THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, June 25, 1995 TAG: 9506240284
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
LENGTH: Long : 110 lines
Ukrop's Super Markets Inc. in Richmond has been lauded by civic leaders for supporting charitable, educational and nonprofit organizations. For years, the family-owned chain of 23 stores has donated 10 percent of its pretax profits to such groups.
James E. Ukrop, the company's vice chairman and chief executive officer, recently spoke about corporate philanthropy to the Hampton Roads 5 Percent Club, a group of companies that donate at least 5 percent of their pretax earnings to charitable, educational and other nonprofit groups.
Ukrop, a 57-year-old Richmond native, has held leadership posts with several community organizations in Richmond, including the United Way, Goodwill Industries and the greater Richmond Chamber of Commerce. After his speech to the Hampton Roads 5 Percent Club, Ukrop talked with business reporter Tom Shean about corporate philanthropy.
Would Ukrop's be able to contribute so heavily to community programs if it were a publicly traded company?
No, not at all. I'd probably be fired. That's the wonderful thing about being a private company. I'm on the board of three public companies, and I'm quite aware of how much time and effort is spent making sure that the quarterly earnings reports looks good.
But isn't there some tension between Ukrop's effort to help community organizations and the need to achieve a certain level of profitability?
In the grocery industry, the difference between winning and losing is a penny on the dollar, so we have to be careful. We're not a big company that has lots of staff and overhead. Every day we open up against Food Lion, so we have to prove ourselves in the stores. While people think we are good guys because of everything we do in the community, they don't come to our stores because of that.
Doesn't the goodwill created by Ukrop's involvement in the community generate sales that you might not otherwise get?
We've never tried to measure it. I think it adds something, but I got a letter the other day from someone who said we had reduced the service in our stores so we could give more away to charity. Some of this could backfire if people thought you were overcharging for their groceries so we could do all this. People won't shop with us just because of all these good things.
How does Ukrop's distribute its profits?
Fifty percent stays in the business. Twenty percent is paid to our associates - our employees - in cash bonuses. Then we have a 10 percent retirement profit-sharing plan. We put 10 percent into charitable contributions, and the last 10 percent are bonuses and dividends for the shareholders.
How does your company decide which non-profit groups will receive contributions?
We are trying to focus our major giving toward activities that involve young people and economic development. Economic development could include a museum or something that attracts tourists and creates jobs. We've tried to steer away from medical things.
How sophisticated is your decision-making process?
It isn't. It's by the seat of the pants. Most of the things that have happened in our business have been accidents or involved being in the right place at the right time. We get credit for hiring all of these senior citizens. It was an accident.
A retired customer came up to me in the mid-1970s and said, `I've got to find something to get out of the house. My wife and I are driving one another crazy.'
I said, `The only thing I know is to bag groceries.' He said, `Well let me try it.'
Two weeks later, he was doing such a great job, I asked him, `Do you have any friends?' It wasn't a grand plan.
How long have you been involved in civic and charitable activities?
When I started in the business full time in 1960, I hid behind my work because I wasn't really comfortable speaking to groups. Whenever someone called, I said the best way I could contribute was to run a good business. I didn't do anything other than some work for the College of William & Mary until the late 1970s. I turned down every request. After a while, it became harder and harder to say `No.'
In your speech to the Hampton Roads 5 Percent Club, you mentioned that a department store whose parent was based elsewhere in the country had not gotten involved in civic and charitable activities in the Richmond area. Why is that significant?
What really concerns me is that the the big national retail chains do very little to put anything into a community other than jobs and taxes.
What trends do you see developing in corporate giving?
The biggest trend I see has to do with public companies and their boards of directors. It's very difficult to create a giving culture when you bring together a group of people whose only common interest is increasing the value of stockholders' shares. In a group of 12 people, you might have five or six who feel one way about corporate philanthropy and five or six others who say, `It's not our job to give away the shareholders' dollars. Our job is to produce more dollars for them to give away as individuals.'
Many of the country's large corporations have steadily reduced the size of their workforces. How are these cutbacks going to affect employee contributions to such things as United Way campaigns?
I think more and more business in this country will be done by small companies. But structured programs for employee giving are much more difficult at smaller companies because the management just doesn't have enough time and resources. So philanthropy is likely to come more from individuals.
Do charitable organizations and other non-profit groups have the resources to make up for the reductions in federal spending for social programs?
I feel like this is a window of opportunity for community groups. My theory is that when money comes from Washington, politicians get involved. They are more interested in photo opportunities and celebrations. I know we have some very smart, well-intentioned people in government. I just think that volunteer boards are much better stewards. There is real passion if you're on the volunteer board. by CNB