Wal-Mart Strengthens Ties Between Giving and Brand Positioning

The Financial Times reports that Margaret McKenna, the president of Wal-Mart’s company foundation, has announced a shift in the foundation’s giving strategy.  Wal-Mart gave away more than $290 million last year in the United States, second only to Bank of America in corporate philanthropy.  Ms. McKenna stated the foundation would be making larger, more focused grants in the United States and considering enhancing its international giving.  In a shift from its previous strategy of often making many small, several hundred dollar grants to local schools and groups as well as larger multi-million dollar grants to national charities, the foundation will now establish state-level mechanisms to make grants of $25,000 or more.  The foundation also plans to hire program officers to better identify giving opportunities and assess the effectiveness of grants. 

The foundation’s new focus will include three funding priorities: healthcare, environmental sustainability, and education and training for 12 to 30-year-olds.  The article reports that two of these goals match recent re-branding efforts by Wal-Mart.  While it only identifies healthcare specifically, Wal-Mart has also been criticized in the past for its environmental practices.  As for the the foundation’s new international efforts, they will feature a partnership with UNICEF to fulfill Wal-Mart’s pledge to support the United Nation’s millennium development goals. 

Companies have often treated philanthropy as primarily another marketing tool, but the use of company foundations for these purposes raises interesting private benefit issues.  When, if ever, does the link between a company foundation’s philanthropic priorities and the related company’s re-branding or other priorities become too close and so violate the requirement that the foundation serve public, not private interests?  Efforts by Wal-Mart and others to more closely link the activities of their foundations to their corporate priorities may require the IRS and eventually the courts to answer this question.

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