Johnson & Johnson: Scrooge or Santa?

Related Links
Discussion Boards
Foolanthropy 2006 Donations
Charity Amt. Raised
Co-op America $169,425
NFTE $91,341
Rare Conservation $30,047
Room to Read $25,266
Half the Sky $21,350
TOTAL $337,429
As of January 9, 2007
Foolanthropy 2006
Recent Foolanthropy Articles

By Jeremy MacNealy
December 13, 2006

Recently, we took a look at Wal-Mart (NYSE: WMT), asking whether the retailing empire was a Scrooge or a Santa. For many Fools, the debate doubtlessly rages on. But I was particularly pleased that actual employees from Wal-Mart took the time to email me, thanking The Motley Fool for giving them recognition for their hard work in helping others in need.

With his permission, I quote from one email which came in from Bill Dyer, an assistant general manager at a Wal-Mart distribution center in Shelbyville, Tenn. Bill writes:

I have worked with Wal-Mart for 15 years and I am proud of the efforts by the [Wal-Mart] Foundation. But I am more proud of the grass roots fundraising that is done on a weekly basis at our location in Shelbyville, TN. We are a distribution center with 400 associates and at least two times a month, on all shifts and schedules we cook meals for the associates with all proceeds going to the CMN Network. ... This year we will donate over $300,000 in food and grants to all sorts of local organizations.

If these articles fall on deaf ears among the gals and guys with shiny suits in some of the world's most powerful corporate offices, then we can take pleasure in knowing that the Janes and Joes of the world, everyday hard-working people like you and me, are getting recognized for their efforts.

So without further ado, let's take a closer look at Johnson & Johnson (NYSE: JNJ) and see how the company is trying to make a positive contribution to the world.

Big giver
In 2005, Johnson & Johnson contributed $591.9 million in "cash and products to philanthropic causes worldwide." Not surprisingly, then, The Foundation Center (which tracks giving from corporate foundations) lists the Johnson & Johnson Family of Companies Contribution Fund as one of the biggest givers, putting it in good company with Intel (Nasdaq: INTC), General Electric (NYSE: GE), and Ford (NYSE: F).

Of this amount, $127.4 million came in cash contributions, up from $121.8 million in 2004. The bulk of this cash was designated to the health and medical field, making up 54% of the total distribution. Contributions to the community were 16.2% of the total, and pulling in third was funding for education at 11.1%.

Non-cash contributions were by far the largest part of its charitable efforts, with $464.5 million in product donations. Much of this went to U.S. patients in need. Another significant portion was given to "medically underserved people in developing countries" and to provide disaster relief.

Fight against HIV/AIDS
The health-care products specialist gives to a wide range of needs, but tends to concentrate in five areas: women's and children's health, community responsibility and disaster relief, health-care access, health-care knowledge, and global public health. I'd like to spend a little more time addressing this last category.

The HIV/AIDS epidemic afflicting Africa is almost beyond comprehension. In South Africa, 5.3 million people are infected, amounting to roughly 19% of the population. That's almost 1 in 5 people. In Botswana, 1 in 4 is infected, and in Namibia and Zimbabwe, it's 1 in 5. Worldwide, it's estimated that 40 million people are living with HIV/AIDS. The situation is dire, and it requires a concerted effort from the global community.

(Product) Red is playing a role, partnering with corporations like Gap (NYSE: GPS) to bring iconic products to the market, a portion of the profits of which go toward fighting the epidemic. And Johnson & Johnson has made the fight one of its primary efforts.

Johnson & Johnson concentrates its funding and resources in Botswana, South Africa, Zimbabwe, and Mozambique. Some of its initiatives include one-on-one education sessions and support for testing centers.

Another major effort is its participation in a campaign that fights against gender-based violence. Studies have shown that there is a "growing link" between the spread of HIV and sexual violence against women and girls. One study points out that HIV-positive woman under the age of 30 "are 10 times more likely to have been abused than HIV-negative women their age."

In response, Johnson & Johnson has partnered with the United Nations Development Fund (UNIFEM) and the Global Coalition on Women and AIDS to support projects ranging from medical and psychological assistance to legal support for victims.

A good corporate citizen
In the company's "Our Credo" document that it has stood by for more than 60 years, a section reads: "We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens."

Johnson & Johnson is well on its way to earning nearly $12 billion this year from its operations. And with $14.5 billion and cash and marketable securities, it's clear that the world has been kind to the company. It's good, then, to see Johnson & Johnson repay some of that kindness, addressing some of the great challenges of the 21st century.

Shareholders and employees alike should be proud that Johnson & Johnson is a model corporate citizen for other companies to follow.

For more social responsibility Foolishness:

The Motley Fool's own philanthropic endeavor, Foolanthropy, is in full swing for 2006. More information can be found at our Foolanthropy site.

We're proud to partner with Hilton Family Hotels in our Foolanthropy 2006 campaign.

Johnson & Johnson is a Motley Fool Income Investor pick. Wal-Mart and Intel are Motley Fool Inside Value selections. Gap is both an Inside Value and Motley Fool Stock Advisor pick.

Fool contributor Jeremy MacNealy is writing a law and ethics thesis paper on corporate social responsibility as part of a graduate program at Duke University. He has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.