Leave Your Mark
There Is Still Time!
David A. Koch
Chairman of Graco
As I retire from my company after 40 years of service, having been CEO for 33 years, I ask the following questions of myself: Did I carry out the trust of the founders of our company? Did I equitably and ethically serve our employees, customers, and shareholders? Has our company made a positive difference in our community and our country?
Responsibility of Corporate Managers
As business leaders, we do not have to be approaching retirement or a new century to consider these important questions. Corporate managers have a special opportunity and a responsibility to ask these kinds of questions regularly on behalf of their organizations. We have a special privilege and responsibility to serve many people.
I firmly believe in the market system and am convinced it is the link to our personal freedom and our standard of living, which is probably the highest in the world in both measures. The free market is spreading throughout the world, but it needs support from all of us in business. To do this, I feel that business should share its success with the “community” that gives us our franchise to exist. We can share our products, our people, and our profits for the common good and not depend upon some governmental agency to solve every community challenge.
I’m of the opinion that immigrants have come to this country over the past 250 years for two critical reasons. They wanted to be free and to have the opportunity to improve their quality of life. They desired the freedom to think, act, say, and believe what they wanted, and to improve their standard of living and that of their families. This country has provided both freedom and opportunity, and our political and economic systems have been an integral part of that culture over all those years.
Our forefathers decided that the most effective system of providing goods and services for the citizens of our country was to establish a free market system. It is competitive, efficient, and has worked exceedingly well over our history, and we should celebrate that success. And yet, we all know it’s not perfect and that it can be improved.
After all these years, I’m more convinced than ever of the vital role business plays in our society in generating wealth, and in the effective and equitable use of that wealth. That wealth has been generated as the result of growing profitable companies and has been shared by employees, customers, stockholders, and all levels of government.
The Role of Business in Society
My deep concern is for the lack of understanding of the importance of business by many people in key positions who have the ability to dramatically change the system over time. This includes politicians, educators, religious leaders, and many others who lack an understanding of all the benefits of a growing, profitable company, and in fact, many of them mistrust business and business people. Therein lies a problem for the future.
In 1976, a handful of Greater Minneapolis Chamber of Commerce members asked about the role of business in our society. I was part of that group of business people. Every person in our informal business roundtable believed that we enjoyed a special privilege doing business in this country and in Minnesota. We had experience and knowledge of other political and business approaches around the world and agreed, that for all its faults, our system was one to cherish and perpetuate. It was also something we did not take for granted. Quite frankly, we wanted to see this privilege of doing business in our communities live on well beyond our own short tenure as corporate managers. We all wanted to leave a mark that would go beyond satisfying our immediate business objectives.
We believed that our companies could only survive and prosper in communities that were healthy and where educational and cultural institutions were strong and supported. We agreed that families needed more than jobs - and argued that community services must be available to provide basic requirements to those with and without economic means. As employers, we needed well-trained and educated workers and we believed in a college and university system that supported research and innovation.
Self-interest? Sure, that was part of it; people are the key to our success. But we knew that a simple profit and loss statement was not the only scorecard we should use to measure our success.
Minnesota Keystone Program
Ultimately, our thoughts led to action. We started the 5% Club to encourage companies to donate a portion of their profits to the communities where they did business. We agreed that 5% of pre-tax earnings was a good target (and at that time, the government allowed us to deduct that amount as a business expense, reducing our actual cost). We wrote letters to the entire Chamber membership and told them that Governor Wendell Anderson was going to attend our annual meeting and acknowledge those companies that agreed to donate 5% of U.S. pre-tax income to charities of their choice.
At that time, we had no idea how many businesses would respond. Within the next few weeks, 23 businesses responded and said they were already giving 5%, or would promise to do so. With that, the Minnesota Keystone ProgramSM was founded. Twenty years later, the Keystone Program has 240 participants, and over the years, 10 of our original members tell us they have invested nearly $90 million in cash and in-kind services to meet a whole host of community needs. Those original members, who are still doing business in Minnesota, continue as long-time supporters.
Today, I still believe in the principles that founded the Minnesota Keystone ProgramSM. I have been privileged to see the rewards in our community and in our quality of life that come from a strong business-community partnership. And while I am pleased that our program has stayed vibrant over twenty years, I can’t help but wonder why the Keystone Program still represents only a handful of Minnesota Businesses. With more than 53,000 corporations listed in Minnesota, why can’t we increase our market share? Instead of 240 participants, we should have 2,400. Maybe some day, we can have 24,000! We should aim high. (I’m sure that many of these companies share their earnings at the 2% level or higher but they have not yet joined the Keystone Program).
There are many reasons to enroll in the Minnesota Keystone ProgramSM and programs like it around the country, as a participant committed to investing some portion of corporate profits back into the community. Let me suggest five.
First, our community needs the support of business to maintain and improve our current standard of living and quality of life. We are a much larger metropolitan area than in 1976, and face the challenges of an aging inner-city and the human problems that come with rapid population growth in our metro area and a critical shortage of human services and economic opportunity in the pocket of our outstate areas. The government cannot possibly solve these problems alone, nor should it. There is a role for business in education partnerships, health care cost and access, and many other issues that affect all of us.
Second, business depends on community support. Quite frankly, every business needs to have community backing. No matter how successful we are, we cannot hope to stay in business for the long-term if the community around us is eroding.
Third, it’s an efficient use of funds. We can see in our community, first-hand, what the real needs are, and can support the agencies or organizations that address those needs. We don’t need to send tax dollars to St. Paul or to Washington for some political group to make those decisions, often establishing a larger bureaucracy.
Fourth, our entire employee organization is strengthened by a community investment program. We know employees want to feel a sense of pride in where they work. We all want to feel that our employer cares about the communities where its employees live and work. People also like to be appreciated for their positive contributions both inside and outside the workplace. Ask any organization with a strong volunteer program how that program affects those who are volunteering. You will quickly learn that it isn’t just the recipients of a program who benefit from corporate giving.
My final reason to begin or to strengthen your community investment through a giving program has to do with the answers to the questions I posed in the beginning of this article. Think about how you would like to answer these questions in ten years - or twenty:
- What have we accomplished not only in our company, but in support of our business system and the “common good”?
- What mark did we leave on this community?
- Have we done what we can to make life better for those who come behind us?
As business people with great opportunities and resources, we have the power to make a difference in our communities to improve the lives of others. We can leave a mark that will be remembered long after this year’s earnings are recorded and spent, and can help to perpetuate a political and economic system that has done such a fine job for people for over 200 years. Make the commitment. Inspire others. Inspire yourself. There is still time.
David A. Koch is Chairman of Graco, Inc. and serves on the Board of Directors at MCCR. This speech, originally presented in 1996 to the Greater Minneapolis Chamber of Commerce, has been modified. 1996 marked the 20th anniversary of the Minnesota Keystone Program.