When someone adds a new dimension to helping others which leverages naturally occurring behavior (consumers purchasing products), works within our economic system and maintains jobs for active employees, it deserves attention and emulation. It is all the more unique when its success is a virtuous, self-reinforcing, upward beneficial spiral. Newman’s Own is just such an innovation.
Newman’s Own, Inc. produces consumer products such as salad dressings, sauces, pastas, etc. with a motto proclaiming its “Shameless Exploitation in Pursuit of the Common Good”. Each year the company pays a royalty, equivalent to its annual profits after tax, to the Newman’s Own Foundation. The foundation contributes all of its annual income, less excise taxes and necessary administrative expense, to charity. Between the business’ beginning in 1982 and 2012, Paul and Newman’s Own Foundation have awarded over $350 million to help others. The foundation was established in 2005 and is presently run by a Board of Directors headed by Mr. Newman’s widow, Joanne Woodward.
Many people show altruism, defined as an “unselfish regard for or devotion to the welfare of others” or “behavior by an animal that is not beneficial to or may be harmful to itself but that benefits others of its species.” Most frequently a person works in industry, makes a lot of money and puts some of the money in a charitable foundation. The money in the foundation is invested and a portion of the foundations funds are donated each year to charity. This generosity is generally recognized by a tax deduction and frequently by honors bestowed on the benefactor such as awards or naming a building after them.
While Newman’s Own is a variation on this theme, its uniqueness is the lack of an intermediate transfer of wealth into private hands to be ultimately turned over to charitable giving. This shortening of the distance from the creation of wealth to a direct charitable end and the immediate recognition of business employees that they work for an enterprise which benefits others is virtuous on its own merits. Assuming the business hires the best talent available for its management and its continued success, it and the foundation become a continually growing partnership for altruistic impact.
While a difficult structure to impose on a public company that has many shareholders, this model would work very well for a successful privately owned business. It would permit an owner to perpetuate their business beyond their own lifetime with professional management for the benefit of customers, employees and charitable recipients. It is this kind of charitable giving and altruistic behavior which honors the individual and demonstrates their intellectual transcendence beyond themselves to the common good of others.
Use the following links to obtain more information:
See page 11 of a history written by Rosabeth Moss Kantor and Lance Pierce for a Harvard University Case Study: http://advancedleadership.harvard.edu/Portals/115252/docs/adv%20leadership%20june%2016%20seminar%20program%20book.pdf