Starbucks' job creation fund finds first partners
(Reuters) - Google Offers and Banana Republic are the first businesses to join Starbucks Corp in raising money for a U.S. job creation fund started by the world's biggest coffee chain late last year.
Starbucks and the Opportunity Finance Network, a group of private financial institutions that make affordable loans to individuals and communities, introduced the "Create Jobs for USA" fund in October.
Starbucks Chief Executive Officer Howard Schultz said the fund would help compensate for a lack of national political leadership on unemployment.
"We can't wait for Washington," he said. "We need to do more on our own. Schultz said he was in discussions with other potential partners about expanding Create Jobs for USA.
The fund already has raised more than $7.5 million and the two new partnerships could bring in another $4 million. The total amount would support about $80 million in lending -- enough to help create or sustain more than 3,800 jobs, Starbucks said.
The U.S. unemployment rate has been above 8 percent since February 2009 and touched a high of 10 percent that October.
Google Offers, a Google Inc business that competes with daily deals company Groupon Inc, will raise up to $3 million on Wednesday by selling $10 Starbucks vouchers at the discounted price of $5 each. It will donate $3 from each voucher sale to the job creation fund.
Gap Inc unit Banana Republic will donate up to $1 million from purchases made during two four-day sales events planned for later this year. The first sale to benefit the fund is slated to begin on April 19.
Money from the fund already is being put to work, and Josh Davis, owner of the Gelato Fiasco in Brunswick, Maine, is among the business owners who have benefited.
Davis had a problem last year when his bank pulled a verbal financing commitment after he had signed a 10-year lease for a second gelato store in Portland, Maine.
A lender with funding from Create Jobs For USA stepped up with a loan of more than $100,000, enabling Davis to open the store in January. It now has six employees and is preparing to hire more for the busy summer season.
"It was absolutely critical," said Davis, who faced the prospect of trying to borrow from family and friends or arranging alternative financing that would have cost more and taken longer. "Who knows whether (the second store) would be up and running right now?"
Davis is donating $1 from the sale of pints of a limited-edition gelato flavor to support the fund.
Starbucks CEO Schultz created a political buzz last year when he called on his peers to withhold campaign donations to the president and members of Congress until the government reached a deal on the country's debt, revenue and spending.
Schultz, who returned Starbucks to growth after slashing costs and closing nearly 1,000 cafes around the globe, also asked fellow business leaders to pledge to step up hiring.
For its part, Starbucks this summer will begin selling coffee mugs made at a once-dormant factory in Northern Ohio. Many of the mugs and other products the company now sells are made in China.
The company, whose shares have risen more than 70 percent in the past year, also plans to build a factory in Augusta, Georgia, to produce VIA instant coffee and ingredients for its Frappuccino drinks. It expects that project to create 140 U.S. jobs in manufacturing, plus more than 100 in construction.
Starbucks is committed to putting the new plant in the United States, Schultz said, even though it would have been "significantly more attractive" to build it in a lower-cost country.
"If we believe in this, this is what we have to do," said Schultz, who repeatedly has said that he has no interest in a government job -- elected or otherwise.
"I feel like I can do a lot from the position I'm in," he said. "I have no plans to be anywhere else."
(Reporting By Lisa Baertlein in Los Angeles)
- Air strike kills 15 civilians in Yemen by mistake: officials
- North Korea executes leader's powerful uncle in rare public purge |
- Twitter backtracks on block feature after users revolt
- Pope attacks mega-salaries and wealth gap in peace message
- Insight: In Yemen, al Qaeda gains sympathy amid U.S. drone strikes