The Salvation Army $1 Billion Kroc Gift

The Salvation Army with Xenophon Strategies

Overview

In late 2003, Mrs. Joan Kroc, wife of the founder of McDonald’s Corp., died and her will bequeathed $1.5 billion to The Salvation Army. Army officials had no previous knowledge of the gift.

Mrs. Kroc specified that the donation must be used only for planning and building community centers similar to the one a previous $70 million donation had funded in San Diego. Her vision was to build centers across the nation where low-income people could have access to libraries, sports facilities, training, daycare and other services sorely missing from their communities. However, she wanted each community receiving a center to be bound to the center’s success and longevity. To accomplish this, she stipulated that the gift could only be used to plan and build the centers, but that on-going operational funds had to be raised by The Army. This stipulation created an enormous future financial commitment; for example, the San Diego center has annual operating expenses of over $6 million. Finally, Mrs. Kroc ordered that none of her bequest be spent on operational activities of The Army.

The gift created an enormous opportunity for The Salvation Army, but it also created a significant financial challenge. The fear was that Army donors would hear of the gift and believe that The Army didn’t need their money because they had just received $1.5 billion from the Kroc estate.

The Army hired Xenophon Strategies, Inc. to design and implement a media relations strategy to announce the Kroc gift that would manage the story without hurting on-going fundraising efforts.

Objectives

Senior Army officials were humbled by Mrs. Kroc’s unprecedented gift, but they also knew that it would present a series of difficult challenges. Those challenges included:

  • Timing: The Army was informed of the gift during the holiday season, however, an announcement made prematurely would have significant impact on the most important fund-raising period of the year. News of a $1.5 billion gift could have potentially confused traditional donors into believing that The Army no longer needed donations because of a “windfall”.
  • National versus regional outreach: The Army in the United States is comprised of four independently operated corporations, called territories. In the days before Xenophon was contacted, there were on-going discussions among senior Army leadership about the merits of announcing the gift regionally – in key territorial cities such as San Diego, or Atlanta – or nationally from the Army’s U.S. headquarters in Alexandria, VA.
  • Messaging: The Army needed to be clear in its message about this gift – that Mrs. Kroc’s donation was for planning and construction of community centers and perhaps more importantly, that the organization’s local fund-raising would be challenged to uphold Mrs. Kroc’s vision. By accepting the gift, The Army committed itself to annually raising millions in operating funds for the centers after they were built. Because of this, the Kroc gift did not reduce The Army’s fundraising needs, but increased the need for charitable contributions.

Xenophon proposed a strategy to The Army for the announcement based on the premise that the gift would make major national news (other than people such as Bill Gates endowing their own foundations, this was the largest philanthropic gift in U.S. history). The core elements of this strategy were:

  • Waiting until the Christmas fundraising season had passed so that Red Kettle donations would not be affected by the announcement.
  • Making the announcement and managing the story nationally vs. regionally to provide better message control.
  • Taking steps to “tap down” coverage of the story while still recognizing that it would become a major national story.
  • Working to weave the message that fundraising needs will “go up, not down as a result of the gift and here’s why…” into as much coverage as possible.

Tactics

To implement the strategy, Xenophon and Army communications staff took the following tactical steps:

  • January 20, 2004 was intentionally selected as the date for the announcement because President Bush would be giving his annual State-of-the-Union address that evening and his speech would dominate the January 20/21 news cycle.
  • In order to create a “story of record”, Xenophon negotiated an exclusive for the morning of January 20th with a business reporter of The Wall Street Journal. The reporter was given a week to work and given full access to all information, plus on-the-record interviews with senior officials of The Army and the Kroc estate board of trustees. Additionally, the reporter was directed to independent information on the significance of the fundraising needs created by the gift and confirming third party sources.
  • The concern about other reporters becoming upset by a Journal exclusive was quickly discounted because the story was important news. A main element of the strategy was to have an exhaustive Journal story, which would have a major influence on other media, especially national television.
  • Support materials, including b-roll of Mrs. Kroc, were prepared and distributed to each of the territories, and a news conference was planned for the National Press Club, coinciding with a ceremony honoring Mrs. Kroc at the San Diego community center. Xenophon was involved in every aspect of the announcement – from preparing internal and external materials, to coordinating the release of the print and electronic news releases, to media support and outreach.

On the day of the announcement, The Journal story ran as a boxed story on the front page and contained an in depth analysis of the demands a major gift placed on charitable organizations using the Kroc gift as an example. Subsequent stories ran on all network news programs, major radio networks, wire services and in major newspapers nationally and in internationally. The Washington Post and The New York Times both ran front-page stories on January 21st. Editorial pages subsequently picked up the story, as did major news magazines and philanthropic trades in the days and weeks following the announcement.

The content of the coverage was as the communications team had hoped – it honoring a woman for her philanthropic vision, but almost every story contained an explanation that “fundraising needs go up and here’s why…”

Results

Results from the Kroc announcement story were overwhelmingly positive. On-going fundraising did not diminish, in fact, Army personnel across the nation reported that donors and volunteers understood the restricted nature of the gift and that The Army didn’t simply receive a windfall.
Follow up work on the Kroc gift continued throughout 2004

The Salvation Army valued the work done by Xenophon Strategies that in the spring of 2004, they hired Xenophon to manage a highly visible ACLU lawsuit in New York City and then to manage communications around their relief efforts stemming from the string of hurricanes that hit Florida during August.