Walmart has been forced to defend itself against allegations that its multibillion-dollar foundation has been using tax-exempt funds to help the retail chain expand into urban areas.
On Monday, more than a dozen community groups filed a complaint with the Internal Revenue Service alleging that the Walmart Foundation violated the tax code by targeting its donations to cities where the big-box giant has faced opposition to its growth plans.
Data analysis of tax returns by these local nonprofits shows an uptick to the tune of millions in donations from the Walmart Foundation to organizations in Boston, New York, Washington D.C., and Los Angeles as Walmart pursued store openings in these cities.
The world’s largest retailer has been outspoken in its desire to expand its footprint in urban areas, identifying 50 “opportunity markets” worth anywhere from $80 billion to $100 billion in sales. However, much of this proposed growth has been stopped or slowed by vocal opposition in these communities.
In October 2010, the complaint points out, such was Walmart’s interest in targeting the Big Apple that an investor meeting ended with a rendition of the song ‘New York, New York.’
In 2011, the Walmart Foundation’s charitable giving in New York City “skyrocketed to $6.5 million, compared with about $1.4 million the previous year” as the Bentonville, Ark. chain faced community opposition to its plans to build a store in Brooklyn.
By 2012, when Walmart failed to crack New York and abandoned its plans, donations to city organizations plummeted to just over $1 million.
The coalition of nonprofits found similar patterns of giving in Los Angeles, Boston and Washington, D.C., charting these contributions in Monday’s 22-page IRS complaint first reported by the Washington Post.
The group — which includes San Francisco Jobs with Justice, Respect DC Coalition and New York Communities for Change — also alleges that the Walmart Foundation is entirely controlled by Walmart executives at board level, led by the retailer’s vice president of sustainability Kathleen McLaughlin. It has no independent directors.
A spokesperson for the Walmart Foundation denied any wrongdoing, saying in a statement:
“The Walmart Foundation focuses giving in critical areas such as hunger, veterans and disaster relief. We provide support for these and other important causes in communities across the U.S. and around the world, not just to particular areas or cities, and it’s unfortunate to see criticism of the Foundation’s charitable giving. The Walmart Foundation takes the Internal Revenue Code and regulations very seriously and the allegations made have no merit.”