Friday, March 13, 2009

Starbucks and the Bucks

Starbucks a few times a year makes a percentage donation from sales of certain types of drinks, benefiting some charitable organization – most recently it happened to be Project Red, which helps fight AIDS in Africa. Many people who are against corporations came out to say that if one were to donate directly to the cause itself, that organization would see more of the money.

You know, I'm agreeing with many of the nay-sayers that the donations I make directly to these foundations and charities is more significant than what Starbucks offers - But damn few of us give direct donations. Even a small portion of all the coffee drinks they produce daily is helluva lot more than I'd likely be able to donate myself. This won't stop personal donations, and is just an additional supplemental source of funding. In the current economic recession here in the US, this is a way to provide a great deal of money, even if it is only $.05 at a time, when many larger and smaller donors are cutting back on charitable donations. Not to mention, now we're putting power of even $.05 from perhaps tens of thousands or even hundreds of thousands of individuals who are unlikely to be donating a nickel or anything else. (And since I belong to a non-profit, I can attest to the underfunding aspect of economic recession.)

This is a BUSINESS though, and they have no requirements on charitable obligations. I say thank you and kudos! Get me a triple tall latte, please!!

A very loose real number would be Starbucks gross profit margin. It’s currently about 19.2%. Taken loosely that means off of your $4 latte, Starbucks makes 77 cents. So even after they give to Project (Red) they still make 72 cents. That’s a cost to them of 6.5% of their gross profit from the sale.

Lets do a little math:

For every 100 latte's they normally sell:
Donation to Project (Red): $5
Starbuck's gross profit (after the donation): $72
Starbuck's lost gross Profit: $5.

Number of additional Latte's they need to sell to make up for the lost $5: 7
So for each 100 latte's they normally sell, they need to sell an additional 7 latte's to have their profit unaffected by the donation.

This also doesn't take into account that Starbucks will get a tax break on their donation.
And they're still a business, so I ask again what local non-corporate entity has the power and resources to DONATE millions every year to various non-profits associated with rejuvenating the lands, people, and culture that grow their precious beans, or house a precious commodity?

You should probably take a look and read over their annual CSR to find out what they actually GIVE away each year to global non-profits (without a mass marketing campaign, I might add), before making lofty folderol. The prices quoted are fair. According to their Fiscal 2008 Q4 report, they were down almost a dollar in stock - a 7 year low - with 2008 seeing a ~$200M loss. Q1 2009 already saw a .50c drop, due to pressure from the housing market.

Not to mention that a few of the Starbucks in my area donate all of the overstocked food products and GIVE it to homeless shelters. And all of the grinds go into my garden every year. And all of the donation boxes that a couple of my stores have MATCH donations.

It would seem then, in the end, the idea of a corporation is much more detrimental to the psyche, than the actual good they can accomplish. True, not all major corporations donate and make good by helping where and how they can, but it’s not fair to those that do (with little understanding) to lump them all together.

Respect is given, when respect is taken ...

Namaste and Slainte

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