McDonald's Accused of Being Cheap Toward Its Charitable Arm

PHOTO: A Ronald McDonald statue sits on the porch of the Ronald McDonald House, in Chicago, Illinois on November 15, 2011.

McDonald's is defending its support of the Ronald McDonald House Charities (RMHC) and firing back after an advocacy group criticized the fast-food giant, claiming it short-changes the nonprofit while reaping all the marketing benefits for the corporation.

Corporate Accountability International, an advocacy group that brought a 9-year old to the company's annual shareholder's meeting in May to criticize the CEO for marketing toward children, released a report on Tuesday called "Clowning Around With Charity: How McDonald's Exploits Philanthropy and Targets Children."

RMHC provides housing for families of seriously ill children receiving hospital treatment.

The report criticizes McDonald's for reportedly supporting only 20 percent of the nonprofit's funding while customers allegedly contribute as much as 1.5 times more to the charitable organization than McDonald's does itself. Other sources of funding are corporate donors and smaller donors. The corporation's philanthropic giving is 33 percent lower than other "leading corporations," the report says, while it spent almost 25 times as much on advertising as it did on charitable donations in 2011.

Doug White, who teaches at Columbia University's School of Continuing Education and the author of books on giving and nonprofits, said the general question of how much of a company's profits goes to its charitable arm is a "valid" one.

"It's a good question to ask," White said of any corporation. "If you're going to get all the publicity from it, why isn't it putting more money into its charity?"

Bridget Coffing, senior vice president of McDonald's Corporate Relations, fired back at the report in a statement.

"This 'report' is shameful and misleading," Coffing said. "We hesitate to even dignify it with a comment, but that would be a disservice to the McDonald's employees, franchisees, suppliers and customers who have partnered tirelessly to support the tremendous work of Ronald McDonald House Charities (RMHC). This is a thinly-veiled attack on our brand at the expense of the millions of families and organizations who have benefitted from RMHC. McDonald's categorically rejects this self-serving and biased document and stands proud of the significant financial support and volunteer hours we have and will continue to provide to RMHC and other charities worldwide."

While White's general opinion is that a corporation should provide at least 5 percent of its net profits for its charitable activities, he said it is important to understand that a "corporation is in the business of making money and there's nothing sinister about that."

"They are a profit-making company and they should be," White said. "That's what their shareholders buy into."

However, White says that if a company is going to make a point of publicizing its charitable giving as part of its business, it then has a responsibility beyond just the shareholders.

The report's author, Michele Simon, is an attorney and wrote, "Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back." Besides her group, Eat Drink Politics, and Corporate Accountability International, another funder of the report is the Small Planet Fund, which says on its website that it supports "citizen-led solutions to hunger, poverty, and environmental devastation around the world."

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Jesse Bragg, press secretary for Corporate Accountability International, said many corporate charities and foundations are set up separately from the corporation itself, but a much larger proportion of their revenues are funded by the parent company.

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"Our critique is that McDonald's touts the charity as if it were its own, that it wholly funds it, but the reality is the local charities are very much on their own. McDonald's gives less than a third of 1 percent of revenues to charity," Bragg said.

Meanwhile, Bragg points to Goldman Sachs, which gives about 3.9 percent of its revenue to charity.

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"If it were really about the charity work, McDonald's shouldn't have a problem allowing the charity to rename itself to disassociate itself from the harms of the brand," he said.

Sheila Musolino, chief operating officer of Ronald McDonald House Charities, provided a statement to ABCNews.com saying, the nonprofit "helps approximately 12,000 families every single night around the world."

"This would not be possible without McDonald's - the awareness they help create, the dollars they donate and the support of its thousands of independent owner/operators, customers and suppliers," she said. "The support of the entire McDonald's family has enabled what started as a local initiative helping a few families grow into a worldwide program that serves over seven million children and families every year. McDonald's assistance with the administrative costs that the global office of RMHC would otherwise incur allows the Charity to devote more funding to support of local programs. This unwavering support allows us to focus on helping families in need while their critically-ill children fight for their lives."

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