Goodwill for Kids—and Good Business

Toy makers and retailers are partnering with charities and consumers to give until it helps—and maybe goose sales
by Bremen Leak

As consumers gear up for their holiday shopping, toy makers and distributors across the country have already been hard at work. Starting earlier than in previous years, they're not only looking to juice sales, they're also looking to boost the profile of their giving campaigns for a very deserving demographic: children.

Toys "R" Us, for example, kicked off its Million Dollar Toy Drive in October—a month earlier than it did last year. Executives at the company say its goal is to raise $4 million in toys and cash for the Marines Toys for Tots Foundation, a Virginia-based nonprofit that distributes gifts to children in need.

In years past, the toy retailer collected cash donations at the register and gifts in its in-store collection boxes. Now, customers can give online or in any store, including for the first time this year, at all 240 Babies "R" Us stores."

Record Donations
Early results are promising. As of Nov. 22—two days before Black Friday, the traditional start of the holiday shopping season—the foundation had seen record monthly donations on its Web site and hit early collection goals in stores such as KB Toys, FAO Schwarz, and Best Buy (BBY). Bill Grein, vice-president for marketing and development at Marines Toys for Tots, says both types of donations are important: "Cash gives us the ability to buy the toys we need, as opposed to what people think we need. People don't tend to buy for older children." Last year, Toys for Tots provided 18 million toys for more than 7 million needy children. That's a little more than half the nation's impoverished children, according to U.S. Census data.

In an effort to reach more of them, this year Toys "R" Us made Toys for Tots its signature charity program, forming the largest retail partnership in the nonprofit's 60-year history. Toys "R" Us Chairman and Chief Executive Officer Jerry Storch says the company has established an "educational platform" to help teach kids about giving.

"We want to emphasize the value of giving and not just receiving," he says. Toys "R" Us even published a book called The ABCs of Giving, which parents can download from the Web or pick up in stores. Recently, actress Brooke Shields read the book to children at the chain's flagship store in New York's Times Square.

It may not be a coincidence that Toys "R" Us's push comes at a time when traditional toy stores have taken a back seat to retailing giants such as Wal-Mart (WMT) and Target (TGT) in toy sales. Storch admits there is business value in such an approach, but of course, "the primary focus is to give back to children." After all, Toys "R" Us caters to a customer base that is very cognizant of the needs of children. "Every company can't support every cause," Storch says. "We pick areas where we have brand resonance and believe we can absolutely make a difference."

Big-Box Cares, Too
That's not to say that the big-box retailers aren't trying to do their bit. On Nov. 21, Target ran a well-publicized event in which magician David Blaine was shackled to a three-ring gyroscope and hoisted by crane 50 feet above Times Square. His mission: to escape in time for the post-Thanksgiving Day sales, during which he is to escort 100 deserving children on a Target shopping spree.

Wal-Mart is focusing its holiday giving campaign this year on military families, delivering a half-million dollars worth of toys and gifts to families in Virginia, Illinois, and the Gulf Coast states. A company spokeswoman said the store has not implemented a nationwide toy drive but continues to partner with the Salvation Army (who last year collected one-fourth of its donations in front of Wal-Mart stores). As long as Wal-Mart sticks to the Red Kettles, other toy retailers may provide the main thrust for Toys for Tots and some other children's charities this holiday season.

Even toy makers are giving big bucks to charity this year and formalizing their donation strategies. Hasbro (HAS), a family-run toy manufacturer in Providence, R.I., has committed to giving $6 million in toys to children's charities this holiday season, including Toys for Tots and Walking Shield, an organization that provides toys for children on the poorest Native American reservations. Hasbro recently launched the Hasbro Children's Fund, a three-year, $18 million commitment to 10 nonprofit organizations that help children at home and abroad. Says Hasbro President and CEO Al Verrecchia: "Writing the check is the easy part. Making an impact is a different thing."

Charitable Partnerships
And like Hasbro, California toy maker Mattel (MAT) is leveraging its gift-giving this year through effective partnerships. As early as October, it began hosting fundraisers in New York, Chicago, and Los Angeles with the Children Affected by AIDS Foundation, a nonprofit founded by Mattel executive Joe Cristina, that has raised more than $23 million since 1993. Early last year, the Mattel Children's Foundation, which first launched 20 years ago, was relaunched in order to tackle problems that barely existed two decades ago. "Mattel has become an anchor for us," says Cristina.

The collective goodwill among toy makers, retailers, children's charities, and shoppers is enough to make you want to foray into the holiday mall crowds. Says Ernie Speranza, chief marketing officer of KB Toys: "We're hoping to break records this year." From the looks of things, it's one holiday wish that just might come true.

Leak is a reporter for BusinessWeek in New York.