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