Archive for the ‘charity’ Category

Baseless Accusations Aimed at Lady Gaga’s Charity Foundation

Accusations recently arose that Lady Gaga’s charitable foundation, the Born This Way Foundation (BTWF), was spending its money in what looked like an irresponsible way. For example: according to 2012 tax filings, BTWF spent almost $60,000 on publicity fees, $50,000 on social media, and nearly $80,000 on travel, but spent “only” $5000 in the form of “grants to organizations or individuals.”

BTWF was founded in 2011 to “foster a more accepting society, where differences are embraced and individuality is celebrated.” But how, commenters wondered, could the foundation accomplish that mission when the vast majority of its spending is goes to what many organizations would consider mere overhead?

As it happens, the accusations were more smoke than fire — not surprising, since the story originally broke on ShowBiz411 and were popularized by Gawker.

Gaga’s mom (who is also co-founder and president of BTWF), Cynthia Germanotta, responded recently, saying that the nature of BTWF had been misunderstood:

“First and foremost, we are an organization that conducts our charitable activity directly, and we fund our own work. We are not a grant-maker that funds the work of other charities, and were never intended to be.

Our activity has included The Born Brave Bus Tour, which has travelled to 23 communities, interacting with more than 19,000 young people and raising awareness to the tune of more than 300 million media impressions. The foundation’s messages of kindness and bravery have touched more than half a million online users via our website, which includes the Bravest Map Ever and the Play Brave Game, as well as social media channels such as Twitter and Facebook — which on a peak week can hit 50 million individual users.”

In other words, the ShowBiz411 story betrayed a lack of understanding of what BTWF is for, and what it takes to run a foundation of that kind. It doesn’t make sense to insist that a charity give away more money to charity — when it is itself dedicated to doing what most charities do, namely spending donated money in ways that aim to help people directly.

Of course, the fact that BTWF (or any other foundation) is dedicated to doing good does nothing at all to put them beyond critique. Indeed, a do-good mission is itself a good reason to insist on accountability, since a do-good mission is liable, in at least some cases, to make those who run a foundation feel a sense of entitlement. And the need for accountability is all the more relevant with regard to charities that accept donations from the general public: when people are trusting you with their money and when all they get in return is your promise to use it well, well, you’ve got an obligation to live up to that trust.

So yes, accountability at charitable foundations is an important topic. Too many (that is, more than zero) foundations spend too much on overhead and too little on doing good. Were I a donor to BTWF, I would like to know a little more about just how the foundation spends its money, why it had to spend so much in 2012 on lawyers ($150,000).

The lesson here is one that should be heard not just by charitable foundations, but by organizations of all kinds. It’s not enough to be doing good. You have to communicate that to key stakeholders. And that means telling them not just that you are doing good, but letting them know how you’re doing it.

Loblaw Compensating Bangladesh Victims

Canadian grocery chain Loblaw has announced that it will compensate the families of victims of the factory collapse that happened in Bangladesh’s Rana Plaza this past May. The factory housed a number of garment factories, including some that made garments for the Canadian’ retailer’s “Joe Fresh” line of clothing.

Some will worry that this is a case of too little, too late. And certainly the “too late” part is correct. Compensation is always a distant second best when compared to avoiding deaths in the first place. Whether the compensation is “too little” or not is subject to debate. It’s not clear that Loblaw (or any company) bears direct responsibility for the behaviour of the companies it buys services from, though certainly the case is stronger where the buyer is a highly-capable multi-billion dollar company, and when the companies it buys from are smaller, less-capable companies operating in an under-regulated environment.

Either way, it’s hard not to admire the company for stepping up and assuming responsibility. And the money will surely be a godsend to the families of the victims. But the real benefit of the compensation scheme may well lie in its capacity to reassure Canadians (and other westerners) that the company cares, and that things are going to get better in Bangladesh, so that we can all keep buying goods made there. Because that’s what Bangladesh truly needs.

But on the other hand I continue to worry about Bangladeshi exceptionalism — that is, that all the attention being lavished on the garment industry in Bangladesh will mean little attention gets paid to parallel problems in places like Malaysia, Vietnam, Pakistan, China, and a number of African countries. There are surely factories in many, many developing countries that are ‘Rana Plazas’ just waiting to happen. It’s not clear just what is being done about those.

Finally, many will be asking what still needs to change? Two things come to mind. The first is that companies like Loblaw need to keep getting better at vetting the companies they do business with, in order to weed out the bad ones. This, of course, is much harder than it sounds. The second is that Canadians and other Westerner consumers need to change the way they think about the issue. They need to recognize that Bangladesh is not Canada, and doesn’t have the luxury of North American-style labour standards. They will surely get there, but it will be a long, slow climb.

Most important is that this tragic series of events has focused the world’s attention on an important set of issues. But the challenge lies in harnessing that attention and seeking out reasoned discussion, rather than knee-jerk reactions.

Apple: The Ethics of Spending $100 Billion

What’s the best thing to do with a hundred billion dollars? Apple — the world’s richest company — gave its answer to just that question, when it announced yesterday how it will spend some of the massive cash reserve the company has accumulated.

Of course, spending the whole $100 billion was never on the agenda. The company needs to keep a good chunk of that money on-hand, for various purposes. Then there’s the fact that a big chunk of it is currently held by foreign subsidiaries, and bringing it back to the US to spend it would require Apple to pay hefty repatriation taxes. But any way you slice it, Apple has a big chunk of cash to spend, and so its Board faces some choices.

In the abstract, there are lots of things one could do with that much money. Financial analysts had rightly predicted that Apple company would decide to pay out a dividend (for the first time since 1995). Some were predicting bolder moves, like buying Twitter (which would use up a mere $12 billion). But what could Apple have done with that much money, aside from narrow strategic moves?

The money could have, in principle, been spent on various charitable projects. That amount of money could also do a lot towards helping developing countries combat and adapt to climate change. Or it could revolutionize the American education system. Closer to home, the company could spend a bunch on improving working conditions at its factories in China, conditions for which the company has been widely criticized. All of these, and many more, are (or rather were) among the possibilities.

But business ethics isn’t abstract; Apple’s Board faced a concrete question. And the Board has ethical and legal obligations to shareholders. Those aren’t its only obligations, but once workers are paid, warranties are honoured, expenses are covered, and relevant regulations are adhered to, the main remaining obligation is to shareholders.

Now, there’s a significant strain of thought that says that a company’s managers (and its Board) are not there just to serve the interests of shareholders, but also to carry out shareholders’ obligations. So, if you believe that Apple shareholders have an obligation to fight climate change or to promote education or to improve conditions for workers, then maybe it makes sense to think that the company ought to help shareholders to act on that obligation. But keep in mind that Apple’s shareholders are a rather amorphous group. Shares in corporations change hands incredibly frequently, and the interests and obligations of shareholders vary significantly, so a Board ‘represents’ shareholders (or acts as their agent) only in a rather abstract sense.

The alternative, of course, is for Apple’s Board to give itself some leeway, forget about what shareholders’ collective obligations might be, and go back to thinking abstractly about what to do with that big pile of cash. They can simply decide whether the shareholders’ financial interests outweigh their collective obligation to do some good with that money, and simply decide which of the various worthy causes it should go to. But of course, lots of people are rightly uncomfortable with the idea of well-heeled corporate boards arrogating to themselves that kind of power. The question for discussion, then, is this. Which is the greater evil? For corporations not to step up to the plate and contribute to social objectives, or for corporate leaders to presume to spend vast sums of money as if it were their own?

Charity: Does Apple Do its Share?

Forget what your accountant tells you is tax-deductible. What counts as a charitable donation, ethically?

There have been a few rumbles around the internet recently about the lack of corporate philanthropy at Apple Computers, and about now-retired CEO Steve Jobs’ own lack of philanthropic donations. See for instance by John Cary and Courtney E. Martin, on CNN: Apple’s philanthropy needs a reboot

Apple’s…charitable identity — or egregious lack thereof — disappoints us. It’s time for Apple to start innovating in philanthropy with the same ingenuity, rigor and public bravado that it has brought to its every other venture….

Cary and Martin acknowledge Apple’s participation in the Product Red program (which has raised tens of millions for relief of AIDS in Africa, and for which Bono recently praised Jobs). But Apple made $14 billion in profits last year, and Cary and Martin think it’s pretty clear that Apple is obligated to give some of that away. They’re not so clear on where that obligation comes from, except to point to precedent within the computer industry. Both Google and Microsoft have well-established philanthropy programs — both of which, as Cary and Martin note, have drawn fire. Hmmm.

The interesting thing here is that Cary and Martin’s criticism implicitly raises interesting questions about what counts as philanthropy.

Take, for example, Apple’s sizeable donation to the fight against Proposition 8, California’s anti-marriage-equality effort. Was that a charitable donation, or a piece of political activism? Is there a difference?

Apple has also been known to donate computers to schools, and regularly gives students (and, ahem, professors like me) a discount on computer purchases. Of course, critics will propose that those are really marketing gimmicks. But then, no sane person thinks that corporate philanthropy stops being ethical when it’s a win-win proposition.

But then, back to the issue of why. Why are corporations obligated to give to charity? One group of critics is fond of pointing out that profits belong to shareholders, and so when corporate execs donate corporate funds to charity, they’re giving away other people’s money. And even within the modern Corporate Social Responsibility movement, the saner folks are at pains to emphasize that CSR isn’t about charity. It’s about making some sort of social contribution, preferably one that makes use of a company’s special capacities and core competencies.

And as a recent piece in The Economist pointed out that, if you’re talking about doing good in the world, you really must look at what Apple has done to put beautiful, highly-functional, productivity-enhancing devices in the hands of millions of consumers. That’s not exactly the same as feeding the world’s starving masses, but then neither is a corporate donation to build an opera house, or to get your company’s name on a plaque in the lobby of the local business school. The questions we ought to be concerned with are questions about a corporation’s net impact on the world, and the methods it uses along the way. A focus on corporate philanthropy risks obscuring both of those questions.

Should a Catholic Charity Take Money from Hooters?

This is twice in two weeks that I’ve blogged about Hooters. I swear it’s a coincidence.

From MSNBC: Catholic charity says ‘no’ to Hooters fundraiser

St. Patrick Center, a Catholic charity that provides assistance to homeless people, has canceled a Thursday fundraising “Dine and Donate” event with a downtown Hooters restaurant after drawing complaints that such a collaboration wasn’t in keeping with the Christian faith….

This is not exactly an isolated incident. Charities of all kinds have to decide, on a pretty much constant basis, who they’ll accept money from and who they want to associate with. In some cases, the struggle is an internal one; in other cases, it’s the result of external criticism. (Just look at the criticism UNICEF faced for making a deal with Cadbury.)

It’s worth pointing out that a charity faces two different issues, here. One is simply the source of money. A charity might consider money from certain sources as ill-gotten gains. In such cases, the money from certain sources is going to be unwelcome, even if donated very discretely. In other cases, the issue is publicity. Some charities might be willing to take money from anyone, in principle, but worry about the impact of having their name associated with — well, with Hooters for example. These two issues (dirty money and a dirty reputation) are separable, at least in principle. But secrets are pretty hard to keep secret, especially in an era in which transparency is valued and in which corporate donors are relatively eager to publicize their good deeds to spit-shine their image. So really, the key concern is liable to be reputation.

And in terms of reputation, the anything-goes strategy seemingly suggested by some idealists is likely to be fatal to just about any charity. Those who think it’s “obvious” that St. Patrick Center, for example, should be happy and eager to take Hooters’ money should ask themselves: if Hooters is OK, how about the local strip club? How about a hardcore porn magazine? I’m not at all saying those various enterprises are all alike, in all morally-relevant ways. I’m just pointing out that most people will see some place where they would like a line drawn. And ethics bleeds into prudence here. Most charities have reputation and goodwill as their only real capital. A company that makes cars can recover from scandal by, well, making good cars. You don’t have to love the company to love the cars. But an organization whose only real asset is its reputation — well, sully the reputation and you’re pretty much sunk.

But then, neither can your typical cash-strapped charity afford to be too prissy about sources of cash. Look too closely at any donor and you’re very likely to find skeletons in the closet.


Thanks to Tara Ceranic for showing me this story.

Business Ethics and the Crisis in Japan

A couple of people have asked me recently about what business ethics issues arise in the wake of the Japanese earthquake, tsunami, and nuclear crisis. As far as I’ve seen, the media hasn’t paid much attention to business ethics issues, or even on businesses at all, in their coverage of the disaster(s). But certainly there are a number of relevant issues within which appropriate business behaviour is going to be a significant question. Here are a few suggestion of areas in which the study of business ethics might be relevant:

1) The nuclear crisis. Although their role has not been front-and-centre (unlike, for example, the BP oil spill), at least a couple of companies have played a significant role in the crisis at the Fukushima I Nuclear Power Plant. The reactors there were designed by General Electric, who surely face questions about the adequacy of that design and the relevant safeguards. And the plant is owned by the Tokyo Electric Power Company (TEPCO). TEPCO has been criticized for its handling of the disaster, including its notable lack of transparency. TEPCO also faces a difficult set of questions with regard to the ongoing risks to employees, including those who have vowed “to die if necessary” in order to protect the public from further risk. (For more information, see the wikipedia page about the Fukushima I nuclear accidents.)

2) Disaster relief. There is clearly an opportunity for many companies, both Japanese and foreign, to participate in the disaster relief effort. Whether they have an obligation to do so (i.e., a true corporate social responsibility) is an interesting question, as is the question of the terms on which they should participate. I’ve blogged before about the essential role that credit card companies play in disaster relief by facilitating donations; do credit card companies (and other companies) have an obligation to help out on a not-for-profit basis, or is it OK to make a profit in such situations?

3) Pricing. The topic of price-gouging often arises during and after a natural disaster, though I haven’t heard any reports of this in the wake of the earthquake in Japan. It’s a difficult ethical question. On one hand, companies that engage in true price gouging — preying on the vulnerable in a truly cynical and opportunistic way — are rightly singled out for moral criticism. On the other hand, prices naturally go up in the wake of disaster: picture the additional costs and risks that any company is going to face in trying to get their product into an area affected by an earthquake, a tsunami, and/or a nuclear meltdown.

4) Investment and trade. A major part of Japan’s recovery will depend on investment, both investment by foreign companies in Japan and investment by Japanese companies in the stricken areas of that country. This is clearly less of a concern than it would be in a less-economically developed country (like Haiti, for instance), but it’s still relevant. So the question arises: do companies have an obligation to help Japan rebuild by investing? If a company is, for example, deciding whether to build a new factory in either Japan or another country, should that decision be influenced by the desire to help Japan rebuild?

5) Consumer behaviour. Just as companies have to decide whether to invest in disaster-stricken nations or regions, so do consumers. Do you, as an individual, have any obligation to “buy Japanese,” in order to help rebuild the Japanese economy? Does it matter that Japan is a modern industrialized nation, as opposed to a developing one?

Should Celebrities Regret Singing for Gadhafi’s Family?

I blogged nearly two weeks ago about the Ethics of Doing Business in Libya. The concern there was about the ethics of involvement in Libya by, well, “businesses” in the traditional, i.e., corporate, sense of that word. But the controversy that emerged short after that, and that continues still, concerns high-profile members of the entertainment business — celebrities like Usher, 50 Cent, and Mariah Carey. Basically, it has come to light that a whole fistful of such stars have, at various times, done private concerts for members of the Gadhafi family. And now, in light of the continuing violence in Libya, most of those stars are expressing regret and doing things like donating the money to charity. (For details, see Public consequences of pop stars’ private gigs, by By Reed Johnson and Rick Rojas for the Los Angeles Times.)

A few people have pointed out that the timing of the celebs’ crisis of conscience is just a little bit off. Libya has been a dictatorship for decades, and its leader has been a vicious madman just as long. As Tim Cavanaugh wrote on his blog at Reason, “Even assuming Qaddafi is so toxic you can’t with sound conscience take his dinars, that didn’t just become the case a few weeks ago.” If it’s right to give the money back now, it was likely wrong to take it in the first place.

But we can also question whether anyone does, or should, give much of a hoot over where these celebs sing, or for whom. The LA Times quotes Sting — a star with a reputation for charity work and activism — as defending having sung for the daughter of Uzbekistan dictator Islam Karimov:

Sting addressed criticism saying he was “well aware of the Uzbek president’s appalling reputation in the field of human rights as well as the environment. I made the decision to play there in spite of that.” He added, “I have come to believe that cultural boycotts are not only pointless gestures, they are counterproductive, where proscribed states are further robbed of the open commerce of ideas and art and as a result become even more closed, paranoid and insular.”

The man has a point. Though it may sound like a self-interested argument, that doesn’t mean it’s a bad one.

(Cavanaugh’s blog entry has a wonderful quote from, of all people, Adolf Hitler, who shrugged off artists behaving in ways that might have taken by him to be treasonous: “I don’t take any of that seriously. We should never judge artists by their political views. The imagination they need for their work deprives them of the ability to think in realistic terms.”)

But this leads me wonder: just what is the objection to singers singing for dictators? Is the money the problem, or is it having sung for (or more generally having done business with, or having provided a service for) an evil man’s family? Consider: if the money really is the problem — i.e., if this really is a case of filthy lucre — then donating the money to charity really does utterly absolve the stars in question of any blame. Or at least it would if the timing weren’t so questionable. Singing for free would also be OK. Indeed, if the money is all that matters, then stars might have a positive obligation to sing for wealthy tyrants and give the money to charity. After all, what could be better than squeezing a few million out of a mad dictator’s family in order to do something good with it? And if singing for free (or singing for money and donating it to charity) isn’t OK, then that seems to imply that the money isn’t the problem either.

UNICEF’s Deal With Cadbury: A Trick, or a Treat?

This is now an entire genre of ethics stories, involving a charity facing criticism for aligning itself with a corporate sponsor whose values seem inconsistent with its own.

Here’s the story, by Carly Weeks, for the Globe and Mail: UNICEF sold out by making deal with Cadbury, medical journal says

One of the world’s most influential medical journals is accusing UNICEF Canada of selling out its values by allowing candy giant Cadbury to use its logo to sell Halloween candy.
In an editorial published online Saturday, the Lancet slammed UNICEF Canada for accepting $500,000 from Cadbury Adams Canada Inc. over a three-year period for construction of schools in Africa in exchange for allowing the company to plaster the iconic – and valuable – UNICEF logo on millions of product packages a year….

Just a few thoughts:

1) It seems to me that the worry expressed in the editorial is really that UNICEF is promoting candy, and candy is unhealthy. I’m no marketing expert, but I strongly suspect that if UNICEF’s tacit endorsement does anything at all, it won’t be to boost anyone’s consumption of candy. Rather, it will be to increase sales of Cabury’s candy relative to other brands.

2) Candy isn’t evil. Eating too much candy, too often, is bad for you. But candy is fun. While obesity trends are not irrelevant, here, I’m not sure we need to demonize candy to such an extent that all association with it is considered toxic.

3) It’s worth thinking carefully about the mutual benefits that come from the UNICEF/Cadbury deal. As the G&M story points out,

“the relationship is…lucrative for corporate sponsors because many consumers look favourably on companies that are aligned with good causes, which can help drive sales.”

But why do consumers look favourably on companies that align themselves with good causes? To spell it out plainly, consumers do so because they think that it is a good thing for companies to contribute socially. So it’s not like there’s any trickery here. If consumers think Cadbury is doing something good, Cadbury will be rewarded.

4) Finally, is it worth it for UNICEF? I’m generally hesitant to hand out advice beyond my expertise. I’m not an experienced fund-raiser. So, far be it from me to tell the experts at UNICEF that the decision to align with a candy company is short-sighted. But it does seem plain to me that a charity only has one real asset: it’s brand, and the trust people place in it. In comparison, a carmaker can lose public trust and then regain it by proving that they really do make a great product. Charities make no product; all the public can judge is behaviour.

Happy hallowe’en, everyone!

Tip the Farmer?

In much of the world, patrons of restaurants and bars tip their waiters, waitresses, and bartenders, in recognition of a job well-done (and in recognition that, in some jurisdictions at least, such jobs are exempted from minimum wage requirements). More recently, tip jars have shown up at places featuring counter service only, like coffee shops. But if you’re going to tip your barista, why stop there? Why not show your appreciation to, say, the farmer who grew and harvested the coffee?

That’s precisely the idea behind this interesting project: TraceableCoffee.org

“We’re using technology to put a human face on a commodity product that Americans savor every day. Coffee lovers don’t think twice about providing a well-deserved tip to a barista, so why not use your smart phone or computer to tip the actual farmers who grew your coffee,” said Thaleon Tremain, General Manager, Pachamama Coffee Cooperative. “This isn’t charity, but a chance at a more direct and meaningful relationship with your coffee farmer.”

[That’s from this press release.]

Interesting idea. And far be it from me to object to a voluntary transfer of wealth. But I wonder about just why farmers are being chosen as the beneficiaries. The most straightforward answer, of course, is that the project is the brainchild of the coffee growers cooperative. It’s entirely (and not unreasonably) self-serving. But from a consumer’s point of view, why tip farmers, in particular? If you appreciate your coffee, and want to improve the lives of the underprivileged people who made it possible, why single out farmers? Why the farmer, and not the truck driver who brought the coffee beans to the processing plant? Or the longshoreman who loaded the coffee onto or off of the ship that carried it from Guatemala or Ethiopia? Or the shipping clerk who made sure that the paperwork got done? Chances are, none of these people is well paid.

My guess is that our continuing romanticization of farming makes it easier to be sympathetic to the plight of a (poor) farmer than it is to be sympathetic to the plight of a (poor) shipping clerk. But from an ethical point of view, the choice seems entirely arbitrary.

(For a recent blog entry about a project with similar intentions, see “Progressive Garment Factory, or Charity?”).

Progressive Garment Factory, or Charity?

What’s the difference between a progressive factory and a charity?

Here’s the story, by Steven Greenhouse, for the NYT: A Factory Defies Stereotypes, but Can It Thrive?

…Ms. Castillo had long dreamed of a bigger, sturdier house, but three months ago something happened that finally made it possible: she landed a job at one of the world’s most unusual garment factories. Industry experts say it is a pioneer in the developing world because it pays a “living wage” — in this case, three times the average pay of the country’s apparel workers — and allows workers to join a union without a fight.

“We never had the opportunity to make wages like this before,” says Ms. Castillo, a soft-spoken woman who earns $500 a month. “I feel blessed…”

There’s lots that’s interesting, here, but what most struck me was the similarity between the factory described (which produces apparel under the label “Alta Gracia”) and the controversial (Product) RED campaign. As you may already know, (Product) RED is a project that attempts to leverage consumerism into charity, by donating a small portion of profits from certain consumer goods — RED-branded iPods, for example — to the Global Fund (to fight AIDS, tuberculosis, and malaria in needy countries). I wrote about RED here and here.

See the similarity? Red asked consumers to pay a premium so that money could be donated to the Global Fund. Alta Gracia asks consumers to pay a premium so that the money can be donated to the company’s workers. In both cases, there’s an attempt to advance a worthy cause (disease prevention on one hand, poverty alleviation on the other) by appealing to affluent consumers via value-laden branding.

Two questions occur to me.

1) Will Alta Gracia be subject to the same kinds of criticisms that (Product) Red has been subjet to? If not, why not?

2) It seems to me that the choice of workers as beneficiaries of the Alta Gracia scheme is but one option. Who are other potential beneficiaries of schemes like this? If RED helps out by donating profits directly to third parties (i.e., via the Global Fund) and if Alta Gracia helps out by donating higher wages to its workers, are there other parallel mechanisms that would work? Here’s an example. What if the company that owns Alta Gracia (Knights Apparel) were publicly-traded (instead of privately-held). And what if it gave shares to poor families, so that they could receive dividends when the company makes a profit? Would that be ethically the same thing? Would people who generally think profit-seeking is evil suddenly think profits are a good thing?

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