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Starbucks donations to help with job growth

October 3, 2011

That $3 cup of coffee at Starbucks may get a little pricier; at least that's what the Seattle-based coffee chain is hoping. Starting Nov. 1, Starbucks will collect donations from customers at its nearly 6,800 U.S. stores to help stimulate job growth. The Create Jobs for USA program will also accept donations online at www.CreateJobsforUSA.org.

"Small businesses are the backbone of America, employing more than half of all private sector workers – but this critical jobs engine has stalled," said Starbucks CEO Howard Schultz. "We've got to thaw the channels of credit so that community businesses can start hiring again."

Donors who contribute $5 or more will receive a red, white and blue wristband with the message "Indivisible." Schultz said they're designed to serve as a symbol of Americans uniting with other Americans to help create jobs. He also promised that 100 percent of donations will help Opportunity Finance Network (OFN) fund loans to community entities, including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing.

Schultz isn't only asking coffee fans to fund the program; the Starbucks Foundation will start it with a $5 million contribution.

OFN represents a nationwide network of 180 Community Development Financial Institutions (CDFIs) set up to provide financing to community businesses in underserved markets where accessing credit through traditional lending institutions is challenging or not available.

Every $5 donation will result in $35 in financing to support community businesses. The CDFI community lenders will issue $30 in financing, on average, for each $5 donation through their respective financing sources. Based on conservative forecasting models developed by OFN with input from independent economists, one new job will be created or retained for about every $21,000 in loans – or about every $3,000 in donations. Since CDFIs in the OFN network have an average 98 percent loan repayment rate, virtually every $1 donated will be re-loaned indefinitely, compounding the job-creation impact.

"Create Jobs for USA is exactly the kind of innovative and entrepreneurial solution that America needs to get its economy back on the right track," said Mark Zandi, Moody's Analytics chief economist. "CDFIs are well known to be highly effective at creating local jobs in communities that need them the most, especially when it comes to helping community businesses that are having difficulty securing credit during the current economic climate."

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