The Newman's Own Foundation, inspired by Paul Newman's legacy, encourages more for-profit companies to donate 100% of their profits to social causes. The foundation, currently supporting various charitable initiatives, aims to provide guidance and resources for organizations seeking to adopt this model. The Philanthropic Enterprise Act, passed in 2018, provides a legal framework for this type of donation.
The promise of 100% profit donation to charity is not new, but it remains a hard concept for many to grasp. In a recent TED talk, Alex Amouyel, CEO and President of the Newman's Own Foundation, made a compelling case for more for-profit companies to adopt this model. She pledged that the foundation will provide guidance and support to organizations interested in making this shift.
'It is trying to be a proof point and trying to serve as a model for a completely different type of organization,' Amouyel explained.The idea originated with Paul Newman, whose face graces all of the company's products. Newman founded the food company in 1982 and, upon his death in 2008, donated it to his foundation. Amouyel stated that companies and founders frequently reach out informally, and she hopes more will seriously consider this model. Humanitix, an Australian company that donates 100% of its profits from selling event tickets to charity, is the second founding member of The 100% for Purpose Club.The path for companies to follow the Newman's Own model became easier after Congress passed the Philanthropic Enterprise Act in 2018. The company lobbied for this legislation for years after Newman's death, as they encountered a dilemma. At the time, foundations were prohibited from owning more than 20% of any company to ensure their focus remained on charitable work. The Philanthropic Enterprise Act, signed into law by then-President Donald Trump, allows foundations to own corporations under specific conditions. 'They’re not trying to open up any big loopholes,' explained Celia Roady, a partner at Morgan Lewis and attorney for the Newman's Own Foundation. Instead, they pursued narrow changes 'that would let companies that were wanting to give it all away to be owned by a private foundation, which seems like a logical owner for a company that has that kind of initiative.' These conditions include the foundation owning the company entirely, the company donating 100% of profits to charity, a majority of the foundation's board being independent of both the company and the donor, and the donor being excluded from the company's operations. In inviting companies to join their initiative, Newman's Own offers various levels of participation for those committed to donating a smaller percentage of profits or resources for learning about maximizing charitable donations. Amouyel acknowledged that other foundations or companies might adopt different structures. Humanitix, for example, is organized differently due to its Australian incorporation. Patagonia, the outdoor clothing company, reorganized in 2022 to transfer ownership to a trust and donate its profits to a nonprofit advocacy organization dedicated to protecting the planet. Amouyel believes these models offer a path forward for those who see capitalism as the most effective system but acknowledge its shortcomings in achieving social good. 'This allows you to use its power and to generate money, but then to make sure that the money is not about making rich people richer and richer and richer,' she said, recognizing that this model might not be suitable for all businesses or sectors but holds potential for broader adoption.Nien-hê Hsieh, a professor at Harvard Business School, has researched Patagonia's transformation and sees value in diverse ownership models and organizational structures within the economy. 'Whether it’s a concern about monopoly or concentrated ownership, or the idea that, if you have a broader array or diverse array of shareholders, that may lead companies to focus on different kinds of ends and goals and be aware of some of the harms they’re causing,' he stated. Newman's Own Foundation reported donating $600 million to charities over the years, with a particular focus on supporting children. Newman established a network of camps for seriously ill children, which continue to operate across the country, such as Camp Boggy Creek near Orlando, Florida, providing free experiences for campers and their families. The organization's website states that Hole in the Wall serves more than 20,000 children and family members annually throughout the Northeast and Mid-Atlantic. The foundation also supports nutrition education in schools and food justice for Indigenous communities. While it remains unclear if other companies have utilized the Philanthropic Enterprise Act to donate a company to a foundation for 100% profit donation, Roady believes it's too early to assess the law's full impact. 'In the scheme of things, the legislation is still pretty recent,' she said. 'And so there’s still lots of time.
Newman's Own Charity Profit Donation Philanthropic Enterprise Act Social Impact Corporate Social Responsibility Paul Newman Non-Profit Organizations Business Models
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