Hard-Core Philanthropist

Using profits from Adam & Eve, his adults-only mail-order company, Phil Harvey has financed a worldwide family-planning network.

When he's in North Carolina—and not, say, quizzing prostitutes in Vietnam or strategizing with street vendors in Bangladesh—Phil Harvey, founder and chief executive of the world's largest mail-order purveyor of sexual merchandise, works out of a cramped corner office at his company's headquarters. The three-story building, which employees jokingly refer to as "the sex factory," hugs a man-made pond in a corporate park outside Chapel Hill. On the surface, the offices of Adam & Eve look like those of any midsize merchandiser hawking computer cables or toll-free calling cards. Color printouts of charts and graphs line the walls, breaking down sales figures and projections in every possible configuration. A corporate family tree fills a display case across the hall from a 24-hour call center, which is packed full of women with hands-free phones dangling from their ears.

But travel farther, into the offices and cubicles, and it becomes clear that this is not the domain of H&R Block. Balanced on desks, beside photos of spouses and children, are brightly hued dildos, translucent vibrators, and stacks of salacious videos. In an attached warehouse, lubes, lotions, love dolls, strap-ons, and pornographic movies are hustled off shelves and onto a conveyor belt that automatically drops the merchandise into zip- code-specific troughs. Orders placed over the Internet or through the company's catalog are processed here and then shuttled out the door to spice up sex lives from Topeka to Santa Fe.

Last year, a typically prosperous one for the company, about $80 million worth of merchandise left this warehouse. And as usual, Phil Harvey took home a hefty paycheck. In the more than 30 years since he started Adam & Eve out of a tiny storefront in Chapel Hill, Harvey has pocketed many millions in profits—and he's given much of it away.

Adam & Eve, which seven years ago began producing its own X-rated movies, is a peculiar porn powerhouse. It's probably the only major player in the $4 billion adult-entertainment business that was first conceived as the fundraising arm of a nonprofit organization. Harvey founded the company while still a graduate student at the University of North Carolina's School of Public Health, hoping to use the profits to fund family-planning initiatives in the developing world. And as the company has grown, Harvey has remained committed to that early goal—exploiting the voracious spending power of the American libido to tackle population growth and, later, the spread of AIDS overseas. "I was very taken with the idea that I could sell sexual accoutrements to relatively wealthy Americans and use the proceeds to support family planning in developing countries," he says. "I've certainly taken a great deal of pleasure from the sort of Robin Hood effect that's resulted."

In his nonprofit work, Harvey's independence from traditional donors has given him the flexibility to go where others cannot. In the early '90s, when a U.S. embargo squashed the distribution of condoms in Haiti, Harvey's representatives stayed on to ensure that birth control remained cheap and abundant. In Ethiopia, his organization has joined forces with the military, selling millions of condoms at no more than a penny apiece. Soldiers are required to carry one whenever they head off base. The program has helped keep the army's HIV infection rate among the lowest on the continent, around 5 percent (many African armies have rates as high as 30 or 40 percent).

Elsewhere, Harvey has used his marketing savvy—the same talent that helped make Adam & Eve a pornography giant—to turn contraceptives from a dowdy, sterile accessory into an attractive consumer product. Last year DKT International, the nonprofit he runs out of an office at 19th and M streets in Washington, D.C., sold nearly 350 million condoms and 20 million birth control pills in eight countries, as well as female condoms, IUDs, and injectable contraceptives—all at a small fraction of retail costs. Distributed by local merchants and promoted with zippy slogans on TV and radio, as well as on hats, T-shirts, and billboards, DKT's condoms now dominate the market in Indonesia, Ethiopia, the Philippines, and Vietnam. In Brazil, they are one of the top three brands.

In each of his vastly different arenas, Harvey has achieved considerable prominence and respect. In the United States he's held up by colleagues as a free-speech icon for having survived a string of federal obscenity charges beginning under the Reagan administration; in the years since, a majority of porn producers, eager to be included in Adam & Eve's catalogs, have adopted his company's standards, which prohibit depictions of forced sex.

Among the family-planning set, Harvey's focus on commerce once earned the scorn of experts, who relied on doctors and nurses to promote birth control. But over the years, his "social marketing" approach has gained a growing number of converts. "Phil's had a terrific impact on the world of family planning," says Bill Schellstede, senior vice president of Family Health International, a research-focused nonprofit in North Carolina that concentrates on overseas AIDS prevention and family planning. "While the model he's pushed doesn't fit easily with a lot of the more traditional approaches, it's hard to deny that commercial distribution systems have an infinitely greater reach into the population than voluntary organizations or even governments."

Although Harvey didn't invent social marketing, he's been one of its most vociferous champions. Malcolm Potts, a family-planning professor at the University of California, Berkeley, has called him the "guru of social marketing," and even Jimmy Carter has read Harvey's 1999 book, Let Every Child Be Wanted, a detailed how-to on the confluence of family planning and social marketing that the former president praised as "lively and interesting."

For 30 years Harvey has remained ensconced in both his commercial and nonprofit enterprises, with surprisingly little negative fallout. "In the early days I was terrified that, because of Adam & Eve, we were going to lose support for some of our programs," he says. "It never happened. I think part of the reason was that the key people in charge of family planning overseas, even in conservative governments, are not the types who are likely to be upset by sex products. After all, they're in the sex business themselves."

The sex business was the last thing on Harvey's mind in 1961, when he walked out of Harvard University with a degree in Slavic languages and literature. Mostly, he had the itch to get out into the world and do something interesting. He looked into the Peace Corps, then decided to enlist in the U.S. Army rather than await the draft. After completing his service stateside, he packed his things and traveled about as far away as he could—to India, where he signed up with the poverty-fighting organization care. By the end of his five-year stay, he was running a program providing school lunches to impoverished children. But he was having doubts about the benefits of his work. No matter how hard he and his colleagues toiled, it seemed, they could never keep pace with population growth. The solution, he began to suspect, was not food, but family planning. He returned home with a new sense of mission.

In 1969, while on a Ford Foundation fellowship to the University of North Carolina, he met another graduate student with years of experience in the developing world, a young British doctor named Tim Black. As part of their thesis work, the two men devised a plan to test social-marketing principles in the American marketplace. After receiving university approval and a small foundation grant, they set up an office in the back of a Chapel Hill restaurant, with an old door balanced on piles of bricks for a desk, and began churning out clever ad copy promoting condoms by mail ("What will you get her this Christmas—pregnant?"). The ads ran in 300 of the biggest college newspapers and orders began flooding in.

At the time there was virtually no competition in the field of mail-order contraceptives, due to an outdated federal statute that made interstate condom commerce technically illegal. Although the pair knew about the law, they also knew it had rarely been enforced. They decided to roll the dice. "The mail-order condom market was just sitting there waiting for somebody," recalls Harvey. "We'd sit down at the end of the week and pay our bills and I'd say, 'There seems to be some money leftover here.' That's about how much we knew about business."

The partners began tossing around a new idea: What if their condom venture could generate enough cash to fund social-marketing projects overseas? They would be able to bypass traditional donors and operate with liberating autonomy. They christened the profit-making arm of their venture Population Planning Associates and set up a separate nonprofit, Population Services International (PSI), which by 1975 was running condom-marketing programs in Kenya and Bangladesh.

Today's Adam & Eve catalog bears little resemblance to the early pamphlets Harvey and Black included with condom shipments. Initially, they advertised clinical publications on contraception and reproduction; then, inspired by a do-it-yourself book on mail order, they began filling the pages with just about anything other companies seemed to be selling. They offered belts and belt buckles, model ship- and airplane-building kits, watches and clocks, women's leisure wear, and lingerie. Only the lingerie sold well, which already told them something about the condom-buying market. One day they threw in a few explicit magazines and, just like that, found their niche.

Today PSI, the early beneficiary of Harvey and Black's mail-order sales, is the world's largest social-marketing organization. With funding from government agencies such as the U.S. Agency for International Development, it sells contraceptives and other health products in more than 60 countries and is the second-biggest player—after Planned Parenthood International—in international family planning. Harvey left his post as director of the organization in the late 1970s to devote himself full time to Adam & Eve; a few years later, itching to once again take an active role in family planning, he launched DKT International. Harvey's reentry into the nonprofit world coincided with his company's first big show- down with the U.S. government. By the 1980s, with the advent of the VCR and the boom in X-rated video sales, Adam & Eve had grown into a multimillion-dollar mail-order behemoth. "The process of bringing in new products got a little out of hand," Harvey admits. "We started getting into some stuff in the mid-'80s, some bondage and one video I remember that had a couple of rape scenes in it, that today we would never sell."

Under the Reagan administration, the Justice Department had formed an obscenity task force with the stated goal of putting companies like Adam & Eve out of business. They came after Phil Harvey with a vengeance, filing criminal obscenity charges against him for some of the movies and magazines in his catalog. Harvey hired the best lawyers he could find—and won. The legal battle, which cost him more than $3 million in legal fees, lasted eight years.

Although Harvey's company survived, many of the other targets of the anti-obscenity crusade were eventually forced to close their doors, launching a period of unprecedented growth for Adam & Eve. To cauterize itself against further legal hassles, the company instituted a strict screening process, enlisting licensed sex therapists to screen all explicit materials prior to inclusion in the catalog.

Though the financial relationship between Harvey's company and his nonprofit work remains strong—he personally covers about 12 percent of dkt's $25 million annual budget—there's no sign of the connection down at Adam & Eve headquarters. Unlike companies that wear their social responsibility on their sleeve, Adam & Eve nowhere mentions its origins, and even within company walls only a handful of the 300 or so employees know much about Harvey's noncommercial work. When a young woman takes a phone-in order for an eight-inch vibrating Emperor, she likely has no idea that a portion of the $44.95 price tag may wind up preventing an unwanted pregnancy or fending off a deadly virus in India, Ethiopia, or Vietnam. And though most of DKT's largest programs ultimately attract funding from foundations and government agencies, including the U.S., German, and Dutch governments, the organization's relative financial independence makes it one of the more nimble and innovative players in its field.

"The ability to use our own money and move quickly and do what we felt certain had to be done has been absolutely delightful," says Harvey. "We've been able to start some small programs, and then go to the major donors and say, 'Look, we've got something started here; it's not very big, but it's working.' That gives a lot of credibility when you're trying to raise funds from governments and big foundations."

Over the years, to reach some of the world's least accessible consumers, DKT has formed many unconventional partnerships. In the intensely poor and densely populated Indian state of Bihar, DKT recruited traditional medicine men to spread the word about contraception. The village healers form part of Butterfly, a marketing and health network DKT created; the colorful butterfly logo is plastered on stalls where the men dole out traditional remedies and contraceptives, and on billboards and walls across the state. The medicine men receive training on reproductive health as well as condoms and pills that they sell at a small profit. Last year, the program provided contraceptives to more than a million people. Another program in Bangladesh, launched under PSI in 1974, has helped raise condom use from 8 to 40 percent in a region where three decades ago few people had ever seen a prophylactic.

In every country, DKT uses culturally specific marketing and packaging. In conservative Vietnam, its condoms are sold under an image of starry skies and palm tree silhouettes; in Brazil, the logo features a grinning panther; in Indonesia, a romantic image of a couple on the verge of intimacy. In the Philippines, where DKT's Trust condoms already dominate the market, the organization recently launched a new line marketed to young people. The condoms, called Frenzy, come in three flavors—banana, mint, and orange—and are promoted with ads far flashier and more visible than anything popular brands like Trojan or Lifestyles have dared use in this country.

Every year, Harvey takes a long trip overseas to look in on his program managers and the customers they serve. This year he hit India, Vietnam, and the Philippines, where he spoke with prostitutes and their customers as well as the local merchants who hawk DKT condoms, alongside aspirin and Coca-Cola, from ramshackle stalls. "It's important to get into the marketplace and see how the products are sold," he says.

In Vietnam, Harvey visited a brothel in the jungle outside Hanoi. He sat by the outdoor bar with the madam and her girls, nursing an ice-cold Heineken and talking aids and condoms. "The one thing that's consistent about brothel visits is how nice everyone is," he says, "how interested they are in telling you what their problems are and how the condoms could be better—and in some cases how hard it is to get customers who've had too much to drink to use them in the first place."