I was at a restaurant in Miami a few months ago, in the now super trendy Wynwood district. Right at the center of the menu, I noticed a 26-dollar cauliflower topped with goat's cheese and shishito herb vinaigrette.
Now 26 dollars for cauliflower might already make you angry, but what my friends and I found particularly absurd was the restaurant's proud announcement that if you purchase this one dish, they will give one percent of the proceeds to environmental nonprofits. So let's do the math. That's 26 cents, and we can solve climate change. Yay!
(Laughter)
And it was just this one dish on the menu. You wanted to order the burrata with sudachi green tomatoes? Tough luck for the planet.
This restaurant is not the only culprit when it comes to paying lip service to corporate giving. This type of greenwashing, in my mind, is worse than doing nothing because it obscures who's doing really good work from who's good at marketing the very little that they do. So you have to read the labels and the fine print. And I have to admit, this is an occupational hazard of mine.
I am the president and CEO of Newman's Own Foundation, and our mission is to nourish and transform the lives of children who face adversity. What makes us unique is that the foundation owns a food company. 100 percent of the profits and royalties from the sale of Newman’s Own product go to the foundation in service of our mission. So when we put cauliflower on our pizza, it’s 100 percent we give away, not 1.
When I tell people what I do for a living, the most common reaction I get is, "Wow, I grew up with your salad dressing in my refrigerator, but I had no idea you gave 100 percent of profits away. 100 percent. Really? You should put that on the label." Yes, we do put that on the label.
(Laughter)
Every label.
(Laughter)
But I understand the confusion. Our message sometimes gets lost in a sea of greenwashed products, to the point that it’s almost unbelievable when we say we give 100 percent away. But we've been doing this for 40 years. And I realize it sounds unbelievable or even radical to build a business and then give all the money away. But you know what sounds more unbelievable to me? That we live in a world where children still go to school hungry. A world where only the fortunate few win the lottery of birth and have the choice with what they do with their waking hours.
So when we have that choice, why would we choose to build organizations to optimize click rates to get us addicted to stuff we don't need, just to maximize shareholder value? Why not build organizations set up to maximize impact? We need different models, systems and institutions, and I firmly believe organizations like ours, that are 100 percent for purpose, could show us the way. They can serve as proof points for doing business, philanthropy and, yes, capitalism differently. And this is not about tearing capitalism down. On the contrary, it's about using its mighty power for justice.
Bold ambition, I know. And it all starts with salad dressing. Or, as our founder, Paul Newman, would say, using salad dressing for shameless exploitation in pursuit of the common good. Paul Newman, actor, race car driver, activist, also a jokester. I mean, look at the carrots.
(Laughter)
And a man obsessed with good salad dressing. Obsessed. So much so that he decided to turn his obsession into his business. Paul and his friend Hotch invested 40,000 dollars of their own funds to get Newman's Own started. After a year, they had turned a profit of 300,000 dollars. That surprised them. Rightfully so. It's the type of quick return even a venture capitalist would be delighted with today. But it's what Paul did next that most surprised him. He gave it all away. So since 1982, Paul and Newman's Own have given away over half a billion dollars to good causes. And this helped spark what I call the 100 percent-for-purpose movement.
Our 100 percent-for-purpose club is small but mighty.
(Laughter)
Patagonia joined our ranks a few years ago. There's also Grameen in Bangladesh, Humanitix from Australia, the Self-employed Women's Association in India, founded by activist Ela Bhatt, which now counts over two million members. 100 percent-for-purpose organizations combine the best of the for-profit and nonprofit business models. They can be organizations truly devoted to serving people and the planet while still operating sustainably. They also avoid the pitfalls of both models: constantly having to beg for money in the nonprofit world or having to put shareholder interest above all else, no matter the cost to the planet and its inhabitants. This is one of my favorite "New Yorker" cartoons.
So how do you make 100 percent-for-purpose business work in practice? I told you this was about salad dressing. And so, just like any good salad dressing, it's the alchemy of the right ingredients. First ingredient: make a profit. Sounds obvious.
(Laughter)
But we know many companies who never have. And listen, this is not about making a profit in your first year, but you have to remember, if your goal is to give away as much money as you can, you want a good business and product with steady, positive cash flow.
From Australia, Adam McCurdie and Josh Ross set out to create a 100 percent-for-purpose business from the ground up. They founded an event ticketing company called Humanitix. Not because they thought, "Wow, ticketing. Such a cool industry." On the contrary, they saw a promising market because people hate ticketing platforms, with high fees, bad customer service and monopolistic trading practices. One of these companies recently got into trouble with the US Justice Department and Taylor Swift. Honestly, I don't know which one is worse.
(Laughter)
People thought Adam and Josh were also radical because they built a high-growth tech business without taking one dollar from venture capital. But I’m happy to say that in eight years, they're profitable and have already given away close to seven million dollars in grant funding.
Which brings me to ingredient number two. Raise money right. You can’t give away 100 percent of your profits today or in the future if you give away control to investors who are not aligned with your vision. Yvon Chouinard, the founder of Patagonia, declared Earth to be the company's only shareholder in September 2022 to great fanfare. He could only do this because he had kept Patagonia private for over 50 years. And let me be clear. This doesn’t mean you can’t raise money as 100 percent-for-purpose business. By definition, you’re trying to be cash flow-positive. That makes you attractive to banks and lenders for loans. You can also tap into sources few for-profits typically have access to: grants and impact investments, for example.
All of this brings me to ingredient number three: reverse the governance. People often assume that as I head up a corporate foundation, I report into the food company CEO. It's actually the opposite, and that makes all the difference. When Paul died in 2008, he gifted the food company to the foundation. That was heavily discouraged at the time. Congress had passed a law in 1969, making it hard for foundations to own more than small stakes in for-profit businesses to close a tax loophole. Newman's Own worked with legislators to support the passing of the Philanthropic Enterprise Act in 2018, paving the way for this new type of organization and allowing nonprofits to own corporate entities under the right circumstances. To align with the Philanthropic Enterprise Act, we keep the food company and foundation quite separate, with two distinct boards of independent directors. Because the governance is reversed, the food company's board reports to the foundation's board. We have a common brand, but the foundation's dollars can't be used to market the products, and the food company can't tell us what organizations or causes to give to. And unlike a number of private foundations, we don't have an endowment. Why? First, because Paul said, let's give it all away. He didn't say, let's hoard it first so we can exist in perpetuity, and then just sit there, giving away the 5-percent minimum required by law. Overall, I love being endowment-free, because our donors are the millions of consumers who buy Newman’s Own products. And we give away all that we can every year, because children who face adversity in the US cannot wait.
Fourth and final ingredient. Forget the competition. They are playing by the rules that got us to where we are today. You have to trust that being 100 percent-for-purpose is the way to win over customers, employees and realize your mission. Yes, you can't give company stock options, but you can provide your employees with good salaries, great benefits and a real sense of purpose. And that’s what 95 percent of college graduates are looking for in a job. You might not have the dollars for big, splashy ads, and you can't slash your prices so low and lose money to meet your competition if they're willing to do that to gain market share. But 66 percent of customers, and especially 91 percent of millennials, say they would switch to a new product from a purpose-driven company. Most importantly, remember the end game. Success is about being all in for impact and showing everyone there's a different way to do business and capitalism. Imagine what we could do if 10 percent of US companies joined our ranks. Or 10 percent of global companies.
The last thing I'll say is this. Paul used to tell the kids with cancer he met at the summer camps he founded to go raise a little hell. And perhaps a little hell-raising is exactly what we need to fix this absurd world where some people can afford 26 dollars for cauliflower and just a mile away, others have to send their kids to school hungry. I invite you all to join me in raising a little hell. Go create, convert and work with 100 percent-for-purpose organizations. The world cannot wait. We can and must build organizations and systems differently, and in doing so, we can use capitalism's mighty power in service of justice.
Thank you.
(Applause)
