Rick Jacobs, Founder of the Courage Campaign, On Pepsi and Corporate Giving


Last week, we wrote about how the Courage Campaign won $50,000 from the Pepsi Challenge, and our concern about the ways in which Pepsi was able to use an LGBT advocacy group to market its product in the non-profit arena. It seemed especially alarming given how the Gay & Lesbian Alliance Against Defamation had imploded just a few weeks before, after its $50,000 donation from AT&T tainted its actions. (UPDATE: GLAAD has formally withdrawn its endorsement of the AT&T deal.)

Rick Jacobs, the founder and chair of the Courage Campaign, reached out to us shortly after the story was posted. Surprisingly, he thought there was a “zero percent chance that you’re not absolutely right that this is a way for Pepsi to advertise.” But he also maintained that it was a very different situation at the Courage Campaign than at GLAAD.

Jacobs thought it was important “not just for LGBT organizations, but for non-profits in general to look at the role of corporate donations.” Indeed, he thought “there’s a lot of corporate money out there, and we’d like to get as much of it was we can without ever compromising our principles.” In order to do so, Jacobs says, an organization “has to be willing to bite that hand that feeds it,” should any quid pro quo ever be asked from a donor.

Is this possible? In an unsigned editorial over the weekend, the New York Times looked at AT&T’s “giving” and came up with a resounding “no.” But Jacobs says that it is.

For starters, he points out, the Courage Campaign had a big difference in its relationshop with Pepsi than GLAAD did with AT&T in that “there was no Troup.” He is referring to Troup Coronado, the former AT&T executive and lobbyist who sat on GLAAD’s board. “No one from Pepsi is on our board!” Jacobs says laughing, emphasizing that they’ve had no direct interaction with the softdrink maker at all.

All the contact the Courage Campaign has had with the Pepsi Challenge, Jacobs says, has been through the Progressive Slate, a project of the Center for Progressive Leadership which has bundled together all sorts of non-profits to win Pepsi’s money. According to their site, Pepsi gives away $1.3 million a month. They wrote in an email that they’ve helped some 35 progressive organizations win over $2 million in funding from the contest.

In exchange, Pepsi gets all of these non-profits to use email, Facebook and Twitter to get people to go to the Pepsi Challenge site, co-mingle their brands, and, inadvertently or not, talk about Pepsi and think about Pepsi. (And then blogs like ours use the word Pepsi Pepsi Pepsi ad nausea reporting on the contest, grudgingly continuing the viral campaign.)

Is it worth this exchange? The Courage Campaign’s $50K, Jacobs says, “is a big gift for us.” But he maintains that the biggest challenge for non-profits taking corporate donations is this (emphasis ours):

As I think about this, there’s another large issue to consider. Out here in
California, Kaiser is the largest HMO in the state and I think the country. It is a not-for-profit business. As such, you and I subsidize it because it does not pay any taxes. Yet, between in the 27 months from 2009 to Q1 2011, it made $5 billion in profit. Of that, $921 million came in the first quarter of this year, more than $10 million per day. The CEO of Kaiser, George Halvorson, makes $8 million per year. Yet, on 1 July Kaiser raised rates on 300,000 of its insureds by an average of 11%. And Kaiser has spent well over $700,000 this year (as reported thus far) lobbying against rate regulation by the state. Kaiser refuses to provide proper staffing ratios or pay its professional workers appropriately. Halvorson, for example, has eight different pension plans; workers who are part of the National Union of Healthcare Workers (NUHW), are being told by Kaiser they cannot have even one pension plan.

What has this to do with consideration of corporate support of the not-for-profit sector? Everything. Kaiser dispenses enormous quantities of corporate largesse around this state in particular, quite a lot to LGBT groups and HIV prevention/treatment as well as AIDS treatment organizations. Undoubtedly, Kaiser’s funding and work have been very helpful in those vital and underfunded sectors. I hope it continues.

However, not one of those groups has challenged Kaiser for fighting regulation, for paying its executives so lavishly, for profiting so highly and for raising rates so cavalierly. Courage’s advocacy arm has taken on Kaiser directly; over 12,000 of our members have written to Kaiser’s CEO demanding that they support AB 52 and calling them out on this. We’ve also filed a supporting letter with the governor demanding that his Department of Managed Healthcare Services review the Kaiser rate increase.

I say all of this not to pat Courage members on the back nor to criticize any other group. Rather, this is a concrete and complex example of subsidizing an entire system that in turn uses its donations to make itself impregnable to political change, change would surely would improve the lives of hundreds of thousands or even millions of Californians.

That’s why I’m so pleased that you are taking on the issue of corporate philanthropy. Our tax code subsidizes corporate donations. It is encouraged as a “social good.” Corporations, on the other hand, exist to serve their shareholders. That’s their job. (In the case of Kaiser, it’s murkier because it is subsidized at its core because it is a not-for-profit.) Our job in the not-for-profit advocacy sector is to engage our members/base, follow their lead and fund our/their work. The cleanest money in politics or philanthropy is small dollar donations from many, many people.

Historically, more than 65% of Courage’s funding for advocacy comes from such sources. As I said to you, regardless of the source of larger donations, Courage or any organization has to be willing to bite the hand that feeds it in the case of larger donations. Over our short lifetime, we have taken on the health insurance sector repeatedly, PG&E which tried to pass a ballot measure that would have served its own purposes uniquely, the oil and gas sector, most specifically Valero and even my former employer Occidental Petroleum when they put a measure on our ballot here that would have weakened our state’s environmental laws. (They lost.)

In short, we must act with/for our members, and be clear about donors. That’s why
the best possible circumstance is funding from members for advocacy. There’s almost always going to be a gap, so we have to be vigilant and serious about how we fill it.

As for the question, “What does being gay have to do with drinking Pepsi?” That PepsiCo would want to peddle their products to homosexuals Jacobs doesn’t necessarily see as a bad thing:

[W]hat is the benefit of corporations actively seeking to cater/market to the LGBT community? On some level, that’s a benefit provided the recipients do not compromise principle.