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Health groups’ donor ties questioned

Corporate cash has pervaded the health nonprofit world, raising new concerns about medical groups’ independence, according to a report released Wednesday.
/ Source: msnbc.com

Corporate cash has pervaded the health nonprofit world, raising new concerns about medical groups’ independence, according to a report released Wednesday. While corporate sponsorships and gifts are popular in the for-profit sectors of medicine, a study by the Center for Science in the Public Interest argues that businesses are gaining the power to influence nonprofit agendas.

The center, a Washington-based consumer group, named nearly 140 nonprofit groups and more than 30 university research centers with significant ties to corporations. It did not include industry trade groups, which are usually operated as nonprofits but promote companies’ interests. The center, which released the report through its Integrity in Science Project, advocates nutrition reforms and accepts donations from individuals and private philanthropists.

While some ties aren’t much of a surprise — no one should be stunned that the Chocolate Information Center was set up by Mars, Inc. — the report names some cornerstones of the nonprofit world, such as the American Heart Association and the American Medical Association.

In the clearest cases, some groups actually offer product endorsements. The American Dental Association, for example, has reportedly backed hundreds of products and includes Crest Corp., whose products it endorses, as a corporate sponsor. The American Heart Association has earned some $2 million from fees for its “heart-check mark” food endorsements, according to CSPI estimates.

But the report also expresses concern about less obvious forms of influence, in which financial help may color the relationship between a company and a respected advocacy group.

“A company can spread its message through an organization that has complete credibility,” says Michael Jacobson, the center’s executive director. “The reputation of those groups then rubs off on the company.”

'Innocence by association'
That sort of connection may offer what Jacobson calls “innocence by association,” an implied stamp of approval by the nonprofit. There are times, of course, when interests can align: a group looking for a disease cure might back the work of a drug firm working toward that cure. Groups that support research and education in a specific field often find companies share their interests: eyecare product makers Alcon Laboratories and Johnson & Johnson Vision Care can certainly make the case that they have a stake in the work of the American Academy of Ophthalmology.

And nonprofits also make the case that they’re interested in finding sponsors who share common interests and goals.

“We’re very careful about the companies that have a relationship with us, that they subscribe to our overall philosophy,” says Vaneeda Bennett, chief development officer for the American Diabetes Association.

But CSPI argues those ties are becoming manifest between major medical companies and advocacy groups, and create the potential for trouble if a sponsor happens to develop an unhealthy product.

“Organizations that receive substantial funding from companies don’t want to offend their supporters. It’s natural,” Jacobson says. “These affiliations can stifle criticism and that, I think, is an important point because the public perceives independent nonprofit groups as being public-service oriented.”

Millions donated
Some fiscal ties noted in the report:

  • In 1996, the Arthritis Foundation ended up in a $2 million settlement with 19 state attorneys general for its deal with McNeil Consumer Products, makers of Tylenol and other drugs, to market painkillers with the foundation’s brand name. The AMA found itself in a similar firestorm when it planned, in 1997, to endorse Sunbeam’s medical products, such as thermometers and blood pressure devices.
  • The American Diabetes Association received $750,000 or more from each of at least 10 major pharmaceutical firms — along with Lifescan Inc., a Johnson & Johnson company, the leading maker of glucose monitoring supplies. Dozens of other medical companies also contribute, as well as food companies like Ocean Spray and the J.M. Smucker Co. Sugar-free sweetener Equal has its logo attached to America’s Walk for Diabetes. However, guidelines approved by its board of directors prohibit its name from being placed on drugs or medical devices, and it does not endorse products.
  • The American Academy of Pediatric Dentistry had argued sugary drinks could be a major factor in childrens’ dental problems before it reportedly accepted $1 million from Coca-Cola this year, the CPSC study notes. Its president recently told the Associated Press that soft drinks’ role in tooth disease was “not clear.”
  • Many minority health groups rely heavily on corporate support, the report says. For example, the Association of Black Cardiologists has at times received nearly 80 percent of its budget from drug companies.

Of course, many nonprofits accept corporate money but retain policies that do not help sponsors. For example. the American Academy of Pediatrics has accepted millions from baby formula manufacturers, according to the report. Yet the academy maintains it is “committed to breastfeeding as the ideal source of nutrition for infants,” and has strongly opposed consumer advertising by formula makers. “We’re going to stand by our principles no matter what, and if funding has strings attached we won’t accept,” says executive director Dr. Joe Sanders.

Ties to industries
The report also questions the growth of official-sounding nonprofits that are what Jacobson calls “corporate creations.” Founders of the Council for Biotechnology Information include chemical firms BASF, Dow, DuPont and Monsanto. Many members of the American Council for Fitness and Nutrition are food industry giants, such as McDonalds, and trade groups like the Snack Food Association. (The council reminds readers of its Web site that “achieving a healthy balance between daily activity and calorie intake plays a major role in how we look, think and feel.”)

Equally troubling, according to the report, are university-sponsored research centers tied to corporate sponsors. Many have clear overlaps in interest, such as nutrition centers at Cornell and Tufts that receive money from food producers. The Wharton Risk Management and Decision Processes Center has “corporate associates” that include several major insurance companies; its purpose, according to its own Web site, is to “promote effective policies and programs for low-probability events with potentially catastrophic consequences.”

Call for accountability
Though monetary ties certainly raise questions, accountability seems to be just as important.

Jacobson says it is becoming more difficult to track specific connections because many groups, such as the American Medical Association, now keep donor lists private. (The 2002 AMA annual report shows $8.6 million of $250 million in revenues came from grants, but does not mention sources.) While most nonprofits must file income figures with the Internal Revenue Service under Form 990, the official reporting only breaks out income by the type of contribution, not the actual donor.

And even a policy on corporate donations won’t necessarily protect a nonprofit from potentially damaging ties, says Thomas Holland, co-director of the Institute for Nonprofit Organizations at the University of Georgia.

Holland compares the dilemma — for better or worse — to ethical conflicts faced by stock analysts. Even if an investment bank sets official policies on conflicts, financial ties to clients can make impartiality all but impossible for some analysts. “There are lines that can be drawn. Enforcing them is another issue,” says Holland, who teaches courses in nonprofit ethics.

At a basic level, he suggests, nonprofits must make clear that any money they get is simply meant to be charity; donations must come without strings. Beyond that, nonprofits can release donor lists and minutes of board meetings to show that corporate donations, especially those with potential conflicts of interest, were discussed and approved. And Holland underscores that nonprofits need to be clear with their corporate donors about exactly what their money provides.

“That way there’s no surprise down the road on anybody’s part,” he says, “and it’s those surprises that just undermine public credibility left and right.”

Those safeguards aren’t just for the nonprofit: As these ties come under greater scrutiny, companies face greater risks with donations. If a nonprofit’s reputation for integrity is tarnished, big corporate donors can also take the fall, Holland says.

In addition to a call for full disclosure by the nonprofits, the report’s authors suggest groups’ corporate ties should be mentioned in media reports. And Jacobson acknowledges many donations are appropriate.

“We don’t say that all corporate funding is bad,” he says. “We’re saying we need to question the relationship between the nonprofit community and the business community.”