By Paula Dwyer
Howard Schultz is giving new meaning to "start me up." The increasingly activist Starbucks Corp. chief executive officer is taking donations online and through Starbucks cafes to create a small business lending fund. The company will donate $5 million in seed money to give the project, umm, a jolt.
That money can be leveraged seven times into $35 million worth of loans. And ultimately, Schultz said today in a meeting with Bloomberg View editors, he hopes to raise millions more for the project, "Create Jobs for USA."
Beginning Nov. 1, donors who give at least $5 will get a red, white and blue bracelet bearing the message "Indivisible." Mark Pinsky, the president and CEO of Opportunity Finance Network, a Philadelphia group that runs a network of 180 community-based lenders, will oversee the actual lending.
Donations will be distributed to Pinsky's network of so-called Community Development Financial Institutions, which can be banks, nonprofits or faith-based organizations. CDFIs are certified by the Treasury Dept. to provide credit to businesses unable to get conventional loans, such as those located in low-income and underserved areas. Those often are the places with the highest rates of unemployment, too.
In August, Schultz asked other business leaders to join him in boycotting donations to political campaigns until lawmakers agreed on a deficit-reduction plan. Last month, he sent a letter to President Barack Obama and Congress, urging them to put partisanship aside to address joblessness. He said Obama is the only elected official who has responded. Today, he expressed not a small amount of outrage over the parlous state of the U.S. economy and the political paralysis in Washington, saying both parties are equally to blame.
Schultz is calling on Congress to reform the tax system, including by letting companies bring home overseas profits at a lower corporate tax rate in return for creating jobs. He also wants Congress to require Fannie Mae and Freddie Mac to write down bad loans "that we all know people aren't going to pay back." Maybe he could refuse to sell coffee to lawmakers until they agree on a housing and job-creation plan?
(Paula Dwyer is a member of the Bloomberg View editorial board.)
-0- Oct/03/2011 21:00 GMT