Was Sam Right? (Gwen Moritz Commentary)

Sam Walton, despite his image as a simple man with a simple plan, was a deep thinker whose contrarian ideas continue to be worth considering. The retail world still seems to resent his counterintuitive idea that less profit would equal more money.

The story by Mark Friedman of Arkansas Business about Wal-Mart’s charitable foundation gave me pause. It seems Mr. Sam, bona fide Man of the People, wasn’t keen on the idea of corporate philanthropy.

I think I understand Walton’s theory: Every dollar that a business gives away comes from its customers in the form of higher-than-necessary prices or, in the case of publicly traded companies, the shareholders in the form of lower-than-necessary profits. Or both groups split the difference. Better, he thought, for those customers and those shareholders to have the dollars and to decide for themselves which charity should receive them.

It’s hard to argue with that theory. But as with so many other idealistic theories — for instance, dismantling Social Security so that working Americans could choose for themselves how to invest those dollars — I don’t think putting it in practice would actually make the world a better place. It seems Wal-Mart has come to the same conclusion.

Would individuals give as many dollars as the Wal-Mart Foundation? Would splintering the gifts not aggravate the existing problem of too many nonprofits, many of them with virtually identical goals, competing for the same philanthropic dollars?

When Charles Fishman, author of the excellent book “The Wal-Mart Effect,” was a featured presenter at this spring’s Arkansas Literary Festival, a Wal-Mart fan who identified herself as Anna scolded him for not showing proper appreciation for Wal-Mart’s charitable giving. Fishman shrugged off the millions Wal-Mart gives away as the equivalent of advertising dollars and merely a “cost of doing business.”

I can’t argue with many of the conclusions Fishman drew from his detailed reporting on Wal-Mart, but I do disagree with him on this one. Wal-Mart may have evolved away from many of Sam’s ideas — favoring American-made products and avoiding ostentatious displays of executive wealth, for instance. But until a dab of image repair crept in very recently, driving down costs had remained the A through Z of the corporate mission.

Still, philanthropy was a growing part of the corporate culture even before the appearance of Wal-Mart Watch and Wake Up Wal-Mart, the union-backed organizations pressing for changes in Wal-Mart’s employee policies.

Wal-Mart’s critics — and Fishman, who is not a critic but a journalist — would like to see the company be less single-minded about driving down prices in order to provide better working conditions and benefits for its own employees and for the employees of its vendors. Those are important issues. But they give the company little credit for deviating from its cost-cutting goal when it comes to charitable giving.

Now, I suspect that Jeff Krehely of the National Committee for Responsive Philanthropy and Pat Lile of the Arkansas Community Foundation are right when they say that corporate giving can actually be good for the bottom line. That may be why Wal-Mart does it. And that’s O.K. with me.

If one does the right thing for a selfish reason — be it charitable giving or providing better health benefits or insisting on better working conditions in supplier factories — isn’t it still the right thing? Aren’t they all just the costs of preserving the long-term viability and profitability of the business?

To put charitable giving, by Wal-Mart or any other company, into a category that doesn’t count is an artificial distinction. Charitable giving does not keep Wal-Mart’s costs down, so it is a departure from that otherwise singular goal.

I agree with Anna: That’s one of the good things that Wal-Mart should get more credit for.