COMPANY CULTURE / JUN. 07, 2014
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Walmart’s Image Suffers Another Blow

Walmart’s attempts to improve their image in recent years have suffered many setbacks. Recent evidence has come to light that taints even the company’s philanthropic efforts. Despite their best efforts to be seen as a family friendly all American company, they are just another corporation.

Friendly Face

As the leading employer of the elderly and disabled in the United States, Walmart provides much needed jobs for those in need. It is also a major employer of U.S. military veterans who have been honourably discharged. In fact, in 2013 Walmart made a pledge to employ 100,000 such veterans over five years. This gesture was highly praised, particularly by the First Lady Michelle Obama. The rock bottom prices also help many American families who are struggling to survive in the current economic climate.

Walmart’s Not So Friendly Face

Walmart has been has been criticised for years, most notably over the way it treats its employees. Despite being the largest retailer in the world and the largest employer in the U.S. many of its employees are still forced to rely on Food Stamps in order to survive. As many as 15% of their employees in Ohio rely on Food Stamps because their wages are too low. Walmart has been a major target of the recent strikes for the right to a living wage. Its increasing use of part time employees and the outsourcing of labour to foreign sweat shops is another point of controversy among many in America. The company is also fiercely anti-union and has been accused of intimidation and shutting down stores which attempt unionise.

The company, which is still majority owned by the founding Walton family has also gained a bad reputation for its charitable causes. This is significant as the Walton family’s philanthropic efforts were seen as making up for their other mistakes. The pledge to hire 100,000 veterans while highly praised was criticised by some who noted that hiring the veterans gave the company $960 million dollars in tax breaks.

Most notable, however, have been the recent revelations of how the Walton family have been utilising their own charitable foundation. According to data obtained from analysing 23 years of tax returns, the Walton family only contributed $58.49 million dollars to their own foundation. With a combined net worth of roughly $140 billion dollars this amounts to 0.04% of their combined wealth. The tax returns indicate that the while the Walton Family Foundation has a large pot of money roughly $2billion dollars, it is not funded by personal contributions. Instead the foundation is 99% funded by charitable lead annuity trusts (CLATs).

What are CLATs

CLATs are a secure method of avoiding paying various estate and inheritance taxes on large sums of money. A donor places money into these trusts for a set period of time and then gives away a set amount each year. However, if the money appreciates in value significantly then the money can be passed on tax free. Financial experts agree that money being passed to any foundation from a CLAT is purely a tax avoidance scheme. It is estimated that the Walton family have so far avoided roughly $3billion dollars in taxes using CLATs.

The Giving Pledge, launched by billionaires Bill Gates and Warren Buffett, was an initiative to get extremely wealthy people to pledge at least half their wealth to charity before they die. While few people doubt Gates and Buffetts philanthropic efforts, In fact they have come out publicly in support of estates and inheritance tax; there are some who have concerns that others could take advantage of it.

Founder of Salesforce.com Inc, Marc Benioff, said in 2012, "[The Giving Pledge] is terrific as long as we see an increase in philanthropic projects. It has been two years; what are the 10 or 20 major projects that come out of it? This can’t just be a bunch of money going into trusts. It could end up being a bunch of air cover for people who don’t want to give away their money."

Although many people rich or poor give to charity generously and use their charitable foundations as a force purely for good, this is not always the case. It is clear that for Walmart and more specifically the Walton family the temptation to use a charitable foundation to get richer has contributed yet another dent to their image.

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