Target Corp. is ending a trademark giving program through which it has sent hundreds of millions of dollars to schools over nearly two decades.
The Minneapolis-based retailer began notifying schools on Monday that it will discontinue its "Take Charge of Education" program, through which the company donates 1 percent of Redcard holders' purchase total to a school of their choice.
Over the last 18 years, Target has distributed more than $432 million to more than 100,000 schools across the U.S. through the initiative.
Target will terminate the program in May 2016 and shift its social responsibility focus from education to health and wellness, executives told the Star Tribune.
"When that program started, it was incredibly innovative," said Laysha Ward, Target's chief corporate social responsibility officer. "There was nothing else like it out there. We just want to continue to innovate."
Target will continue to give 5 percent of its profits — about $4 million a week — back to communities, Ward said. "That is unwavering and is not going to change," she said. "What will look different is how we express and reimagine our social responsibility commitment."
Ward and other Target executives are still working out details of the retailer's future giving programs. But they will test some new campaigns this fall and roll out more comprehensive programs next year.
One likely element will be using social media to engage consumers. Ward cited the buy-one, give-one campaign for back-to-school supplies the company ran last fall as an example of where the company is headed.
The Take Charge of Education program, she added, had a "phenomenal" run. But only 10 percent of Redcard holders enrolled in the program. When the company surveyed shoppers, it found that many did not remember if they had designated a school.
Still, the change will be a disappointment to schools that had become accustomed to receiving the unrestricted funds every year to cover budget gaps for everything from school supplies to after-school programs. Target says schools received an average of $370 a year from the program, though some received thousands of dollars a year.
Minneapolis Public Schools officials declined to comment on the program's demise, but a spokesman said the district has received $1.43 million over the years and $147,630 this year alone. St. Paul Public Schools received $96,525 this year.
"We could always count on those checks a couple times a year," said Darren Yerama principal of Expo Elementary School in St. Paul. "Sometimes we use it for school supplies when students come without any. We also use it to supply books for classroom libraries and in helping to purchase some supplemental curriculums."
Ward acknowledged that it would be an adjustment for schools when the program ends, and she said Target has decided to give a one-time grant to schools in July. "It's just a way for us to help ease the transition," she said. "Certainly, that's not something we have to do, but something we want to do."
Changes under new CEO
The shift in Target's giving strategy is the latest change under chief executive Brian Cornell, who joined the firm 13 months ago. The retailer's first outside CEO, he has left nothing off the table as he has taken a fresh look at a lot of the retailer's long-standing programs.
Last week, Target said it would part with Cherokee Global Brands, an exclusive children's apparel brand that has been a fixture in its stores.
When the Take Charge of Education program launched in 1997, it was a novel concept to tie the shopping behavior of individual consumers to a company's donations and to give customers the opportunity to direct funds to a school of their choice. It was also an extra incentive to get people to sign up for Target's credit and debit card.
"This program really connected across a lot of areas that Target cared about in the past," said Amy Koo, an analyst with Kantar Retail. "It hit on the Redcard, it hit on greater loyalty and it hit on more community engagement." She noted that education was a social issue that deeply resonated with Target's core demographic — young families with children.
"If they are stepping back from education, I think that's a mistake," she added, noting that a number of grocers and drugstore chains already focus on health and hunger in their charitable giving.
Jill Davis, head of the parents' group at Thomas Edison High School in Minneapolis, had mixed feelings about the end of the program. She noted that high-poverty schools such as Edison are not as likely to get as much from the program as more affluent suburban schools, where parents are more likely to have a Redcard and spend more money at Target. So she wished Target more closely matched its donations to those schools most in need.
In addition to the Take Charge of Education program, Target has directed a lot of its philanthropic funding in recent years toward schools in the form of library makeovers and other school-based grants. In 2010, it set a goal to give $1 billion to education by this year — a milestone it recently reached and has been celebrating in a TV spot and other advertising.
Ward said the company will continue to support some education programs that have a wellness bent, such as Target Meals for Minds, which gives food to schoolchildren in need, and Target Field Trips.
The shift in focus, Ward added, is being dictated by Target's customers. A decade ago, shoppers said education was their top social concern. Today, Target's customers say health is their No. 1 issue.
In wellness, Target will focus on three areas: healthy eating, active living and cleaner labels. It will more closely integrate its business and social programs in a way it hasn't before, she said. And it is tweaking its product assortment to have more natural, better-for-you products.
"The win for corporate social responsibility is that it truly can help drive societal and business impact," she said. "They are not mutually exclusive."