[Note: This post was published in similar form in the Chronicle of Philanthropy December 15, 2015.]
The other day a nonprofit organization I admire sent out a Facebook posting that encouraged its supporters to shop at Amazon and to designate their organization as the charitable beneficiary of “Amazon Smile.” Through Amazon Smile, the charity explained, Amazon would give the organization ½ of 1% of the total purchase price of whatever I buy.
This is not the first pitch I’ve gotten from nonprofits about Amazon Smile, and it surely won’t be the last. I’ve heard many people say, “You’re spending the money anyway. Why not have a portion go to a charity you care about?” But what struck me this time was that the nonprofit suggesting buying from Amazon was an organization whose mission was to promote community economic development – and it seemed to me that Amazon would be more of a natural adversary than a collaborator. I began to think about other nonprofits. Should they also pause before diving into a relationship with Amazon? Should we ask ourselves if we really are “spending that money anyway,” at least at Amazon? Is this arrangement really a cost-free charitable donation?
Central to analyzing these questions is gaining an understanding of the corporation itself. Nonprofits certainly don’t want to align themselves with a bad actor. So what to make of Amazon? Well, as an Irish friend of mine would put it, Amazon is not exactly an angel of mercy. First of all, they have very questionable (some would say unquestionably bad) labor practices. A February 2014 article by Simon Head in Salon describes a ruthless culture where warehouse workers are subjected to minute oversight in the name of efficiency (many workers have to wear chips so their supervisors can track their every movement within the warehouse), with extremely demanding quotas for the number of items picked off the shelves and shipped each hour. Apparently the quotas are ratcheted up as workers gain experience, and those who can’t keep up – usually the older or less physically strong employees – are summarily fired.
And the working conditions sound at times Dickensian. The most startling investigative piece about Amazon’s labor practices appeared in 2011 in the Allentown (Penn.) Morning Call. The reporter, Spencer Soper, describes the heat in the local Amazon warehouse being so intense in the summertime (the heat index was regularly over 100) that the local rescue squad kept an ambulance on call at the facility. During heat waves, there were as many as 15 employees passed out in a single day from heat exhaustion. Amazon reportedly refused to open the garage bays to let in fresh air, for fear of theft.
As for its responsibility as a corporate citizen, for almost two decades Amazon adamantly refused to collect state and local sales taxes on purchases. As Michael Mazerov of the Center on Budget and Policy Priorities wrote in 2010, Amazon claimed that it didn’t have facilities in most states, and thus had no obligation to collect sales taxes. But at that point Amazon had major facilities in 17 states that had sales taxes, and it only collected sales tax in four of those states – and of course it had customers in all 50 states. This refusal by the nation’s largest online retailer to collect taxes deprived state and local governments of critical revenue for schools and other vital services (including maintaining the roads over which the Amazon deliveries are made), while providing Amazon with a significant price advantage over the poor schnooks who run bricks-and-mortar retail operations and dutifully collect sales taxes.
Amazon claimed that it was far too complex to keep track of all the local tax rates, but that’s hogwash. A company of Amazon’s technological sophistication can easily track the tax rates across the country. In fact, it already does, charging sales taxes for other companies that use their system – but Amazon doesn’t do it for purchases at Amazon itself. As Mazerov wrote, “The fact that Amazon charges sales tax in connection with other companies’ sales but not its own suggests that Amazon’s primary goal is exploiting its price advantage.” That’s putting it rather diplomatically.
Last year Amazon did an about-face, declaring that they now supported the Marketplace Fairness Act, which would require online retailers to collect sales taxes. Analysts note that this now makes business sense for Amazon because: a) its biggest business priority is to offer one-day delivery, which means having fulfillment centers in more and more states; b) its biggest competition is increasingly with other online retailers, who would be subject to the same tax collection; and c) Amazon (more than its competition) has the wherewithal to manage the technical aspects of collecting taxes, so it’s now actually a competitive advantage to require all online companies to collect sales taxes. Of course, Amazon for the most part is still not collecting sales taxes until all of this gets worked through. They are positioning themselves as the good guys, while continuing their old ways.
Meanwhile, Amazon is ruthless in dealing with suppliers and competitors. It famously forces vendors to cut their prices, as seen in the only recently resolved dispute with Hachette Book Group, and it openly wants to put bricks-and-mortar stores out of business – even while shamelessly using those same stores to showcase its products. A cynical example of how this works: Amazon markets an app whereby the consumer can scan the bar code at local stores and then order the same item (presumably for a lower price) directly from Amazon. Amazon has on occasion even offered a 5% discount for those who do this sort of parasitic shopping. Can you understand why the local store owner may resent Amazon? Or, more precisely, revile Amazon? (For more details, here’s a convincing graphic about how Amazon, well, became Amazon.)
We might dismiss this as capitalism being capitalism, and we can assert that Amazon is simply using “disruptive technology” to change how markets operate. But when Amazon so badly mistreats its employees, when it competes so unfairly with traditional retailers, when its refusal to collect taxes deprives local and state governments of revenues, and when its practices contribute to hollowed-out downtowns and bankrupt local business owners, is this really a company we should support?
More to the point, is this the kind of corporation with which you want to align your nonprofit and for whom you want to provide free advertising? Because buying through Amazon is not inevitable – it’s a choice. And if you give your supporters a moral excuse for supporting an immoral corporation, are you serving your mission or simply chasing a few bucks?
And the bucks, by the way, are very few. Say you are fairly successful in getting your supporters to put your organization down as the beneficiary of Amazon Smile. Let’s say that over the holidays they purchase $25,000 worth of goods from Amazon – purchases that otherwise would have been made at local stores that your neighbors own and where taxpaying members of your community work. That $25,000 would have been a lot of income for those local stores, perhaps the difference between survival and closure, or keeping staff members or firing them. But you’ve thrown your lot in with Amazon. And in return you will get a kick-back of… $125. Yes, that’s all that ½ of 1% of $25,000 amounts to.
Is it worth it?
Copyright Alan Cantor 2014. All rights reserved.