What Is Starbucks Doing in the Financial Stimulus Business?

Starbucks (NASDAQ: SBUX) CEO Howard Schultz has been in the cause de jour business for the past several months. It does not seem to do much for the causes, but it could hurt the coffee shop company’s relationships with its customers.

The Starbucks Foundation made a $5 million donation to the “Create Jobs for USA” campaign. It will cooperate with Opportunity Finance Network to funnel money to community lending institutions. The program likely will be as large a failure as Schultz’s plan to encourage CEOs and other Americans to eliminate their contributions to politicians. His theory was that politicians without money would be impotent to continue partisan activity. Schultz got several chief executives to support his plan. Little has been said about it since, and Schultz has shown nothing to prove it was any more than a failure.

The $5 million the Starbucks Foundation contributed to the local loan program is barely enough to fund financial support for a very small city. It is hard to imagine that Starbucks customers in line to buy $4 drinks, in some cases, will warm to a request to put money toward a scheme they neither know about nor understand. Customers may view the solicitation as an intrusion. Even if one person  walks out of a Starbucks store because of it, the program will have harmed the company’s public shareholders.

Starbucks shareholders may fairly ask why Schultz has so much time on his hands. While the firm’s stock has done exceptionally well over the past year, there is a recession on its way, if it has not arrived already. Plans to reform the U.S. political system and fund local loan programs are so ambitious that if every one of the companies in the DJIA  joined in, it would not be enough to make them viable.

Schultz ought to go back to his day job and leave the rescue of America alone.

Douglas A. McIntyre