner-city Pathmark supermarket.
These three organizations are all addressing critical social problems and achieving results that don’t have to be measured in headcounts, but which are visible and tactile examples of neighborhood transformation. We have already acknowledged the Starbucks corporate social responsibility reporting in the past, but this feels like something beyond that. This kind of corporate philanthropic effort makes Starbucks really stand out amid its business peers. Do we have this right about Starbucks or is there a part of the story that we’re missing here?—Rick Cohen