Tricky Questions on Corporate Philanthropy at Walmart and Beyond

Walmart's eighth annual Global Responsibility report came out not long ago, and it suggests that the company is feeling pretty proud of itself. It boosted its minimum wage for associates to $9 an hour in April of this year and will boost it again to $10 in February 2016. That will cost them $1 billion, and represents a big step forward.

Along with increasing wages, Walmart's philanthropy is also rising, and we report often on what its foundation is doing—which is a lot. Just the other day, for example, it announced $15.5 million in grants to seven nonprofits to help low-income children meet their nutritional needs.

On the other hand, a recent complaint filed with the IRS by over a dozen community groups alleges that Walmart's philanthropy is being used to fuel its growth and that the company “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.” As for Walmart's extensive giving to address hunger issues, we've noted in the past that these grants are being made by a company that pays such low wages that thousands of its workers rely on food stamps.

The troubling issues raised by Walmart's giving are not unique. At the same time, the overall picture on corporate philanthropy is brighter than ever, with evidence showing a trend toward more giving for poor and underserved populations. Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, presents evidence here that between 2004 and 2012, corporate philanthropy for underserved communities rose dramatically. Dorfman suggests that corporations actually do a better job of along these lines than independent and family foundations—which is not what you might imagine.

All this raises the question: How much do most people—even those paying attention, within nonpofits—really understand about today's corporate philanthropy? And related, who is keeping the ledger on whether corporations are doing enough in terms of their responsibility to the community?

At IP, we're excited by many of the things that corporate funders are getting behind these days. These funders are more creative than they once were and often pretty bold, too. See our coverage of the Caterpillar Foundation, for example, or our many articles on what the IKEA Foundation is up to in conflict zones. Or see the article we posted recently about JPMorgan Chase's support of innovative new financial services for the poor.

Yet many corporations—especially the big banks right now—also have long histories of problematic behavior. JPMorgan Chase was involved in capitalizing predatory lending in the past, and was also a player in the subprime mortgage crisis. Wells Fargo, whose housing grants we have recently covered, was implicated in predatory lending targeting minority homeowners. Junk food companies back anti-obesity work while also fighting soda bans. We could keep going down the list.

How should we think about corporate philanthropy vis-a-vis past or present misdeeds? Or about positive forms of giving that also advance a corporation's bottom line?

Walmart provides a great case in which to ask those questions. How do we know if the scale of Walmart's philanthropy is offsetting the much-discussed negative effects of its low-road business model—which, among other things, includes huge taxpayer subsidies via the safety net programs that Walmart's underpaid workers rely on to survive?

To try to get some perspective, let's look at the Walmart Foundation's overall giving in recent years. In 2012, Walmart ranked No. 5 for top U.S. foundation giving, with over $175 million in total cash giving. In 2013, the last year available in the Foundation Center's records, Walmart upped its cash giving a little, taking it up to over $188 million, and reported that in combination with its in-kind giving, its total giving "surpassed $1 billion."

During the 2014 fiscal year, giving changed dramatically for Walmart and its foundation. Combined, the two gave more than $1.3 billion in cash and in-kind contributions, including all of their efforts to fight hunger, empower women, and advance sustainability practices. How they calculated this number is quite complicated, I am sure, and we've seen other cases in which fuzzy numbers are used to paint a company's corporate citizenship in the best light. Regardless, the increase marked the largest level of giving in Walmart’s history, and surpassed the previous year’s total by more than $244 million. Global in-kind donations accounted for $1 billion of that total giving number, while $316.3 million was reportedly given in cash globally.

Now, for fiscal year 2015, Walmart and the Walmart Foundation are reporting a total of $1.47 billion in in-kind and cash giving. So that's another hundred million or two in total giving. On the other hand, what's another hundred million or two when your 2014 net sales totalled $473.1 billion, an increase of $7.5 billion from the year before? Not much.

Most corporations don't talk very candidly about their philanthropy, so it's hard to know what motivations are at work. But one way to think about corporate giving is that it offers strong hints of how companies want to improve their brands and, related, what's nagging at their conscience. It make sense that Apple, Google, and other tech companies would back STEM diversity efforts after this industry's historical hostility to women. Or that Wells Fargo would give for low-income housing after its huge missteps on predatory lending.

Walmart's increased giving may be best seen as part of a broader effort by the company to respond to years of bad press, and bad behavior, and get on a new path—perhaps one more in sync with the values of younger members of the Walton family, and certainly more in sync with changing public expectations of corporate responsibility.

Some of the particulars of Walmart giving seem closely related to its past problems and aimed at mollifying critical outsiders. Is it a coincidence that a company that was famously sued by its female employees is now making a huge push to empower low-income women? We doubt it. Is it a coincidence that a company that's been criticized by civil rights groups has given to help historically black colleges as well as to support career readiness programs for African-Americans at the United Negro College Fund, the NAACP, and the National Urban League? We doubt it.

The puzzle of corporate philanthropy is so hard to unravel because this is a realm where the motivations of generosity, greed, and guilt can converge in different ways at different times. Things are getting better, but with bumps along the way. We'll be exploring these issues more in the months to come.

Related: