-By Jenny McTaggart

Giving back to the community is nothing new for grocers--industry pioneers such as Sam Walton and Publix's George Jenkins saw the importance of corporate charitable giving early on, as did many others. But retailers today are approaching philanthropy with a new sense of urgency. They're working with an expanded portfolio of charities, and many are taking more public credit than ever for their goodwill efforts.

For the major publicly owned players, charitable giving is a stout pillar of their corporate social responsibility programs, but the trend isn't limited to the big chains only. A prime catalyst of all this generosity, say experts in the nonprofit community, is increased competition, which has intensified the desire among businesses to be recognized as do-gooders.

"There's a halo effect involved," says Vicki Escarra, president and c.e.o. of America's Second Harvest, based in Chicago. "There is definitely a business case for charitable giving. We know consumers are drawn to organizations that are involved ethically and give back to the communities they serve."

Another stimulus is a rash of closer alliances between corporate givers and charitable organizations. Says Karen White, team manager, corporate sponsorship for Dallas-based Susan G. Komen for the Cure: "While corporate charitable giving has remained steady over the past few years, partnerships between for-profit companies and nonprofit companies are on the rise. Cause-related marketing, as it's known in the industry, serves to differentiate a company's products or services from the competition by aligning with a cause."

Indeed, a recent series of experiments conducted by The Wall Street Journal found that consumers were willing to pay a slight premium for ethically made goods. And a more formal study, conducted by Boston-based brand strategy and communications agency Cone, Inc., found that 87 percent of consumers were willing to switch brands--if price and quality are comparable--when a brand is aligned with a cause that resonates with them.

Would shoppers actually switch from one grocery store to another just because of the social causes identified with that retailer? While no such study testing this scenario is readily available, the actions of some of the country's leading grocers suggest that there are some definite benefits to being charitable.

Wal-Mart Stores, Inc., the world's largest retailer and perhaps the leading contributor to charities among U.S. grocers, has steadily upped its giving in recent years, while also making local giving more accessible.
Safeway, Inc. has brought an enormous amount of attention to the tragic epidemic of breast and other cancers, among other causes, through its charitable efforts.
Kroger, Inc. is linking its sustainability initiatives to corporate giving by donating fresh food leftovers to America's Second Harvest.
The Delhaize Group recently announced the setup of the "Delhaize Group Fund," with the objective to support charitable efforts at a more local level.
The list of retailers involved in charitable giving could go on, but here are a few examples of efforts among the largest U.S. grocery chains.

The Walton legacy

Beyond creating a feel-good connection with shoppers, companies realize other benefits from giving, notes Tanya L. Baskin, v.p. of corporate sponsorships for Special Olympics, Inc., based in Washington. "Companies are getting involved for multiple reasons; employee volunteer opportunities, consumer engagement, community building, and marketing objectives are some of the most prevalent."

Potential employees may choose to work for a company based on its giving practices, observes Sandra Miniutti, v.p. of marketing at Mahwah, N.J.-based Charity Navigator, America's largest charity evaluator. "College students today are exposed to volunteer opportunities in their curriculum, so many are looking for employers that are involved in this area."

These trends haven't gone unnoticed by Bentonville, Ark.-based Wal-Mart.

"There's no question there's a return on investment--we're doing well and doing good at the same time," notes Margaret McKenna, president of the Wal-Mart Foundation. "It's a win-win-win." (Wal-Mart has a foundation and also is involved in corporate giving.)

The retailer now provides financial and volunteer support to more than 100,000 charitable and community-focused organizations, and in 2007 it donated more than $296 million to various causes. Its areas of emphasis are education and work force skills, health, and the environment.

Wal-Mart has a long history of giving back to the community, from the days of its founder, Sam Walton, notes McKenna. Still, she acknowledges, "We are trying to focus our efforts more. There were times when we were more reactive than proactive. Now we're trying to be really proactive, to understand the issues and find solutions even before people come to us with problems."

That involves offering more empowerment for giving at the local level, she says. "We're trying to be more strategic about our state giving programs. Before, [the charity] would have to go to the local store. If they wanted to do something St. Louis-wide or Boston-wide, they'd have to deal with each store. Now they have access to a state pool of money, which is available for statewide or citywide programs. In Texas, for instance, Wal-Mart is focusing on water conservation, which is an important initiative for that region."

Each state's programs are governed by an advisory committee made up of Wal-Mart associates, including a regional operations person, a public affairs representative, and someone from distribution. "They all bring their own perspective," she notes.

Ultimately, it's important that the commitment to giving starts at the top, acknowledges McKenna, echoing other experts. "One of the things that thrilled me when I came to Wal-Mart was to see that this dedication is from the bottom to the top, and the top to the bottom. From [president and c.e.o.] Lee Scott down to our cashiers, anyone will tell you about the importance of giving back to the community."

Hunger relief

In one of its latest charitable moves, Wal-Mart has pledged $1.5 million to America's Second Harvest. The gift includes $1 million for food banks and $500,000 to the organization's "BackPack" Program, which provides food for needy schoolchildren to take home on the weekends.

Wal-Mart also recently unveiled a national food donation program in more than 560 Sam's Clubs throughout the country, which would include the ability to provide bakery items and proteins, among them fresh meats and deli products, to members of America's Second Harvest. A pilot that has been in place since 2006 will begin to roll out to Wal-Mart Supercenters in coming months, the retailer said. (Food Lion began the "America's Second Harvest Fresh Food Initiative" years ago as a grass-roots program, followed by the participation of Kroger and Albertsons, according to Escarra.)

Because such a program helps eliminate waste, it fits in with Wal-Mart's sustainability initiatives, notes McKenna.

Cincinnati-based Kroger Co. has been involved in food donations with America's Second Harvest for more than five years--and like Wal-Mart, the company sees this as a major push toward more sustainable operations.

Kroger's v.p. of grocery merchandising, Scott Hendricks, was on hand earlier this year at the Grocery Manufacturers Association's first-ever Environmental Sustainability Summit to discuss the supermarket giant's work in more detail.

"Kroger donated more than 135 million pounds to America's Second Harvest between 2002 and 2007," he said. "With the fresh food rescue program, we collect perishable food from our stores that's safe to eat but no longer appropriate for sale at retail. These donations are some of the most economical and efficient to handle, [and] the program excites and engages our store associates. Our goal for 2008 is to have a minimum of 2,000 stores become part of the Fresh Food Initiative."

Escarra of America's Second Harvest notes that there's plenty of work to be done to reach the organization's goals--and the current economy, including sky-high food inflation, isn't helping. "There are more than 500 million pounds of food in the retail community that can be saved," she says. "Our goal is to capture 300 million pounds of that by 2012. The entire retail community is stepping up to help us."

For the kids

Giving to food banks makes perfect sense for the grocery community, but there are other causes near and dear to many retailers' hearts. Montvale, N.J.-based A&P, for example, focuses its corporate giving and community involvement on the health and welfare of children.

"Our affiliated banner stores, including A&P, Food Basics, SuperFresh, The Food Emporium, Waldbaum's, and Pathmark, are constantly revising new opportunities to support causes related to this focus," says Jennifer MacLeod, s.v.p. of advertising, marketing, and communications at A&P.

The company's top three charitable endeavors are the Muscular Dystrophy Association (MDA), the Children's Health Fund, and the St. Jude's Children's Research Hospital. In 2007 A&P donated more than $1.5 million to these and other organizations.

In addition, A&P operates the Waldbaum's Foundation, an initiative dedicated to the fight against breast cancer. The foundation has raised more than $375,000 from its stores in the New York City area since its establishment in 1999.

And now A&P's program has been expanded to include Pathmark's community partnerships as well.

The company's fundraising efforts fall under A&P's corporate social responsibility program, notes MacLeod. But like many other grocers, the company has made a point of giving back to the communities where it has operated since its beginning.

With sustainability such a major current concern, A&P has found ways to tie its fundraising into helping preserve the environment. The company sponsors a reusable shopping bag program in support of the Elizabeth Haub Foundation's efforts to protect the earth's resources through environmental law and policy. The stylish carryall bags are available for 99 cents each, with a portion of sale proceeds donated to the foundation.

Olympic proportions

The welfare of children is also a major area of emphasis for Lakeland, Fla.-based Publix Super Markets, which has been a supporter of Special Olympics, an international nonprofit organization dedicated to empowering individuals with intellectual disabilities to become physically fit, for more than 30 years.

The grocer was recently honored with the 2008 "Spirit of Special Olympics" award for being the single longest-standing sponsor in the history of Special Olympics Florida. Earlier this year, the retailer's associates and customers raised $1.74 million in just three weeks for Special Olympics. The annual promotion was carried out in partnership with Cincinnati-based Procter & Gamble.

Other groups supported by Publix include March of Dimes, Children's Miracle Network, United Way, and Food for All.

Maria Brous, director of media and community relations at Publix, notes that while the company's emphasis on charitable giving began rather quietly under the leadership of the chain's founder, George Jenkins, today people want to know about the retailer's philanthropic efforts. "This has been a major change for us," she notes.

A new grocery supporter of Special Olympics is Pleasanton, Calif.-based Safeway, Inc. Safeway recently added the organization as a beneficiary of a national in-store customer fundraising campaign.

The retailer has focused on supporting people with disabilities for the past two decades, so the Special Olympics program was a natural fit, explains Safeway chairman, president, and c.e.o. Steve Burd.

"Over the past 20 years, Safeway has raised over $100 million in support of people with disabilities through organizations such as Easter Seals and MDA," continues Burd. "Safeway wants to serve even more people with disabilities, and [we believe] if we work with Special Olympics, we will reach more people, especially those with intellectual disabilities, the largest disability population in the world."

Through The Safeway Foundation, Safeway supports a broad range of charitable and community programs. Donations in 2007 exceeded $172 million, according to the company's Web site. In addition to supporting people with disabilities, the retailer focuses heavily on cancer research and awareness, along with hunger relief, education, and disaster assistance.

Its support of cancer research has really stood out among other retailers--and corporate America in general. "Safeway has positioned itself as one of the transformational corporate funders of cancer research," says Jonathan W. Simons, M.D., president and c.e.o. of the Santa Monica, Calif.-based Prostate Cancer Foundation.

In 2007 the grocer raised more than $16 million for breast cancer awareness and research through a consumer-funded in-store event, according to White at Susan G. Komen for the Cure.

While the country's leading grocers will likely continue their charitable giving practices for many more years to come, at least one retailer sees the potential for companies to come together to tackle major issues for the common good.

"I think Wal-Mart will continue to give locally, because it's part of our DNA and history," maintains McKenna. "But we're also trying to find ways that we can partner with others, in areas where it makes a long-term difference. For example, one of the areas we're involved in is adolescent literacy. We're currently working with the Boys & Girls Clubs to address this issue. But can we, with the help of partners, expand these programs to the Y, Urban League, or in schools? I think we can find issues that are on a national scale and work on them locally everywhere."

That kind of thinking could have a halo effect on the whole country--and even the world.

Smart giving

Tanya L. Baskin, v.p. of corporate sponsorships for Washington-based Special Olympics, Inc., points to the positive press retailers can generate through charitable giving. "With the recent issues that have plagued corporate America, many companies are not only looking for ways to get involved, but also for ways to tell their story to all their stakeholders," she says.

However, retailers should take their time to carefully research charities before they get involved, suggests Sandra Miniutti, v.p. of marketing at Mahwah, N.J.-based Charity Navigator, America's largest charity evaluator. "This can be even more important for businesses than individuals, because of the stakeholders involved," she says. "Corporations that research the charities they're going to invest in are more likely to stay in a long-term relationship."

Unfortunately, cases where charities have shown unethical judgment are much more likely to attract media coverage, adds Miniutti. "So if a company is involved with an unethical organization, it could blow up in their face," she says.


EXCLUSIVE WEB CONTENT

Charitable giving trends in the United States

U.S. charitable giving reached a new record in 2006—an estimated $295.02 billion—but gifts by individuals accounted for 75 percent of the pie, according to Giving USA 2007, the yearbook of philanthropy published by Giving USA Foundation, and researched and written by the Center on Philanthropy at Indiana University. (The 2007 report is the latest available from Giving USA, which is based in Glenview, Ill.)

Donors gave an estimated $11.97 billion more than in 2005, a 4.2 percent increase (1.0 percent adjusted for inflation) over a revised estimate for 2005 of $283.05 billion. The 2005 estimate includes nearly $7.4 billion in extraordinary disaster relief giving. If disaster gifts are excluded from the 2005 total, giving in 2006 rose 6.6 percent (3.2 percent after adjusting for inflation).

"It is impressive that giving continued to rise in 2006, especially following the unprecedented levels of disaster giving in 2005," notes Richard T. Jolly, chair of Giving USA Foundation. "America's 1.4 million charitable and religious organizations provide a huge range of services that improve lives, from meeting immediate needs to funding medical research or creating endowments to assure the future of arts or educational institutions."

The record-setting gift amount includes $1.9 billion that Warren Buffett paid in 2006 as the first installment on his 20-year pledge of more than $30 billion to four foundations, and also includes donations from hundreds of millions of ordinary Americans, as well as gifts from charitable bequests, foundations, and corporations.

"While headlines focus on 'mega-gifts,' they represented 1.3 percent of the total," notes George C. Ruotolo Jr., CFRE, chair of Giving Institute: Leading Consultants to Non-Profits, parent organization of the Foundation. "About 65 percent of households with incomes lower than $100,000 give to charity. That's higher than the percentage who vote or read a Sunday newspaper."

Giving by individuals is always the largest single source of donations, according to the report. Individual donations rose by 4.4 percent (1.2 percent adjusted for inflation) to an estimated $222.89 billion, and account for 75.6 percent of all estimated giving in 2006.

Charitable bequests are estimated in 2006 to be $22.91 billion, a 2.1 percent drop (-5.1 percent adjusted for inflation) from the revised value for 2005, which is based on IRS records and is now $23.40 billion. New IRS information about 2005 shows a large change in giving by the wealthiest estates. Charitable bequests in 2006 are 7.8 percent of the estimated total.

Foundation grant making, as recorded by the Foundation Center and reported in Giving USA, rose 12.6 percent (9.1 percent adjusted for inflation) to $36.5 billion. The increase was because of growth in the number of foundations and because the stock market rose rapidly in 2006. Foundations make grants based in part on the value of their assets, and when asset values rise quickly, grant making increases. Foundation giving accounts for 12.4 percent of total estimated charitable donations in 2006.

Donations by corporations and corporate foundations are estimated to be $12.72 billion in 2006. This is a decline of 7.6 percent (-10.5 percent adjusted for inflation). The decline reflects the extraordinary gifts in 2005 for disaster relief, as well as a slowdown in the rate of growth for non-disaster-related corporate giving. Without the 2005 disaster relief gifts included, corporate giving is estimated to have increased 1.5 percent in 2006 (a drop of 1.7 percent when adjusted for inflation).