Walmarts Shifting Focus Leaves Some Nonprofits Starved for Funding Help

Nonprofits and corporations coexist within an intricate financial ecosystem. An organization typically depends on investors to fund a mission it believes makes a positive contribution to society. It often spends a lot of time courting companies, in order to foster sustainable financial relationships.

Meanwhile, corporations field proposals from various nonprofits and, based on an amalgam of altruistic intentions and self-interest, contribute to causes of their choosing.

The nonprofit world needs corporate investors, and the corporations need them — now more than ever, as an increasing number of consumers demand large companies give back to the community, according to an August 2013 Nielson report titled “Consumers Who Care.”

In Northwest Arkansas, Fortune 500 companies like Wal-Mart Stores Inc., Tyson Foods Inc. and J.B. Hunt Transport Services Inc. could be classified as the major producers in the financial ecosystem.

When one of those giants makes a move, it’s felt — good or bad — throughout the chain. And, recently, the biggest of them has initiated a change in direction in its Northwest Arkansas giving program. And, while some causes are likely reaping rewards, others have been left to fend for themselves. 

In December 2012, the Walmart Foundation announced that corporate grants would, in the future, be limited to groups whose initiatives fall within three categories: hunger relief, health care and quality of life (which includes access to the arts and recreational activities).

The intention, said Julie Gehrki, senior director of the Walmart Foundation, is to have a “greater, larger, more transformational impact on society” and “really move the needle” on what it considers to be some of the region’s most pressing issues. 

“It’s a significant trend in philanthropy in general,” Gehrki added. “And we believe it’s the right direction, long-term.”

But, for those organizations that no longer fall within the foundation’s mission, the change in direction has meant a loss of, in some cases, an integral funding source.

 

Singled Out

The Single Parent Scholarship Fund of Northwest Arkansas Inc. is among those nonprofits that no longer meet the criteria for corporate grants from Walmart.

The Walmart Foundation had been giving to the cause since 2004, and in 2012 it upped its contribution to $130,000 annually. The scholarship fund, which works with students in Washington, Carroll and Madison counties, was able to tap into that money for two years after the focus change announcement, thanks to bridge funding from the foundation reserved for organizations whose budgets would be significantly affected.

To the scholarship fund, it has been a pretty big hit. The Walmart money made up about 37 percent of the scholarships given out during the past couple of years. The funds comprised 18 percent of the organization’s overall budget.

At the end of 2014, the fund’s Walmart contribution will be dried up, while the need for scholarships is only increasing, according to the fund.

To compensate, it has gone in a new direction of its own, with plans to launch a big fundraising campaign to kick off 2015.

“Due to the rising costs of tuition and fees and the growing number of single-parent households, the need for scholarships has never been greater,” said Jody Dilday, executive director of the scholarship fund. “We have to trust that our community will rise to the challenge and help us fill the gap.” 

 

Network Connection Lost

The scholarship fund is not alone. Although Walmart’s annual contribution to the Springdale-based Arkansas Support Network (tax records show $67,000 in 2011 and $75,000 in 2012) makes up a small percentage of ASN’s $16-million budget, the Kids Club summer program it funded was significantly affected, said CEO Keith Vire. Kids Club provides care for special needs children during the summer hiatus from school.

Although the loss of Walmart money since 2012 was a blow, Vire is confident.

“I think there is a big enough group of people out there who recognize and appreciate what we do,” he said.

Although he has been doubted in the past, Vire is still sticking to his personal philosophy, which he says has proven to be a “good business model” for nonprofits, as it has garnered the support network lots of community support: Follow your own moral compass and don’t worry about trends or going with the popular stance.

 “I do what I do because it’s the right thing. And we’re going to keep doing the right thing,” he said. 

 

Que Sera, Sera

As to the withdrawal of the annual Walmart contribution, Vire takes it in stride.

“It’s their money; it’s not mine … They get to decide where to spend it and whether our cause furthers their mission.”

Most of the nonprofit leaders left behind by the focus change have a positive attitude about it. They say they understand the foundation’s position and are grateful for aid they were given in the past.

“[The $1.1 million given to the Single Parent Scholarship Fund during the past decade] has helped more than 1,000 single-parent families in our region live better by providing access to higher education and enabling them to compete for jobs that provide family-sustaining wages,” Dilday said.

But, at the same time, some of the nonprofit heads are frustrated.

“It’s probably just because I’ve got a dog in the fight,” said Mike Fohner, founder and CEO of Youth Strategies.

The loss of support came as a surprise to Fohner, who thought Youth Strategies’ goals would fit within the focus areas. However, he added that the organization is too far-spread in its outreach to be pigeonholed into a category, as it helps adolescents in many ways. The faith-based nonprofit in Springdale works with at-risk youth with programs that specialize in development of marketable job skills and healthy social attitudes.

The cause lost about 5 percent of its budget when Walmart stopped providing annual grants averaging about $12,500, Fohner said. This will mean 25 kids can participate in the program this summer, as opposed to previous years, where it took in upwards of 35.

 

Tough Decision

In some cases, the future of entire programs could be in jeopardy.

According to tax documents, the Walmart Foundation gave the Fayetteville Public Library $48,000 in 2011 and also in 2012, and local news sources show that money was used for several years as the primary funding for the library’s summer reading program.

However, libraries are among the types of institutions that no longer fit the Walmart giving criteria — something that, if looked at individually, could make it seem literacy is not a priority for the retail giant. 

But Gehrki said the choice to streamline the Walmart Foundation’s initiatives was “not a decision that things we don’t fund are not important. There is a lot of good, important work going on.

“Also, it was a decision that was not taken lightly,” she said. The Walmart Foundation mulled over the issue for a year, during that time it engaged more than 75 nonprofits. 

“We thought about what was right for us and looked at our core capabilities,” Gehrki added.

For example, as a grocer with years of experience in fighting hunger on a national level, Walmart felt compelled to chip away at Arkansas’ child hunger rate, which is one of the highest in the U.S.

Because of the high concentration of Walmart people in Northwest Arkansas, the corporation has a “deep commitment to the area. We know this is our hometown and want it to be a great place to live and work. Because of that, we disproportionately give to Northwest Arkansas,” Gehrki said. 

And Gehrki said that giving amount has only gone up since the announcement of the change. In 2012, Walmart gave more than $15.5 million, 8.5 percent of its total grant contribution, to Northwest Arkansas.

In 2013, Gehrki said the foundation spent about $17 million in the area. That number is likely to be about the same in 2014, maybe a little higher, although the numbers are not yet available.

While the move is far from universally popular, the nonprofits don’t seem to be questioning the intentions behind it.

The way Vire looks at it, “They, like all of us, are trying to change their little piece of the world. But do I agree with how they are doing it? No,” he said. “But I’m OK with it.”