Donating after the Destruction
October 3 2002 by Echo Montgomery Garrett
A single thought sometimes gnawed at Clayton L. Mathile’s conscience as chairman and CEO of the Iams Co., the Dayton, Ohio-based pet food manufacturer. “When I ran Iams, I had an issue with the fact that we were feeding dogs and cats better than 75 percent of the people in the world,” recalled Mathile, 60, who sold his company in 1999 to Procter & Gamble for $2.3 billion. “If America is going to be recognized as a humanitarian nation, we’ve got to share our wealth. We cannot sit here and be complacent while 40,000 people a day starve to death,” he insisted during an interview in his office on Sept. 10.
The next day, the terrorist attack on America punctured that shell of complacency in a way that no one could have imagined. CEOs are used to solving tough problems, so it’s only natural-and many would argue an ethical duty-for this pool of talent to tackle the overwhelming charitable needs facing society locally and globally. Viewed through the prism of the terrible events of September 11, which created a whole new set of intense needs, the issue of giving suddenly became even more complex. Those events caused many CEOs to reexamine philanthropic priorities and, for many, that day marked a renewed sense of urgency in meeting the demands around them.
“The events of September 11 confirmed the compassion and generosity of all Americans, including corporations,” says Sara E. MelÃ©ndez, president and CEO of Independent Sector, a coalition of nonprofit organizations based in Washington, DC. “CEOs understand the important contributions of philanthropy and nonprofit organizations to their communities and to society before the terrorist attacks, through the aftermath and beyond.”
Some CEOs are taking a hands-on approach to philanthropy. Says Frank J. Belatti, chairman and CEO of AFC Enterprises, Atlanta, one of the world’s largest operators and franchisors of restaurants with more than 3,600 locations in 30 countries: “I have this sense that commerce is the greatest secular power on earth. As CEOs, we have an enormous capacity and responsibility to do great things-not only in creating value for shareholders but in improving the world as well. It’s incumbent upon us to think about not only how we personally give back but also how we can inspire others to give back as well.”
Shortly after September 11, Belatti, who grew up in a South Bronx ghetto, committed his company-which operates Church’s Chicken, Popeyes Chicken & Biscuits and Cinnabon-to build another 100 houses for Habitat for Humanity by 2005. Since DreamBuilders, the moniker he gave AFC’s effort on behalf of Habitat, was launched in 1993, Belatti and AFC employees and franchisees have constructed more than 400 houses in 12 countries and 40 U.S. cities, providing homes for more than 2,000 children.
“The beauty of that is that we’ve not only raised money to build houses, we’ve also invested over 1 million hours to build them. I can see these homes. I can see the faces of the children,” he says. Belatti gives about 10 percent of his annual income to charities including Habitat.
Shortly after the planes struck, Jeffrey L. Freemyer, 42, president and CEO of Convergent Media Systems, an Atlanta-based distance learning and television media company, was sitting with several other CEOs in a meeting for the Alex de Toqueville Society of the United Way.
He and his wife Kim had joined the society two years earlier after one of their friends, a company salesman, was murdered. After the attacks, a half dozen of the CEO members met at a local restaurant to brainstorm ways they could support patriotism in their companies. Freemyer, past president of the Atlanta chapter of the Young Entrepreneurs’ Organization, spearheaded a drive for Atlanta’s YEO members to contribute $1,000 or more to either the September 11 relief fund or a fund for entrepreneurial relief efforts-an idea later submitted to the international membership.
“One of the things that 9/11 has [caused me to do] is to look for ways to do things that have an eternal impact,” says Freemyer. “There’s more of a focus to do things that involve time and personal commitment.”
Granted, there are many ways to serve charities while supplying leadership. The most effective CEO philanthropists apply the passion and lessons they’ve learned in their companies to their favorite causes. The CEOs who garner the greatest satisfaction from those efforts focus their resources on a handful of key causes.
Long before the sale of Iams landed him on Forbes’ list of the world’s wealthiest people-he’s tied at No. 167 with Donald Trump-Mathile and his wife Mary set up a foundation to give away their fortune to worthy causes-something many CEOs do. Indeed, the United States now has 41,750 independent or family foundations, up 52 percent in the 10 years since 1998, according to Steve Lawrence, director of research for The Foundation Center, a New York research and information organization. From 1996 to 2000, foundation giving doubled. In 1999, independent foundation gifts totaled $18 billion, and Lawrence estimates that number will total $21.6 billion for 2000. In the wake of September’s tragedy, he expects to see an increase in giving to the causes of peace, security and disaster preparedness. Currently 25 percent of all grant dollars each year goes to education.
Once Mathile was catapulted into the company of billionaires, he sought out advisors who could help the couple make the wisest use of their wealth. “We’re committed to spending most of our resources on the local community,” asserts Mathile, who now spends part of his time running the Center for Entrepreneurial Education in Dayton. “Dayton doesn’t have too many entrepreneurs like me, and if I don’t take care of my own backyard, who will step in to address the needs right here?” The Mathiles primarily concentrate on educational and children’s causes.
Mathile credits the Philanthropy Roundtable as a great resource and place to network with important philanthropic players. “I happened to be sitting by an estate planner at a Philanthropy Roundtable dinner, and I told him about my concern over world hunger,” recalls Mathile, who grew up poor on a small Ohio farm. “He said, €˜I know exactly the guy you need to meet. One of the premier leaders in the fight against hunger is sitting at the next table.’”
In the wake of September 11, the Mathiles for the most part have taken a wait-and-see approach to sort out what help was most needed. They made a donation to the New York Firemen’s Association Fund, but eschewed sending money to the American Red Cross or United Way of America, because of concerns over how the agencies would deliver the funds.
That’s a concern shared by Sanjiv S. Sidhu, 44, chairman of supply chain software firm i2 Technologies in Dallas. “September 11 actually highlighted the inefficiency of how aid is delivered in emergency and non-emergency situations. New York City ended up with a logistics problem because so many goods that had been donated out of the goodness of people’s hearts, like clothes, teddy bears and food, were not the kind of aid that disaster needed,” notes Sidhu.
An employee sent Sidhu an email a few years ago with an idea about using software to match donors with relief agencies and people in need. “I got so excited the moment I read it,” says Sidhu, who agreed to sponsor the site, called Aidmatrix.org, via the i2 Foundation that he and his wife Lekha set up in 1996.
The entrepreneur asserts that September 11 has caused more people to think about charitable causes, but he urgently wants to fix the problems that arise from not having the right help. “Sending winter clothes to the Caribbean after a hurricane is fruitless,” he says. “People care. They just need direction. [Our] software allows you to manage, so waste doesn’t occur.”
The i2 Foundation came up with a goal of measuring its success. Says Sidhu, “By year 2005, we want to be able to impact 50 million lives.”
Sidhu and his wife would also like to foster their own commitment to charity among i2 employees. The CEO surveyed all 5,000 i2ers and asked them what causes they support and why. “What came out was children and education, followed by environmental causes, and research in health,” he notes. So for each quarterly grant cycle, a half dozen company employees sit on a grant committee for the foundation and determine which applicants are most closely aligned with causes near and dear to his employees.
Belatti chose Habitat because he also thought it was a way to help his employees connect to charitable causes. “We’ve sent our employees to be ambassadors,” he says. “Those are memories that you don’t get when you just write a check. It’s helped us feel in a really concrete way that we’ve made a difference.”