Wal-Mart Stores accused of using nonprofit outfit to advance commercial interests

Wal-Mart Stores Inc is facing allegations from community and labour organisations of inappropriately using the nonprofit Walmart Foundation to help counter local opposition to its expansion efforts in certain areas like Boston, Washington, Los Angeles, and New York.

According to the group, which filed a complaint with the Internal Revenue Service yesterday, the foundation violated terms of its tax-exempt status by targeting millions of dollars in donations that would directly benefit the retailer.

The Walmart Foundation's contributions in a number of cities increased steadily as Walmart tried to curry local support and gain access in those markets. The foundation donated just over $200,000 to organisations in Los Angeles in 2008 and 2009, according to the complaint, but increased the amount to $1.4 million in 2011, just as its plans to open a store were being rolled out. In 2013, the year that store opened, donations were down to about $230,000.

''I think if this is truly charitable donations, they would be giving this every year,'' said Matt Ryan, executive director of the nonprofit advocacy group Alliance for a Greater New York, which signed the complaint, The New York Times reported. ''I would characterise it as part of a smoke-and-mirrors campaign that Walmart would run when they're trying to move into a city,'' he added.

The retailer's marketing and lobbying activities are detailed in a 22-page complaint addressed to IRS commissioner John Koskinen. The company sought approval for opening stores in Washington, Boston, Chicago and other cities.

According to the groups, the company exercised complete control over the foundation and 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."

The foundation, which is registered with the IRS as a 501(c)3 charitable organisation, is prohibited from operating in the sole interest of private individuals or entities.

Rejecting the allegations, Tricia Moriarty, director of its global responsibility communications, said the foundation focused on areas such as hunger, veterans and disaster relief.

"We provide support for these and other important causes in communities across the US and around the world, not just to particular areas or cities, and it's unfortunate to see criticism of the Foundation's charitable giving," she said in a statement. "The Walmart Foundation takes the Internal Revenue Code and regulations very seriously and the allegations made have no merit."