This piece ran in the Miami Herald on May 2, 2018
Starbucks’ response to last week’s debacle at its store in Philadelphia was swift and strong. Closing 8,000 stores for a half day of sensitivity training is a good public relations gesture that could change some of its employees’ attitudes toward black customers.
But there’s something else the company could do that would be much more impactful, and just might be the first step toward adding a powerful new weapon to the arsenal of black Americans’ struggle for equality in America.
What Starbucks could do is the thing it does best—make money by building and operating coffee shops. But instead of returning the profit from all of its shops to its shareholders, the company could dedicate, in perpetuity, the stream of profit from a small number of Starbucks locations—for the sake of example, let’s say 100 of them—to an organization with a strong track record of successfully addressing one of the critical challenges that face black Americans today.
Doing that would harness the future of the chosen organization—and by extension, its ability to make a real difference in peoples’ lives—to the most powerful force in American life: the free enterprise system.
It may seem wildly counter-intuitive to suggest any kind of linkage between black America and free enterprise capitalism. It’s as if they exist in non-intersecting universes, a black one dedicated to freedom and justice, and a capitalist one preoccupied with money and profits.
But the absence of a meaningful connection between the cause of black Americans and the workings of business is a problem, one that makes it impossible to use industry’s virtually unlimited political and economic power to our advantage. The next step for black Americans is to find a way to align at least some of our key interests with businesses’ unwavering focus on making money.
One way to take that step is a concept called Social Business. Social Business is the brainchild of Muhammad Yunus, the Nobel Prize-winning founder of Grameen Bank and creator of the concept of micro-finance. Yunus defines social businesses as cause-driven enterprises that simultaneously make money and solve social problems. His favorite example is Grameen Danone Co., a joint venture between Grameen Bank and Groupe Danone, the French multinational corporation that produces Dannon Yogurt and other dairy-based products.
The problem Yunus set out to solve when he began to work with Groupe Danone in 2007 is the malnourishment of children in Bangladesh. The company they created is a for-profit venture. It produces a product—a fortified sweet yogurt—that children like, and that provides much-needed nutrition. It covers all of its costs, and makes a profit at the end of each year. The key difference between Grameen Danone Co. and Dannon’s traditional business is that the profit Grameen Danone creates is not returned to the company’s shareholders. Instead, it is re-invested in the company’s mission—reducing the malnourishment of poor children in Bangladesh.
Social business is an idea that’s working in the developing world. And it can work here as well. The path Muhammad Yunus has blazed is available to other entrepreneurs looking for ways to leverage the power of free enterprise for the benefit of black Americans:
- Identify a problem;
- Create a plan for a business whose products or services address the problem in a meaningful way;
- Find investors who will be satisfied with getting their money back and foregoing any additional return on their capital;
- Run your business, make a profit, pay back your investors, and invest any additional profit in expanding your ability to solve the problem your business was created around.
Starbucks is not a social business. But like Groupe Danone, it could create a social business subsidiary. If it put 100 Starbucks stores into that subsidiary, the subsidiary would generate, by my estimate, more than $27 million per year in after-tax income. That’s enough money to fund an organization that has shown it can make a meaningful contribution to educating black children, reducing housing segregation, addressing health care disparities, or addressing one of the other major ills that affect black Americans.
And that would have a much more long-lasting and powerful impact than a half day of sensitivity training.