When the acclaimed actor and Hollywood movie star, Paul Newman, founded Newman’s Own in 1982, he created something entirely new in American business, a company built on the promise to give away 100% of its profits to support charitable purposes. This proposition was so unusual that there was no way for Newman’s Own to survive the passing of its founder without an entirely new tax law being passed, and this challenge felled to Paul’s longtime friend and successor as Chief Executive Officer of Newman’s Own, Bob Forrester.
“As counter-intuitive as it may seem, because of an unintended consequence of an old tax law, a company which had existed for over 26 years, was set up only to do good and had donated over $225 million the charity would be forced to go out of business,” said former Newman’s Own President and CEO, Bob Forrester. There were no alternatives, without a change in the law, Newman’s Own would be forced to divest itself of 80% or more of the control of its only source of income, the Newman’s Own food company. Something Newman’s Own was mandated to do by late November 2013, with a slim possibility of a one-time extension of no more than five years should they be able to demonstrate to the satisfaction of the IRS that there were real, insurmountable obstacles to meeting that date, something they were able to do in late 2012, with a new and final break update no later than November 2018. As Bob Forrester wryly notes, “It was obvious that no one was going to step up and buy a business, then give all the profits away, and without that brand promise intact, there was little real value to Newman’s Own. I used to get calls from companies interested in buying Newman’s Own, but once I explained of 100% of profits to charity brand commitment, I never got the second call.”
After Paul Newman’s passing on September 28, 2008, Newman’s Own was in turmoil. There was serious doubt that it could survive without its much admired and inspirational founder. Forrester’s priority was to address the immediate threats to Newman’s Own. “Once I felt had a reasonable handle our most urgent issues, I turned my attention to trying to get a new law passed, and first meeting with a member of Congress in early March 2009. I was supremely naive about Washington politics and thought that the goodness of what we were trying to accomplish would carry the day, and I should be able to wrap matters up in 12 to 18 months. Boy, was I wrong,” commented Bob Forrester. “It took nine years of effort. In 2017 and 2016, I had over 200 and 160 meetings, respectively; some days, I had as many as 12 meetings a day on The Hill. Trying to keep a press in your suit and a smile on your face when you are running back and forth between the Senate and House sides on a hot, steamy July day, or a cold, wet, and dreary February day is simply not possible, at least the suit part isn’t.”
Bob Forrester credits Senator Bob Dole’s friendship and leadership with playing a key role in the passage of the Philanthropic Enterprise act.
“Two things sustained me,” continued Forrester. “First, I had made a promise to a friend, Paul Newman, that I would try my hardest not to let Newman’s Own go by the wayside; I profoundly believed in its purpose. Second, along the way, I was graciously welcomed by Senators, House Representatives, and senior Congressional staff, who were intelligent, thoughtful, and encouraging. Frankly, just the opposite of the image one might develop from the media. There was no resistance to what I was trying to do; at most, a small number did not seem all that interested, but again, they were just a few. While I was told to expect my meetings to last no longer than 5 to 10 minutes, especially with Members of Congress, 30 minutes to over one-hour meetings were not unusual, with multiple meetings with some.”
Despite the support and encouragement of so many, it took Bob Forrester one month shy of 9 years from his first meeting to finally having the Philanthropic Enterprise Act passed and signed into law on February 9, 2018. As Bob would frequently remark, it baffled him to have gotten to know so many Members of Congress and grow to respect them and their commitment to doing what is right, then see how jammed up the works get when it comes to getting good legislation passed. “I understand it’s politics which causes the problem. What I can’t understand is politics itself; it’s badly broken to the detriment of our nation,” commented Forrester. “I think one of the things which brought together such strong bi-partisan leadership on behalf of Newman’s Own is that there were no politics involved. We were not a political entity, had no political affiliation, had nothing to gain personally; it was just about the rightness of the goal. I had fashioned a simple statement to support the effort:
‘The Philanthropic Enterprise Act brings together in a single entity two of the most widely admired Characteristics of American society, small business entrepreneurship, and philanthropic generosity, to benefit the greater good.’ That was it; that’s the purpose of the law.”
► The Philanthropic Enterprise Act was originally included in the Tax Cut and Jobs Act of 2017, which went into place January 1, 2018, but at the last minute, before Congress acted on the bill, it was removed for a purely esoteric technical issue unrelated to its substance. This happened a mere 90 days before Bob Forrester was to make the final recommendation to begin the dismantling of Newman’s Own in order to meet the November 2018 deadline. After intense effort, the Act was then included in The Bi-Partisan Budget Act, which was passed on February 9, 2018, only 30 days before a final decision to break up was to be made.
► The Philanthropic Enterprise Act passed both the house and Senate with bipartisan support and was scored by Joint Committee on Taxation as having no impact on tax revenues.
► While Bob Forrester’s immediate goal was the survival of Newman’s Own, he placed a priority and worked with Congress to assure:
• It was not an earmark only for Newman’s Own, and other
like-minded philanthropic entrepreneurs could benefit from it. He identified over 25 such businesses already in operation and commissioned a university-based study that demonstrated that the new law would result in several hundred philanthropic enterprises starting in a five-year period after its passage.
• The law would be transparent and not subject to abuse or any
kind of private benefit.
• At the time, Bob Forrester stepped down as Chief Executive Officer in May 2019, Newman’s Own had donated over $550 million to thousands of charities, more than 60% of this, about $290 million, was contributed Bob Forrester’s 10-year tenure, exceeding the total raised in the proceeding 26 years.