Playing Politics
Just about a year ago, Target Corp. unwittingly created a firestorm when it made a $150,000 donation to a group supporting the Minnesota gubernatorial candidacy of Republican Tom Emmer.
Emmer, who ran unsuccessfully as a pro-business candidate, opposed expansion of gay and lesbian rights. Target, on the other hand, had been in the forefront of companies offering benefits to employees in same-sex relationships.
Target's contribution outraged some gay and lesbian groups, who called for a boycott of the mass merchant.
The headline-grabbing controversy caught Target off guard. While the Minneapolis-based discount chain known for its generous corporate giving apologized for the brouhaha, it didn't back off its right to make political donations. "Target doesn't have a social agenda. It has a business agenda," Target spokeswoman Lena Michaud told the Minneapolis Star Tribune.
Thanks to the U.S. Supreme Court's 2010 decision in the Citizens United case, which upheld the right of a nonprofit group to air an unflattering documentary about Hillary Clinton during a campaign period, corporations and unions have more leeway to make donations to political candidates. The court said corporations have "personhood" and the same First Amendment right to free speech as individuals. It also declared unconstitutional former limits on corporate spending and dismissed a requirement that corporate sponsors of televised ads clearly identify themselves.
But playing in the high stakes world of politics carries big risks to food retailers and manufacturers because they serve broad swaths of customers and often have invested heavily in building their brands, say brand consultants and business experts.
"It's risky for brands to make political contributions because their contributions are public information, and their political leanings may not match their customers' political leanings," warns Joan Schneider, a public relations strategist in Boston.
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Laura Ries, a brand consultant in Roswell, Ga., and author of "The War in the Boardroom," agrees. "The downside is the negative PR that groups will generate by publicizing a company's gift to a candidate who has views that not everyone will agree with."
Getting emotional
A controversy can erupt quickly when the political cause is emotionally charged. "Those third-rail issues, whether it is gay rights or abortion, these are just very black-and-white issues in the way that candidates talk about them and people feel about them," Ries says.
Another potential third-rail issue is immigration reform, say observers. Supporting a candidate who opposes amnesty for illegal immigrants, for example, could offend Hispanic customers, the fastest-growing demographic group in the United States.
While most of the risk for businesses comes from supporting socially conservative candidates, contributions can backfire in another way, points out Schneider: A contribution could be refused. In 2005, when Walmart was engaged in a battle with labor groups that accused the nation's largest retailer of paying substandard wages and providing stingy benefits, then-Sen. Hillary Rodham Clinton gave back a campaign contribution from Walmart Stores Inc., citing "serious differences." She did so despite previously serving on Walmart's board of directors.
A company doesn't even have to make a monetary donation to find itself embroiled in controversy. Earlier this year, several gay rights organizations called for a boycott of Atlanta-based fast-food chain Chick-fil-A, which is known for promoting its founder's version of Christian values. The trigger: One of Chick-fil-A's Pennsylvania restaurants had offered meals to participants in a marriage seminar sponsored by a group that opposes gay marriage.
Backing a winner
Some food retailers have decided to avoid the potential for controversy from political donations altogether. For example, Costco Wholesale Corp., based in Issaquah, Wash., states on its website that it does not fund political organizations, religious organizations, research studies and athletic teams.
But others embrace political donations in the name of being a good corporate citizen. Pleasanton, Calif.-based Safeway Inc., which has won corporate social responsibility awards for its environmentally friendly practices and generous support of food banks and medical research, continues to make political and cause-related donations.
Since 1985, Safeway has raised more than $100 million for Easter Seals and other organizations that aid people with disabilities and contributed about $160 million to cancer research, according to a company statement.
While Safeway did not respond to requests for comment, FollowTheMoney.org reports that the company has donated more than $3 million to political candidates and causes in the past eight years. Most of the money was spent in Safeway's home state of California, records show, and 77 percent of the time Safeway picked winning candidates and ballot measures.
That's an impressive winning percentage, but food retailers generally are better off staying close to the food chain with their contributions, says Laurie Demeritt, president of the Hartman Group, a market research firm outside Seattle that specializes in food culture.
A company's donations should align with consumers' views of its brand, Demeritt says. Embracing causes related to a core competency can build brand equity and serve as effective marketing.
"We tell our clients all the time to think about causes that have to do with food and local communities rather than national organizations," Demeritt says. "If you start getting involved in things that consumers don't know you for, it doesn't make a lot of sense. Consumers are going to be most interested in you supporting causes that relate to products in your store."
Examples include food banks and programs that educate children about food. It could even involve supporting a local chefs' organization. But a cause also might include hosting a farmers market in a grocery store parking lot, Demeritt says.
"Forward-thinking retailers are seeing that consumers are looking for more engagement with producers. So why not bring them to your area? They can't get everything they need at the farmers market, and you are attracting incremental business," Demeritt says.
Food is a largely apolitical topic for most consumers, she adds. Based on a Hartman Group study that involved an online survey of 2,700 adults plus interviews with 60 consumers, about 12 percent of consumers are "extremely engaged" in food culture. These people want to "look behind the curtain" and check into whether their food is hormone-free and raised in a sustainable fashion, among other things, Demeritt says.
About two-thirds of consumers are slightly interested in food-related issues and the remaining 23 percent, a group Demeritt calls "the periphery," are not very engaged at all, the study indicates.
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Small-scale giving
For many smaller chains, steering clear of political donations isn't an option, according to consultants. Grocery stores and food manufacturers are considered mainstays of their communities, and politicians are likely to seek their financial aid.
That's just reality, says Marilyn Hoyt, a consultant to nonprofit groups who is based in Riverside, Ill. "Small business owners work in an environment where candidates are going to ask them for money. They understand they may go to that individual, so they want a warm relationship. And they don't want to be in the position of having supported a losing candidate," Hoyt says.
One simple solution is to hedge your bets by making equal contributions to both candidates in an election, she advises. That way there's no chance of being left out in the cold after the voting ends. "With even-handed giving, there isn't much risk," she says.
Businesses can always make a bigger contribution to the candidate they support, but they should make a token gift to the opposition, she advises. "This is about having the capacity to address a public official," Hoyt says.