Corporate Philanthropists Turned Activists
In the minds of the public, activist organizations are generally not equated with profit-seeking businesses. The two types of entities seem absolutely antithetical to each other: one aims to improve society through social and political means, while the other aims to maximize profits at whatever cost to society necessary to do increase margins. In fact, the late economics Nobel Laureate Milton Friedman once published an essay entitled “The Social Responsibility of Business is to Increase Its Profits,” a very self-explanatory name. Clearly, business and activism are not traditionally complementary endeavors.
However, profit-seeking businesses are quickly realizing that engaging in social, political, environmental, and other types of activism can benefit their bottom lines. The press publicity from community service and activism campaigns is simply great marketing. For example, Whole Foods grocery stores holds an annual “5% Days” campaign where each participating store donates 5% of its net sales (revenue minus deductions for returns, discounts, and damaged or missing goods) to local non-profits and charitable organizations. Whole Foods’ CEO John Mackey believes these days help the business by bringing in hundreds of new, socially-minded customers to each store, as well as strengthening relationships with older customers. In this case, corporate philanthropy helps both the community and the company’s shareholders.
Other companies are quickly cottoning onto this fact, and are taking it a step further by turning corporate philanthropy into corporate activism. Passive shareholder value creation is out; corporate activism, corporate social responsibility, and triple-bottom lines are in. The new activist role played by business flies in the face of a huge tenet of corporate America over the last half century, which is to stay clear of politics and social issues. Why would businesses want to make political statements that could alienate huge swathes of a potential market?
Ironically, much of the new activism is due to political issues stirred up by the Trump administration. Trump’s administration is simply giving businesses and corporations too many opportunities to market themselves as socially conscious and responsible entities. A recent example is President Trump’s decision to have the United States withdraw from the Paris climate agreement just one year after the accord was formally signed into effect in 2016. Over two dozen major U.S. companies joined together to take out full-page advertisements in major newspapers like the Wall Street Journal and the New York Times to post letters condemning Trump’s decision and arguing for the continued status of the United States as a Paris agreement signatory. Many of the signing companies are very large and very well-known by college students — companies like Patagonia, Facebook, Google, Apple, and Morgan Stanley. Others are less explicitly relevant to millennials, but still very indirectly so, such as the VF Corporation, the parent company of brands like The North Face and Vans.
For these companies, speaking out against Trump’s policy decisions makes sense both financially and otherwise. Positioning themselves concretely on the world stage of one of the most pressing debates of the current era serves as a form of publicity and marketing, drawing attention to these companies that are blatantly opposing the President. This wins over new customers, many of them millennials who care deeply (or at least a little) about environmental activism, and who will be impressed by these companies’ bold stances. This manifests itself in more sales and higher bottom lines, and greater shareholder value.
That’s not to say that the only reason for corporate activism is to drive profits, however. Sometimes, companies engage in political activism for moral reasons first, and potential bottom-line boosts second. Look at Cards Against Humanity (CAH), for example. CAH is a raunchy and vulgar party card game based in Chicago that is notorious for pulling stunts on their customers, communities, and the world. On Black Friday two years ago, the company took their online store down, and put up a payment form where shoppers could enter their billing information and give the company $5 for literally nothing in return. The company made over $70,000 that day at almost no cost of goods sold. CAH does donate a good portion of its profits, however. The company gave around a quarter of its profits from Black Friday 2015 to various charities and needy individuals. Since 2012, the company has given away over $4 million to charitable organizations and set up scholarships for women in STEM.
Cards Against Humanity’s latest stunt, however, transcends their traditionally prankster, laissez-faire attitude. In response to Trump’s plans to erect a border wall between the United States and Mexico, CAH began a campaign called “Cards Against Humanity Saves America.” The company gave customers the opportunity to pay $15 in return for six surprise gifts. As it turns out, CAH used the money from this campaign to pull the ultimate corporate activism move thus far: it bought a tract of land along the U.S.-Mexican border in an attempt to stall Trump’s border wall efforts. The company’s actions included hiring a law firm specializing in eminent domain litigation on retainer, for the near-certain eventuality that the federal government attempts to seize the land under the principle of eminent domain.
It’s too early to tell whether the publicity from CAH’s land grab will generate a significant amount of extra sales. In any case, it’s not the profits from the move that count; it’s the principle behind the action. Companies like Cards Against Humanity are entering the limelight for their corporate activism, not their excellent management or record profits. Businesses are playing an increasingly active role in social, political, and environmental issues, whether they like it or not, and they have to engage in these debates with their words and actions in order to compete and succeed.