November 22, 2011; Source: Washington Post | To what extent should a company’s willingness to pony up charitable contributions count toward a local government’s decision to permit or reject a proposed corporate deal? In Washington, DC, where community residents have long opposed Wal-Mart’s plans to open several big box stores, the city government just gave Wal-Mart the green light in return for a number of concessions. Some of them are such typical “community benefits agreement” givebacks as including minority businesses in their search for construction contractors, creating training programs for new staff, and opening hiring centers in the areas where Wal-Mart is opening stores, as well as some untraditional givebacks, like agreeing not to sell guns or ammunition (despite the court ruling legalizing guns in the previously gun-averse district) and installing bike racks.
It does seem like there was some give-and-take here: Wal-Mart acceding to these somewhat minimal conditions, and the city turning a blind eye to Wal-Mart’s plans to increase the number of planned stores from four to six. Usually, CBAs are negotiated when the business is looking for some big package of government incentives, but Wal-Mart needs little or nothing from the District government other than the City’s signing on in support against the continuing opposition of some communities and local shopping districts, which could get slammed by the competition Wal-Mart would bring. We have long suspected that many Community Benefits Agreements look a lot better on paper than in practice and that some don’t get much implementation oversight and scrutiny after they have—purportedly—been implemented. In this case, most of the elements of “give” that the CBA gets from Wal-Mart actually serve the firm—hiring halls, training programs, etc.
Here’s the kicker. Wal-Mart is also pledging to make $21 million in charitable contributions for hunger relief, health, education, and job-training programs. Two questions arise. First, are the company’s other CBA commitments, such as to “create and fund a citywide workforce development program that provides educational job training services,” count toward that $21 million charitable total, and is this and other such avowed commitments above and beyond what Wal-Mart would have typically given anyway as a matter of its corporate philanthropic policies? Second, should public agencies be changing their positions or policies in return for companies’ promises to make charitable contributions? Does $21 million in charity undo the potential damage of a half-dozen big box stores on neighborhood commercial strips in Washington, DC?
DC government has long made charitable giving trades with its corporate citizens—for example, treating Fannie Mae as the equivalent of a tax-exempt property owner (with its headquarters on Wisconsin Avenue) in return for Fannie’s commitment to make charitable and philanthropic contributions. Is this a good thing? Or does the Fannie Mae experience—a troubled firm that closed its foundation and has now sped away from lots of other charitable “commitments”—make the practice a dubious local government strategy?
We’d like to know what you think of the charity-for-approvals agreement negotiated by Wal-Mart and Washington, DC.—Rick Cohen