Groups Charge Walmart’s “Charitable” Activities Are Aimed Primarily at Business Expansion

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June 15, 2015; Washington Post

Corporate giving programs are often inextricable from their marketing, part and parcel of their strategies for profit enhancement. This assumption is generally taken to be true despite the fact that those organized as foundations are not, by law, allowed to use the status in this way. Now, the Washington Post reports that more than a dozen nonprofits from across the nation have filed a complaint with the IRS against the Walmart Foundation.

Their claim is that the foundation violated its tax-exempt status by using its “charity” to ease the corporation’s entry into various large urban markets, including Boston, New York, D.C., and Los Angeles. In a 22-page complaint, the group alleges that the foundation is completely controlled by the company and that it “appears to target its donations and influence its grantees primarily to assist Walmart to achieve those expansion goals, ultimately providing Walmart more than an incidental benefit. Walmart Foundation’s activities are impermissible under the Code,” which prohibits it from operating in the sole interest of a private entity.

The nonprofits filing the IRS complaint include:

  • The Alliance of Californians for Community Empowerment
  • Alliance for a Greater New York
  • Bernal Heights Neighborhood Center
  • Causa Justa (Just Cause)
  • Chinese Progressive Association
  • Coleman Advocates for Children & Youth
  • C. Jobs with Justice
  • Grey Panthers
  • Mujeres Unidas y Activas
  • New York Communities for Change
  • Respect D.C. Coalition
  • San Francisco Jobs with Justice
  • Senior & Disability Action
  • South of Market Community Action Network

These groups claim that Walmart not only increases its donations in cities in which it is trying to gain entrance, but that it also targets groups that it believes might otherwise oppose the retailer’s setting up shop in their neighborhoods.

The foundation’s funding guidelines say that donations may not be given to any programs that “directly benefit Wal-Mart Stores, Inc. in any way (e.g., driving customer traffic to stores, purchasing only Walmart product or gift cards, supplying candidates for Walmart employment, etc.)”

The complaint alleges that the company integrated lobbying, advertising and donations in their bids of approval of sites in the cities named.—Ruth McCambridge

  • Michael Brand

    Before I begin, let me first give you props on the site redesign. Much fresher and cleaner. Nice work.

    Now about Walmart. Unfortunately this is now how the game is played….and the nonprofit sector must accept the blame for creating this distortion. Starting primarily in the 1970s ‘activist’ groups would target one company or another over some perceived injustice. After lots of noise and plenty of media presence, the offending company would come to an agreement which often involved a contribution to said activist group. Jesse Jackson perfected this game.

    So is it any surprise corporations are now using their charitable gift in order to head off such problems? And who among suspects that the above nonprofits raising this stink at the IRS are hoping this is an entre into getting some of that Walmart cash flowing into their coffers?