Ewing Kauffman

Ewing Marion Kauffman was a pharmaceutical entrepreneur and major Kansas City philanthropist and civic leader. Known for many philanthropic contributions related to K–12 education and human services in Kansas City, near the end of his life Kauffman discovered a new field for philanthropy: the promotion of entrepreneurship. Today, the Ewing Marion Kauffman Foundation is the largest foundation focused principally on fostering economic growth by supporting entrepreneurs.

Ewing Kauffman was born in 1916 into a farm family in western Missouri. As a boy, his salesmanship helped his strapped family to make ends meet. Kauffman sold eggs and magazines door-to-door and went “noodling”—diving into the Grand River’s muddy underwater burrows to wrassle big catfish and sell them. When he was 11, a year of forced bed rest turned Kauffman into a lifelong speed-reader. Kauffman worked his way through junior college at a laundry service and continued there after graduating. He served in the Navy in World War II, and in the long stretches aboard ship, the shrewd poker player put away $90,000 in gambling winnings. His wife saved the money and invested in real estate, and when the war ended, Kauffman had the leisure to find the right job.

That job was in sales at the pharmaceutical firm Lincoln Laboratories. It didn’t look like much—no salary, no benefits, only 20 percent commission—but Kauffman warmed to it immediately. He was a natural salesman, and by the end of his second year, he was earning more in commissions alone than Lincoln’s president. The president cut Kauffman’s commission and reduced the size of his territory, which chafed at Kauffman. He began planning his escape.

In June of 1950, Kauffman quit Lincoln and started Marion Laboratories in his basement. It was a pharmaceutical firm, a perhaps unusual choice for a man who, in his own words, “had no pharmacy background and not very much scientific education.” But Kauffman loved the unique challenge of selling to doctors, and he convinced three doctors to stick with him if he could provide equal or better-quality drugs. (The new firm’s name was slightly deceptive; Kauffman used his middle name to suggest that it wasn’t a one-man show, and Marion did not have a single laboratory.) The “research” division was Kauffman reading medical journals and writing up formulas.

A step up (scientifically) was Os-Cal, Kauffman’s first big hit. A calcium supplement that included ground-up oyster shells, Os-Cal’s success came through Kauffman’s innovative marketing. “He was in a business that was rooted in science and fueled by research, and he had only a smattering of the former and could not afford the latter,” writes one biographer. “He knew how to sell drugs, and he was confident he could learn the rest.” In the ’50s, Marion grew on Os-Cal variants and through licensing and bringing others’ products to market. It reached sales of $1 million by 1959, and added new blockbusters in the 1960s, during which decade it went public.

“Mr. K,” as Kauffman was known to his employees, was a popular boss. He offered a profit-sharing plan, stock options, and education benefits. By 1968, 20 of Marion’s employees had become millionaires (including a widow in the accounting department). In 1989, when Marion merged with Merrell Dow, it had annual sales of over $1 billion—and hundreds of employees had become millionaires.

Through it all, Kauffman was a leading benefactor of Kansas City. In 1969, he bought a Major League Baseball expansion club: the Kansas City Royals. He initially had little interest in baseball; he acquired the team for the benefit of the city. Kauffman took to the sport quickly—and applied his vaunted marketing techniques to making the Royals a K.C. favorite. Kauffman propelled the Royals to a powerful decade starting with an American League division championship in 1976 and culminating in a World Series victory over the St. Louis Cardinals in 1985.

The Royals were not “a part of his financial portfolio,” explains biographer Anne Morgan. The team “was a part of his civic philanthropy.” As a final present to the region at his death, Kauffman donated the Royals to the Kansas City Community Foundation—with the stipulation that their proceeds from selling the team had to go to local charities, and that the buyer of the team had to agree to keep the Royals in Kansas City.

As soon as Marion Labs went public, Ewing and Muriel Kauffman began to engage in serious giving in Kansas City. They launched STAR, an evidence-based drug-abuse prevention program in Kansas City schools; it reduced marijuana use by 43 percent compared to a control group. They also set up Project Choice, which used a carrot of college or vocational-training funds to incentivize high-school completion.

An entrepreneur to his fingertips, Kauffman learned from his mistakes. One of his first major philanthropic initiatives involved co-funding a campaign with Hallmark to underwrite home-heating bills for the poor. The campaign succeeded; nobody in town went without heat. But he decided not to participate again. After all, he observed, winter comes every year—and the program "didn't solve the problem. They just threw money at it." Kauffman preferred solutions-based giving.

“Even as he began to fund substance-abuse awareness and to offer postsecondary education to those who completed high school, he was always conscious of the need to create more and better paying jobs for those young people as they prepared to enter the workforce,” observed Morgan. As a Kauffman Foundation report at that same time put it, “We’ve got to do something to help encourage the creation of jobs.” That effort became the next act of the Kauffman Foundation.

In 1990, Kauffman directed his foundation to research what could be done to help entrepreneurs. He eventually created a Center for Entrepreneurial Leadership to train entrepreneurs, form networks, develop curricula, and foster research on entrepreneurship. The center’s 1992 launch event would mark one of Kauffman’s last public appearances. “We cannot finance everybody who wants to get into business,” he explained. “But we have the capability of guiding them to the point where they can get seed money.”

With this commitment, Kauffman set his foundation on a path of pioneering philanthropic specialization. With assets of more than $2 billion, Kauffman became the largest foundation in the country to focus on fostering entrepreneurship—and helping dreamers become the next generation of Ewing Kauffmans.

~ Evan Sparks

 

Further reading:

  • Anne Morgan, Prescription for Success: The Life and Values of Ewing Marion Kauffman, (Andrews McMeel, 1995) 


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