Some community and labor groups contend Wal-Mart's foundation used donations to soften opposition in cities where the company wanted to expand. Fred Katayama reports.
Even Wal-Mart's charity can't get a break. Some labor and community groups coming together to file a complaint with the IRS. They contend the retailer's foundation used donations to soften opposition in cities where the company wanted to build stores. Take Los Angeles. The group says the foundation boosted giving in LA to $1.4 million four years ago while it was planning to launch a store in the Chinatown neighborhood. Once that store opened in 2013, contributions dropped to $230,000. Wal-Mart, known for its huge stores in small towns, has been trying to grow in urban areas with its new small-format stores. Wal-Mart spokesman Kevin Gardner said the complaint lacked merit, adding that the company takes IRS regulations "very seriously." Some experts believe the group, which includes long-time Wal-Mart critic New York Communities for Change, faces a high hurdle. LSU associate law professor Phil Hackney, who once worked at the IRS, said, "Plenty of large businesses set up foundations, and they are going to invest in the community in which they operate. You are just running in an uphill battle to make the claim that this is somehow out of the ordinary and different." The complaint comes at a time of slow sales at Wal-Mart, whose stock this year has vastly underperformed that of its archrival, Target. Wal-Mart and its foundation donated $1.4 billion last year.