Wal-Mart Accused of Misusing Nonprofit in Push for Urban Stores

Photo (cc) by JeepersMedia

Thirteen community groups have filed a complaint with the IRS accusing the Walmart Foundation of violating the U.S. tax code by using its tax-exempt funds to aid the retail chain’s expansion into urban areas.

The groups claim that between 2008 to 2013, donations from the multibillion-dollar Walmart Foundation escalated into the millions of dollars in cities including Boston, New York, Washington, D.C., and Los Angeles, as the retail giant fought community resistance to opening stores in those cities, Forbes reports.

“Walmart has publicly stated a primary goal to build more retail stores in urban areas, where it often faces public opposition, and Walmart Foundation 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,” the complaint alleges. “Walmart Foundation’s activities are impermissible under the Code.”

The Walmart Foundation is registered as a 501(c)(3) charitable organization, which prohibits it from operating in the sole interest of private individuals or entities.

The complaint also notes that the Walmart Foundation has no independent directors. Instead, it’s governed entirely by senior Wal-Mart executives and foundation staff members.

The Walmart Foundation has denied any wrongdoing.

“The Walmart Foundation takes the Internal Revenue Code and regulations very seriously and the allegations made have no merit,” Tricia Moriarty, director of global responsibility communications for Wal-Mart, said in a statement.

“Walmart and the Walmart Foundation gave $1.4 billion in cash and in-kind contributions around the world,” in 2014, according to the company’s website. The foundation describes the priorities for its charitable donations here.

According to the Washington Post, the foundation’s funding guidelines state that donations cannot be made to a program that “directly benefit Wal-Mart Stores Inc., in any way.”

The complaint outlines several instances in which the foundation dramatically increased its donations to cities at the same time it was pushing to get the green light to open a new store there.

What do you think of the allegations against the Walmart Foundation? Share your comments below or on our Facebook page.

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