Arco Foundation

* Due to lower oil prices and other factors related to the long-term future of our business, Arco is cutting back. We’re reducing expenses and staff throughout our operations worldwide. But we are not withdrawing from our strong community involvement in cities such as Los Angeles. Nothing could be further from the truth.

Since our grant-making budget is tied to our profits and therefore considerably diminished in recent years, we decided that the community affairs staff, including those assigned to the Arco Foundation, could be reduced with minimal impact on our ability to make intelligent grants that provide needed help to the community.

Our confidence rested on the fact that the Arco Foundation, while an important program, is only part of a much broader community affairs effort. We also make direct corporate contributions and have heavy volunteer involvement by senior executives and many other employees.

Unfortunately, as your editorial (July 23) and other coverage indicated, our announcement triggered deep alarm in the philanthropic community. If Arco, historically a leader in corporate giving, was drawing back, would other companies follow?

We were surprised by the reaction. Arco has deliberately chosen a high community profile since we relocated to Los Angeles in 1972. And although much has changed in the oil business over the past 22 years, especially in terms of oil prices and profits, the key to our thinking continues to be a balance between the requirements of our shareholders and the needs of communities where our employees live and work.

In other words, we continue to believe deeply in our obligations to society. We are not trying to distance ourselves from the problems challenging L.A.’s future. That’s hardly possible. We’re involved, after all, in everything from air quality issues to the causes of civil unrest that gutted our neighborhoods not many months ago.

Today we have a highly skilled, though somewhat smaller Foundation staff. They have the total backing of Arco senior management, and I have a feeling they will do well as they continue to invest in solutions to our deep social problems, particularly with respect to young people in the inner city. In this and other ways, we will continue to emphasize and encourage Arco’s social commitments.

MIKE R. BOWLIN

President, Arco

Los Angeles