'G.I. Gift Pac' appears to come with a heavy markup

December 01, 1990|By Frank Greve | Frank Greve,Knight-Ridder News Service

WASHINGTON -- While many U.S. businesses are donating their products to GIs stuck in Saudi Arabia for the holidays, a widely promoted charity is charging hefty markups on goods that it ships to them.

The drive, called "G.I. Gift Pac," promises to "make every effort" to deliver by Christmas what ads and telephone order takers describe as $15 worth of "cookies and candy, dried fruit, tasty nuts and other holiday treats." Contributors pay $15 for one box, $25 for two, $6 more for each delivery to an individual GI.

The hugely successful project -- promoted heavily by ads on television and in newspapers, including The Sun -- already has 170,000 gift packs en route to the Persian Gulf by military sealift, according to the packager, Precise Kit Promotions Inc. of HoHoKus, N.J.

But the question of who will benefit more from the project -- GIs or veteran charity entrepreneur Roger Chapin of San Diego and Falls Church, Va., the organizer of the campaign -- is hard to answer.

Mr. Chapin's previous venture was an anti-drug crusade that raised $7.1 million in 1989, spent $6.8 million of it on direct mail and ended the year with a negative bank balance of $39,486, according to Internal Revenue Service records. He declined to be interviewed.

Other sources, however, raised serious questions about the "G.I. Gift Pac" effort, which is being carried out under the auspices of another charity organized by Mr. Chapin called Help Hospitalized Veterans.

Among the problems:

* Telephone order takers don't tell contributors this, but the last shipment likely to reach the Persian Gulf before Christmas sailed Nov. 27, according to Steve Gould, president of Precise Kit Promotions, which assembles the gift packs.

* Although some retailers in monopoly markets might charge up to $15 for the snacks in the gift pack, their wholesale value is

about $8, according to grocery buyers. Mr. Chapin, in a promotional news conference Oct. 30, said he had bought at prices "below wholesale."

* With the Defense Department picking up the costs of shipping the gift packs from Port Elizabeth, N.J., to the Persian Gulf, and "many major television and radio stations" contributing advertising time, according to Mr. Chapin, it is not clear where the rest of the money goes. Mr. Gould charges $1 for packaging, he said in an interview, and the trucking bill to Port Elizabeth adds 18 cents.

Bottom line: Mr. Chapin's costs for the $15 gift packs appear to be under $10.

In a snack food industry where normal markups are about 35 percent, Mr. Chapin's charity seems to be posting better than 50 percent.

Mr. Chapin declined to answer written questions about these issues.

The issue of the gift pack's value is summed up by what Mr. Chapin says is its most expensive item -- an 8-ounce plastic container of whole dates. Mr. Chapin paid Hadley Date Gardens of Thermal, Calif., about 87 cents for them, according to Hadley sales manager Sean Dougherty. In an accounting, Mr. Chapin assigns a $1.99 "retail value" to the dates.

"Keep in a cool place," recipients are instructed on the lid of the Hadley's container of dates. According to Defense Department shipping instructions, however, "any food items must be able to withstand seven to 10 days' transit in heat of 100 degrees and even after delivery must continue to withstand similar temperatures."

Saudi Arabia, the world's leading date producer and exporter, grew 596,000 tons of them last year, according to the U.S. Department of Agriculture's Foreign Agricultural Service.

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