On the Wal-Mart Money Trail
by Lisa Featherstone
The Nation magazine, November
21, 2005
With a combined fortune of more than $90
billion, the Waltons--the immediate heirs of Wal-Mart founder
Sam Walton--are the richest family in the world. Five of the country's
ten richest individuals are members of Sam's immediate family:
his wife, Helen, and their three surviving children--Rob, Jim
and Alice--as well as his late son John's widow, Christy (John
Walton died in June when his private plane crashed). Until recently,
however, they gave away little of their fortune. As Sam Walton
explained in his 1992 autobiography, Made in America, he didn't
believe in giving "any undeserving stranger a free ride."
Nor did he believe in being generous with company profits. "We
feel very strongly," he wrote, "that Wal-Mart really
is not, and should not be, in the charity business." Money
that Wal-Mart donated to charity, he reasoned, would only come
out of the pockets of "either our shareholders or our customers."
(He didn't mention workers, perhaps a tacit acknowledgment that
picking their pockets was just business as usual.) As for politics,
Sam couldn't stand the stuff. At a 1988 Mother's Day "toast
and roast" honoring Helen Walton, then-Senator Dale Bumpers
of Arkansas quipped that waiting for big campaign contributions
from the Waltons was like "leaving landing lights on for
Amelia Earhart."
All that has changed. Since Sam died
in 1992, both the Bentonville, Arkansas-based company and the
family have dramatically escalated their charitable giving, becoming
far more influential in the worlds of philanthropy and politics.
It is hardly a coincidence that this transformation occurred after
Wal-Mart became the nation's largest private employer and a flytrap
for much-deserved criticism. The company is battling numerous
employee rights lawsuits in court, the biggest of these being
Betty Dukes v. Wal-Mart Stores, a sex-discrimination class action
representing 1.6 million women. Communities around the nation,
charging that the company is a stingy low-wage employer with an
arrogant disregard for local and national laws, are battling to
keep Wal-Mart from opening or expanding stores. Several labor
unions have made fighting Wal-Mart a top priority. This year two
major national organizations, Wal-Mart Watch and Wake Up Wal-Mart,
formed to lead a citizens' movement to pressure the company to
change its ways.
The National Committee for Responsive
Philanthropy (NCRP), a watchdog group, released a report in September,
The Waltons and Wal-Mart: Self-Interested Philanthropy, detailing
the recent increase in Wal-Mart and Walton philanthropy and noting
its likely relationship to the company's image problems. Indeed,
the increase has been staggering. The Walton Family Foundation
(WFF) gave away $106.9 million in 2003--the most recent year for
which data are available--twice as much as in 2000. Wal-Mart's
company PAC, now the third-largest corporate PAC and the second-largest
corporate donor to the GOP, gave away $2.1 million in 2004, compared
with just $100,000 in 1994. The Walton family, too, has greatly
increased its political giving; in 2004, for example, Alice donated
$2.6 million to the influential Republican PAC Progress for America,
which supported the sleazy Swift Boat Veterans for Truth and gave
Bush a critical push in the election's final months. Since 1999
the Wal-Mart Foundation (WMF)--a company-controlled entity with
no direct connection to the WFF--has tripled its giving and by
the end of this year will have doled out more than $200 million
in cash and merchandise, according to spokeswoman Melissa O'Brien.
The company also donated $20 million
in cash and merchandise to the Hurricane Katrina relief effort,
garnering extensive--and partially justified--praise. To antigovernment
zealots like New York Times columnist John Tierney and the wing
nuts running the Wall Street Journal editorial page, Wal-Mart's
impressive response to the hurricane showed that the private sector
is simply more effective than the government. It is true that
when you starve government by draining its resources and electing
officials who don't believe in it, nothing seems to work. But
Wal-Mart played a major role in that eviscerating process. Much
of Wal-Mart's philanthropy (as well as that of the Walton family)
has been directed toward promoting anti-government politics, whether
by lobbying against high taxes for the rich or contributing to
Republican candidates, conservative think tanks and efforts to
privatize education.
Jeff Krehely, who co-wrote the NCRP report,
says that for his organization, such a sharp increase in giving,
coupled with the company's obvious desire to spin itself as a
better corporate citizen, "raises red flags. We wonder, What's
the agenda here? What's happening?" The WMF's Melissa O'Brien
told The Nation that criticisms of the company come from "special-interest
groups" and do not influence its giving. She also told the
New York Sun that the NCRP report was funded by Target, a charge
Krehely calls "ludicrous." (Dayton Hudson, Target's
former parent company, contributed to the NCRP in the 1990s. In
2000 the company reorganized as the Target Corporation and hasn't
contributed to the watchdog group since.)
Each Walton heir has philanthropic projects
of his or her own--Alice, for example, is building a world-class
art museum in northwest Arkansas--but the family fortune should
be considered as one because most of the money is managed together.
The giving is also largely administered together, through the
Walton Family Foundation, as well as through close communication
among its family members. (At least twice a year, the family meets
to talk about how to spend its money.) The Waltons own about 40
percent of Wal-Mart's stock, making Wal-Mart essentially a family
business--highly unusual for a large multinational company. (Both
the Wal-Mart Family Foundation and Walton Enterprises--the company
that represents the Walton family's interests--declined to cooperate
with this article, or to make any of the notoriously press-shy
Waltons available for interviews.)
Philanthropy obscures the often unseemly
process by which the money was made--and for Wal-Mart that's at
least part of the point. Stephen Copley, a United Methodist Church
pastor who serves on the board of the Arkansas Single Parents
Scholarship Fund, a Springdale, Arkansas, charity that has benefited
from Walton dollars, says that the program has "an incredible
success rate. One lady even got a PhD. [The Walton money] does
a tremendous amount of good." However, he adds, "it's
great to help single parents go to school, but those same single
parents might be working for Wal-Mart, and they can't afford health
insurance." Copley, also head of the Arkansas Interfaith
Committee for Worker Justice, is troubled that in his home state,
Walton and Wal-Mart generosity "gets great media...they look
so good even though in reality their business practices are very
bad."
The Wal-Mart Foundation gives a staggering
number of gifts, apparently in order to buy goodwill in as many
communities as possible, rather than, as Krehely points out, "giving
to sustain organizations." The WMF's 2003 IRS 990 form is
2,239 pages long, far longer than that of the Ford Foundation,
which has billions more in assets. That's because most WMF gifts
are tiny: thousands or even hundreds of dollars to churches and
Lions clubs and Boys and Girls clubs, $500 to the YMCA of Nashville
and Middle Tennessee and to the Tulip Trace (Indiana) Girl Scouts
Council and so on. Communities where Wal-Mart faced a particular
battle over opening a new store--Inglewood, California, or New
York City--enjoyed especially generous largesse. Like the flowers
and other tokens of courtship from a suitor who later becomes
a wife-beater, such gifts are often followed by demands for public
subsidies and tax breaks. In this way Wal-Mart is repeating the
strategy that has served it so well in Arkansas, where Wal-Mart
and the Waltons' charitable gifts are many and company critics
are relatively few. Says Lindsay Brown, president of the Central
Arkansas Labor Council, "It's a hell of a plan, and it works."
We are supposed to applaud philanthropy--the
very word connotes altruism and "giving back"--but Walton
and Wal-Mart giving serves as a reminder that philanthropy provides
an alternative to taxation, a way for rich people and corporations
to decide what to do with their extra money, as opposed to letting
the rest of us decide through our elected governments. Since charitable
donations are a tax write-off, as Krehely points out, "they
are supposed to benefit the public good." He thinks it is
reasonable to ask whether a family's--or a company's--philanthropy
serves the common good, or at least enough good "to make
up for the public revenue that we're losing."
Funny he should mention taxes: Wal-Mart
and the Waltons have, after all, been notably reluctant to pay
them. Not only has the company lobbied for tax breaks in communities
all over the nation, the Waltons--the family that former Wal-Mart
board member Hillary Clinton has called "the best America
has to offer"--have campaigned vigorously against the estate
tax. They have donated money to its opponents, Republicans like
John Thune of South Dakota and David Vitter of South Carolina,
and enlisted one of Washington's top lobbying firms, Patton Boggs--a
leading anti-estate tax lobbyist--to represent their interests.
Chuck Collins of Responsible Wealth, a
group of well-off people who strongly favor the estate tax, observes
that the Waltons sometimes say the estate tax is not a priority
for the family. "That may be true from their perspective,"
he says, "but it's a bit like an elephant saying it's really
not interested in stepping on anthills. When you're America's
wealthiest family, you are a philanthropic and lobbying heavyweight
even on your minor interests." For instance, Senator Blanche
Lincoln of Arkansas, one of a handful of Democrats who draw checks
from the Waltons, supports estate-tax repeal (or crippling "reform").
"Senator Lincoln will wax eloquent about the small farmers
of Arkansas," Collins says, "but what's really on her
mind is Walton."
In addition to campaigning specifically
against the estate tax, the Waltons also give money to groups
that generally favor tax giveaways to the rich, like Americans
for Tax Reform. And the Waltons have already reaped the benefits
of tax policies enacted by the conservatives they helped put in
office: This year Bush's dividend tax cut will save the family
$51 million, according to Lee Farris, an estate-tax expert with
the Boston-based United for a Fair Economy.
The Waltons' philanthropy--and their
hostility to paying their fair share of taxes--also needs to be
viewed in the context of tax subsidies Wal-Mart has received for
building new stores, which Good Jobs First places at more than
$1 billion, an estimate that does not include the many other ways
taxpayers subsidize Wal-Mart stores, for instance, through numerous
forms of public assistance--Medicaid, Food Stamps, public housing--that
often allow workers to subsist on Wal-Mart's low wages. A report
by the House Education and Workforce Committee conservatively
places the latter at $420,750 per store; the Wal-Mart Foundation's
per-store charitable giving is just 11 percent of that amount
($47,222).
In addition to spending on Republican
candidates, the Waltons have lavished funds on right-wing ideological
institutions--organizations that serve the interest of wealthy
individuals and lawless antiunion companies like Wal-Mart. From
1998 through 2003 the WFF contributed $25,000 to the Heritage
Foundation, $15,000 to the Cato Institute, $125,000 to the Hudson
Institute, $155,000 to the Goldwater Institute, $70,000 to the
National Right to Work Legal Defense Foundation, $300,000 to the
Mackinac Center for Public Policy, $185,000 to the Pacific Research
Institute for Public Policy and $350,000 to the Evergreen Freedom
Foundation.
Both the family and the company have
made education a major funding priority. Many of the WFF's education
gifts have a distinct ideological tilt, emphasizing a "free
market" approach to education reform, a vision the late John
Walton embraced with particular enthusiasm. The WFF funds advocacy
groups promoting conservative school "reform"--otherwise
known as privatization--like the Center for Education Reform and
the Black Alliance for Educational Options, as well as the actual
programs these groups champion: charter schools and voucher programs.
(The BAEO did not return calls for this article.)
Among such projects, the Waltons tend
to fund the most mind-numbing and cultish, giving in 2003 alone
nearly $3 million to Knowledge Is Power (KIPP) schools and millions
more to other schools using the KIPP curriculum, which emphasizes
regimented recitation rather than critical or creative thinking.
Particularly widespread in low-income neighborhoods, such schools
seem bent on disciplining and exhorting the poor rather than developing
human potential (much like Wal-Mart as a workplace, with its relentless
company cheers and dead-end jobs). Several years ago the principal
of New York City's John A. Reisenbach Charter School, which uses
the KIPP curriculum and received $118,000 from the Waltons in
2003, told me proudly, as we watched fidgety second graders chant
meaningless slogans, "We are getting them ready for business."
The WFF has become the single largest
source of funding for the voucher and charter school movement.
Walton funding allows some charter schools to spend more per pupil
than "competing" public schools. The ironic result is
that while these projects are supposed to demonstrate to the public
the wonders of a marketized approach to education, the WFF's money
gives its grantees an advantage over other schools, allowing them
to perform better than they would otherwise. "[The Waltons]
claim to support competition and the free market," says Paul
Dunphy, a policy analyst for Citizens for Public Schools, a Boston-based
coalition, "but actually they are manipulating the market,
conferring advantage on their pet projects."
It's a fitting paradox, since the Wal-Mart
economic model, like almost anything held up as an example of
the beauty of the free market, contains so many contradictions
(yes, it's extremely profitable, but look at all those tax subsidies).
Because so much Walton and Wal-Mart philanthropy is crudely self-interested,
it's tempting to find an equally crude motive for the Walton family's
interest in education; many Wal-Mart critics have assumed that
the Waltons must be planning to reap several more fortunes through
for-profit education companies. That's not completely baseless:
John Walton was briefly involved in such a venture. However, he
backed out, realizing such profiteering was hurting the credibility
of his education reform efforts. And so far, for-profit education
is still not a very profitable industry--especially when compared
with retail.
The Waltons' motives for supporting the
privatization of education seem--at this writing, anyway--to be
ideological, even idealistic, rather than an elaborate backdrop
to a new money-making scheme. Like many rich Americans who have
helped to finance the far right's rise to power, they have embraced
a worldview in which what's good for the wealthy is good for everyone
else. And greater cultural acceptance of the unfettered market--through
an increasing tolerance for privatization of all kinds--will certainly
make the world safer for a family business that thrives on weak
government and lack of regulation. But it's also likely that the
Waltons, like most right-wingers, sincerely believe that their
ideas have the potential to improve people's lives. Why wouldn't
the Waltons genuinely believe in the free market? Look how well
it has served them.
Helen Walton, now 85 and in poor health,
is expected to donate almost all of her personal fortune--worth
$18 billion--to the WFF upon her death, which, as the NCRP points
out, will make that entity the richest foundation in the world.
This should disturb progressives, since so much Walton money goes
to support conservative causes. Yet although the current direction
and political leanings of Walton "philanthropy" are
clear, the future is a mystery. As Krehely observes, nothing is
known about the politics or interests of Sam Walton's grandchildren.
This matters in a family foundation; this fall the Olin Foundation
closed its doors, having spent down its endowment because the
older generation did not trust the younger Olins to carry on the
family's right-wing traditions. Since the Waltons don't say much
about their future plans, or about their internal family politics,
it's unclear what lies in store for this--currently--right-wing
fortune.
"The Waltons could be an enormous
force for good," says Responsible Wealth's Chuck Collins.
"As the company's biggest shareholders, they could decide
that Wal-Mart could pay a living wage. They could use their charitable
dollars not to undermine public education but to boost educational
opportunity. They could become major contributors to social good.
But they're not."
One item in the Walton Family Foundation's
most recent IRS filing shows how uninterested this family is in
true social responsibility: a measly $6,000 to something called
the Wal-Mart Associates in Need Fund. Contrast that with the millions
the family spends promoting right-wing causes, and it becomes
painfully clear that the Waltons value conservative ideology far
more than they value the human beings who have made them the richest
family on earth. Told about these figures, Kathleen MacDonald,
a Wal-Mart candy department clerk in Aiken, South Carolina, responded
bluntly, "All I have to say about that is, it doesn't surprise
me. Like Bush, they don't have a clue what working families go
through." MacDonald would like to see The Simple Life do
a show about working at Wal-Mart. "I could see Paris Hilton
on a register at Christmastime, or stocking shelves," she
says. Or perhaps Alice Walton as a greeter, on her feet all day,
thanking us for shopping at Wal-Mart.
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