Challenging corporate US on world hunger
A $1 million gauntlet has been thrown at the feet of corporate America. The challenge: End world hunger. ComputerLand, the largest retail computer chain in the world, is sponsoring a controversial ad and direct-mail campaign that posits such questions as:
``If America's rock musicians can raise $45 million in three months, what could the Fortune 500 do?''
This ad and three more full-page essays have appeared in the Wall Street Journal since May 28. One more will run this week. Then, in September and October, six more will target corporate executives.
But the 820-store company, based in Haywood, Calif., has no plans to give money itself to aid African famine victims. Instead, as is stated in one ad, ``[We will] use our time and resources to bring you this public forum, in the belief that the results will be more enduring and of greater effect.''
ComputerLand, to say the least, is raising eyebrows.
``I've never known of a case where a corporation has devoted its entire advertising budget to world hunger. It's exciting and unique,'' says Gene E. Bradley, president of the International Management and Development Institute, a nonprofit group aimed at fostering better relations between international business and government. ComputerLand has borrowed some IMDI material for its campaign.
The CompterLand thesis echoes a comment by Mr. Bradley: ``Ending hunger is a byproduct of nation building.''
The ads urge American companies to explore what resources they have and use them to help developing countries build their economies so that, instead of ongoing food donations, the people can feed themselves. There are benefits for the shareholders and the malnourished when a company commits not just money but time, management, and technical know-how to this effort, the ads assert.
For United States corporations, the payoff, albeit long-term, may be in creating new markets and gaining access to cheaper, well-fed (more productive) labor.
``Initial response has been greater than expected,'' says Fred Whelan, spokesman for ComputerLand. ``In the first two weeks, we've received 300 letters: 50 from Fortune 500 companies, and most of the rest from small businesses. They're running 60 to 1 in favor of our effort.''
The ComputerLand campaign is lauded by most hunger relief and development agencies contacted. The ads, they say, accurately portray the need for long-term solutions involving bootstrap projects. The ads also suggest that corporations turn to these agencies for their expertise.
But some are disturbed by what they see as ComputerLand capitalizing on the Ethiopian famine, enhancing its image without spending money on actual hunger aid.
This may be true. But it's also true that ComputerLand chairman William H. Millard has been championing the role of business in solving world problems long before this ad campaign. And ComputerLand is already planning to set up a data base to match corporate goals with specific development projects and agencies.
Still, some observers are concerned that the ads encourage corporations to exploit laborers and use up the resources of less-developed countries.
``I was mad when I saw it,'' says Patricia Young, who is on the executive committee of the Interfaith Council on Corporate Responsibility, in New York. ``Finding new markets, saving on taxes, and getting cheap labor may be an honest statement of why businesses move to the third world, but I wish there was a social bottom line greater than the dollar bottom line.''
Says ComputerLand's Whelan, ``It has to be both: partly philanthropic and partly bottom line.'' A company must be responsible to its shareholders, who expect a profit from their investment.
So what do ComputerLand franchisees and shareholders get out of this campaign? Companies that respond to the ads get a hunger kit, and they're encouraged to work together with local ComputerLand retail store owners in developing hunger projects. ``We expect these business contacts could lead to increased sales down the road,'' Whelan says.
Though the focus of controversy here is on that blending of profit and humanitarian motives, many hunger groups contacted say the two motives are not mutually exclusive.
The government-funded Agency for International Development is one proponent of this concept. ``We want to firmly implant the idea in private voluntary organizations [PVOs] and corporations that collaboration is possible,'' says Deborah Kennedy at AID in Washington.
Indeed, the private development groups are receiving more funding from corporations now, said Thomas Fox, a vice-president at the Council on Foundations in a congressional hearing in March. Other sources estimate that some two dozen coporations are actively committed to ongoing development efforts, often in a joint venture with PVOs. And some 150 companies are estimated to be contributing funds to private, nonprofit relief and development organizations.
The rise in corporate donations to hunger groups of late is primarily a response to the Ethiopian famine and the much-publicized success of USA for Africa, the organization responsible for the ``We Are the World'' record album.
Says Bernard Boudreau of Oxfam America: ``In the last six months, a lot of companies have gotten involved, but whether they're going to be involved over the long term is anyone's guess.''
To maintain the hunger-issue momentum, Rep. Benjamin A. Gilman (R) from New York introduced a bill last week to channel $75 million in foreign-aid funds for environmental development projects. Mr. Gilman has gathered some 50 congressmen as cosponsors for a bill urging corporations to join long-term efforts to alleviate hunger. The co-sponsors have agreed to write and encourage Fortune 1,000 corporations to pitch in.
``We've got about a six-month window to make this happen,'' says Mr. Bradley at IMDI. ``Then box office attraction, if you will, will wear off.''
ComputerLand ads may assist, says Bradley, by slicing through the layers of managers and bureaucracy and reaching corporate CEOs. ``Before you can get him involved you have to get his attention, otherwise this kind of thing gets caught in the lower echelons and you're not going to end world hunger.''
But reaching the CEO is only a fraction of the battle. Shattering age-old management attitudes may be a tougher goal. Many managers may still see overseas development projects such as water purification, increasing crop yields, or irrigation as ``merely'' charity work, with little impact on productivity or sales.
In better-managed international companies, however, such as IBM, some recognition is given to executive participation in local community projects.
``The company wants to be accepted in that country as a good citizen, and they do what it takes to be perceived as such,'' says Dr. Edward Bowman, the Reginald Jones professor of corporate managment at the Wharton School of Finance and Commerce at the University of Pennsylvania. But he says very few consider reducing hunger in a host country as a management priority, as the ComputerLand ads advocate. ``They worry about personnel, competition, products, prices, the political climate, and infrastructure first.''
Still, as more US companies plunge into overseas markets to keep that curve heading up on the sales chart, they may also see the value in building ties abroad -- and decide to pick up the gauntlet dropped by ComputerLand.
Here and abroad, corporations such as International Business Machines, Monsanto Agricultural Products Company, Kaypro Corporation, Hershey Corporation, and American Express are already investing varying amounts of time, talent, and resources in projects that directly or indirectly alleviate hunger. For instance, Minneapolis-based Land O'Lakes Inc., has set up a nonprofit venture-capital foundation in Jamaica. In less than a year, the foundation has put $8 million into 18 business and development projects. The foundation is funded by selling surplus US government cheese and butter to local processors. The cheese and butter donations will stop after five years, at which time the loans and equity positions taken will fund the foundation.
``We've taken what could have been a food handout and turned it into money for ongoing development,'' says Dr. LaVern A. Freeh, vice-president for international development and government affairs at Land O'Lakes.
After five years, Jamaican cheese and butter processors may consider Land O'Lakes first when they look for a new supplier. Already, the processors have placed a small order. But the company's strategy is much broader.
``We were pretty domestically oriented and about 41/2 years ago we said, `We're living in a world economy and if we want to be successful 10 or 15 years down the road we need to get in touch with the world,' '' Dr. Freeh says. ``The real opportunity for market growth is in developing countries, but they don't have any money.''
So the company set up both a marketing unit to sell exports, and also a development unit. ``In the short term, we expect no payoff from these projects,'' Freeh says. ``But in the longer term, if we help develop their economy, then we'll be opening up markets, and they will remember us as friends.'' He adds, ``This is too important to be left to the government alone.''
Other examples include:
In 1983, American Express sponsored a management training program for the tourism industry in the Dominican Republic. A Washington, D.C., group, Partners of the Americas, set up the program. Some 450 people took part, including government officials and management and staff from hotels, airlines, car rental agencies, restaurants, and retail stores.
The benefits: a surge in Dominican tourism and coincidentally, greater use of American Express cards, traveler's checks, and services. American Express attributed a 50 percent increase in Dominican sales to the program.
Last year, about 1,000 people took part in similar programs in one Brazilian and two Mexican cities. And there are plans for more programs in Mexico, Argentina, Brazil, and Venezuela.
The Hershey Corporation needed a new supply of cocoa for its chocolate products. Belize had the right soil and climatic conditions. Hershey turned to two private development groups to organize the growers and set up the project. Hershey provided technical and managerial assistance and guaranteed to buy the cocoa for a fixed period.
``Its too early to assess the developmental impact, but there is now an American export market for cocoa where there wasn't one before,'' says Deborah Kennedy at the Agency for International Development, which provided some funds for the project.
The Kaypro Corporation, a home and business computer maker, has donated more than 500 computers to developing countries since 1983. In its African famine relief efforts, Grassroots International has used the computers to process and convey information about the status of refugee camps. ``The bottom line is we're saving lives because of them,'' a spokesman at Grassroots International said.
IBM is cosponsoring with CARE a three-year ``Care for the Earth'' program, funding agri-forestry projects in Africa. IBM has also offered its computer modeling expertise in Venezuela and provided management training for agricultural leaders in Central America.
Monsanto Agricultural Products Company is developing disease and pest-resistant seeds and other hunger combating products. And an executive vice-president at the parent Monsanto Company devotes a large portion of his time to hunger ``consciousness raising'' among agricultural companies and the government, as well as lobbying for cooperative efforts between the two.
General Motors, General Mills, Safeway and Control Data also have domestic food donation programs. And more and more banks and hotel chains are becoming active in gifts and development projects, relief groups say.
Pharmaceutical companies are the biggest contributors of free products to developing countries. And computermakers frequently top the list of active hunger relief and long-term programs.
``These are companies in the blush of their youth,'' says Dr. Edward Bowman, a management professor at the University of Pennsylvania's Wharton School, who has studied corporate giving. ``They're modern, progessive companies, filled with highly educated white-collar workers. The managers and employees are concerned about corporate responsibility, it fits their gestalt.''
Although they don't have subsidiaries abroad, small businesses have been very active in raising funds and making product contributions to support the development efforts of relief groups.
``There's more small business involvement now,'' says Bernard Boudreau at Oxfam America in Boston. ``We are seeing a lot more donations and benefits from small businesses than large corporations.''
Mr. Boudreau cites the fund raising of Share Our Strength (SOS). This Washington, D.C., group has just begun soliciting annual $500 donations from the 400,000 restaurants nationwide. ``Restaurateurs are sensitive to this issue. They see the sad irony of wasting so much food in this country,'' says program director Laura Quinn. ``The idea is to establish funding for long-term groups, such as Oxfam, permanantly, rather than in light of the famine crisis now.''
To date, SOS has received contributions from 63 restaurant owners. In return, SOS issues a door sticker citing the restaurant's participation.
Some large corporations are involved in development projects but shy away from publicity for various reasons, including fear of being accused of profiteering. Or they don't want to run the risk of the outcry that erupted over Nestl'e's infant formula program.
Several companies, in fact, have turned down a hunger award that was given out last year. Monsanto, Coca-Cola Company, Ibec Inc., Beecham Products, Land O'Lakes, St. Regis Corporation, and the Caterpillar Tractor Company were all given the Fowler-McCracken Commission Leadership Award, in recognition of normal business procedures that had contributed toward ending hunger.
The Fowler-McCracken Commission, managed by the International Management and Development Institute in Washington, D.C., was set up to improve corporate and government relations and to spur international business ventures.