The idea may sound familiar yet remains hard to swallow for many: every cent earned from Newman’s Own products, such as salad dressings, pasta sauces, and popcorn, is given to charitable causes.
In commemoration of what would have been Paul Newman’s 100th birthday on January 26, the Newman’s Own Foundation is encouraging others to embrace this principle through the launch of the 100% for Purpose Club.
During a TED talk shared recently, Alex Amouyel, the foundation’s CEO, made a compelling argument for why a growing number of for-profit businesses should consider donating all their earnings to social enterprises. She further promised that the foundation would offer support and guidance to any organizations looking to adopt this practice.
“Our aim is to set an example and act as a model for a fundamentally different type of organizational structure,” Amouyel remarked in an interview.
Paul Newman, an iconic Oscar-winning actor, established the food company in 1982, and when he passed away in 2008, he bequeathed ownership to his foundation.
Although Newman’s Own is not entirely unique in its structure, it stands out in the U.S. business landscape. Amouyel mentioned that there are frequent informal discussions between companies and stakeholders, and she hopes more businesses will contemplate this approach seriously.
A similar Australian venture, Humanitix, also contributes 100% of its ticket sales from event entries to charity and is among the founding members of the 100% for Purpose Club.
The implementation of the Philanthropic Enterprise Act in 2018, which Newman’s Own actively championed, has facilitated adherence to their model for other businesses. According to Celia Roady, an attorney representing the foundation, Newman’s Own faced challenges post-founder’s death due to existing regulations limiting foundations to owning no more than 20% of any business, aimed at preserving their focus on charitable activities.
The Philanthropic Enterprise Act permits foundations to have complete ownership of businesses under certain conditions and was signed into law by then-President Donald Trump.
Roady stated, “The goal was not to introduce broad loopholes, but rather to implement specific adjustments allowing companies wishing to donate fully to be owned by a private foundation.”
The stipulations include requirements that the foundation must have total ownership of the company, that the business donate 100% of its profits to charities, that a majority of the foundation’s board be independent from both the company and the donor, and that the founder no longer participate in the company’s management.
In its invitation to other firms, Newman’s Own provides various levels of involvement for those businesses that currently donate a smaller share of their profits to charitable causes. They also offer resources for companies interested in increasing their philanthropic contributions. Amouyel acknowledged that other foundations or companies may opt for different organizational frameworks.
Notably, Humanitix operates under a distinct model due to its Australian incorporation. Patagonia, the well-known outdoor apparel brand, transitioned in 2022 to transfer ownership to a trust that will allocate profits to nonprofit organizations advocating for environmental conservation.
Amouyel believes these approaches pave the way for those who feel that capitalism can be an effective system, yet needs to be reformed to yield better outcomes for society.
“It enables the generation of revenue while ensuring that profits aren’t merely fueling the wealth of a select few,” she emphasized, acknowledging that not all businesses may find this model suitable, yet it could indeed work for many.
Nien-hê Hsieh, a Harvard Business School professor who has examined Patagonia’s restructuring, underscores the importance of diverse ownership models in the economy.
He argues, “A broad range of ownership structures can mitigate issues related to monopolies and concentrated ownership, prompting companies to adopt diverse goals and be cognizant of the consequences of their actions.”
As of 2022, Newman’s Own reported that it has contributed $600 million over the years to charities, particularly focusing on initiatives for children. Newman initiated a network of camps for seriously ill children, with facilities like Camp Boggy Creek in Florida, offering complimentary experiences for campers and their families. The foundation is also actively involved in nutrition education in schools and food justice initiatives for Indigenous communities.
Currently, it remains uncertain whether other enterprises have utilized the Philanthropic Enterprise Act to transfer full ownership to foundations allowing for the 100% profit donation model. Roady expresses cautious optimism, suggesting that it might be premature to assess the law’s impact.
“Given that the legislation is relatively new, the potential effects can still unfold over time,” she advised.
