editor’s note-Spending Wisely-December 2011

editor’s note-Spending Wisely-December 2011

How the beliefs of two leaders past are still relevant today.

Let me into an antique store, and I inevitably come away with an old magazine or newspaper. They’re fun to leave out on coffee tables, and they offer up some of the best doses of history one can find. It’s not a diluted Wikipedia entry; it’s a tangible piece of history, as sharply in focus as at the time it was originally reported.

I picked up Fortune’s December 1961 issue a few weeks back, and one of the stories teased on the cover quickly dated its content: “The New Man at Studebaker.” The editorial talked about how the Soviet Union’s resumption of open nuclear tests was good because it meant the U.S. could resume such tests as well. John F. Kennedy was still alive.

Then I came across the story, “Does the West Face a ‘Credit Collapse’?” It was a response to a July story by the famous French economist Jacques Rueff, who wrote, “A grave peril hangs over the economy of the West.” The discussion in both articles centered around the increasing practice of the United States in settling deficits in its balance of payments owed to other countries not in gold (at the time, each dollar was backed by U.S. gold) but by way of increased debt to foreigners. Rueff—whose 1958 economic plan enabled France to balance its budget and advance into a period of economic prosperity—warned against it; others expressed the notion that debt was good (in moderation, of course). And the trend continued.

Recent U.S. administrations have been blamed for our economic problems. But what would have happened if the United States and other major countries had continued to pay what they owed each other based on the gold exchange standard? That standard was instead dropped in 1971, and everything turned more abstract. Our country began to leverage its assets via debt, and it didn’t take long for it to encourage average Americans to do the same beginning with the freeing up of consumer credit in the early 1980s.

I wonder what Mr. Rueff would say today, in addition to “I told you so.”

Also written up 50 years ago this month in the same magazine was a story about the new president of General Mills, Edwin W. Rawlings. A Harvard graduate who became a four-star Air Force general, Rawlings eventually led the U.S. Air Material Command, presiding over the spending of about $8 billion a year.

Charles Bell, son of the founder of General Mills, worked for Rawlings during World War II and persuaded him to become financial vice president at General Mills in 1959. Rawlings went on to become CEO, and there are fleeting references on the Internet about how he not only helped transform the company from a family-led, predominantly flourmill–focused business into a well-run conglomerate (becoming the world’s largest toy maker for a time), but that he was one of the first major CEOs to exercise corporate social responsibility as a core value.

In digging further, I couldn’t discern how much this was truly the case. But it was interesting nonetheless to look back in time and think about how a core value such as corporate social responsibility took root and flourished within General Mills. Over the years, each of its CEOs has continued to support it, as has the company’s employees and retirees.

One of the most notable areas where this shows up today is in corporate giving. The Minnesota Council on Foundations (MCF) in November released its “annual grantmaker rankings,” which examines how much Minnesota’s leading givers awarded in the most recent year that such information could be tracked. By sheer dollar amount (excluding in-kind or other noncash contributions), the top publicly traded corporate givers (along with their foundations) were Target, General Mills, UnitedHealth Group, Medtronic, and 3M.

General Mills, however, leads the pack in terms of how much it gives, relative to how much it has to give.
According to the MCF, the company and its foundation gave $87.7 million in the most recent year reported, the equivalent of about 2 percent of its total current corporate assets, or 5 percent of its annual net earnings. The company and its foundation also managed to increase total giving by 11 percent, compared with year-earlier numbers.

The next closest was Target, giving $132 million, a total of about 0.8 percent of its total current assets, or 4.7 percent of annual net earnings. Target’s overall giving dropped by about 2 percent.

UnitedHealth Group, meanwhile, gave $52.1 million, the equivalent of less than 0.3 percent of its current corporate assets, and about 1 percent of its annual net earnings.

A couple of other nods are due as well when it comes to corporate giving this year. Medtronic gave 13 percent less, but increased its foundation assets by 44 percent to $83.5 million. United-Health Group must have seen the Ghost of Minnesota’s Christmas Future, as it increased giving in this state by 222 percent to $8.7 million. And privately held Cargill and its foundation increased giving by 11 percent overall to $61.1 million, and 28 percent in Minnesota, ranking it third highest for overall corporate giving.

Switching gears, I want to mention the dedication and great quality delivered by the entire team at Twin Cities Business this year. The magazine was recognized last month by the 700-member Minnesota Magazine and Publishing Association, which awarded it with 11 Excellence Awards: five gold, one silver, and five bronze in the “business/trade publication over 30,000 circulation” category. We won gold awards for overall excellence, overall design, feature article, regular column, and profile story. Kudos to the team, with a special thanks to our editors; our art director, Scott Buchschacher; columnist Tony Carideo; and writer Brian Lambert.

Twin Cities Business had a good 2011. I hope you did as well. Happy holidays, and may you have a prosperous new year.

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