November 02, 2016

Foundation CEOs Shouldn’t Serve on Corporate Boards

Luke Sharrett/Bloomberg via Getty Images

Should the presidents of our great foundations be paid to sit on the boards of corporations while they serve in office?

That’s a question that’s been much on my mind in recent days, prompted by a call from The New York Times that asked my opinion on Darren Walker’s decision to join the board of PepsiCo. I left the Ford Foundation before Mr. Walker joined, and I don’t know him personally, but I like much of what he’s written about the need for transformation in coming to grips with inequality and privilege. That’s why I was so surprised by his decision.

Let’s deal with the obvious objections first. Working as president of the Ford Foundation is or should be a full-time job: no exceptions, and no rationalizations to justify spreading your time and loyalties more thinly by taking on other, highly paid responsibilities. According to the Times, Mr. Walker will be paid between $275,000 and $418,000 a year for his work with Pepsi (plus bonuses and shares), on top of his Ford Foundation salary of $789,000 in 2015.

By accepting a paid board position like this, he is exploiting an opportunity that isn’t available to 99 percent of his colleagues, one that could earn him millions of dollars over the coming years. Yet Mr. Walker’s public message — as he has focused Ford’s grant making entirely on inequality — is that we should do everything we can to make our world more equitable.

At the very least, his decision is confusing: Is the message one of radical change, a fundamental break with the practices of the past, or is it more business as usual? After all, other foundation presidents also served on corporate boards, including those who led Ford.

That’s the second issue: Accepting money from corporations while still in office might reinforce the public perception that foundations are not as straightforwardly philanthropic as they claim. Ford is not the Clinton Global Initiative or the Trump Foundation, the two entities that are currently in the firing line for obvious reasons on these grounds, but accepting a formal role with PepsiCo may stoke the suspicion that foundations are places where public and private interests overlap in ways that are unhealthy.

Little Influence

As senior figures pass through the doors that constantly revolve between business, government, and philanthropy, it’s fair to ask who or what they’re working for. However high-minded his motivations for doing so, Mr. Walker is joining an interlocking power elite that shuts out the vast majority of society from decision making.

There are also plenty of significant but less visible risks and complications: the raised eyebrows at other foundations; the danger that his credibility will be undermined both inside and outside the Ford Foundation; the ammunition for critics who see inconsistency behind the lofty rhetoric of Mr. Walker’s writings; and the members of his staff who may not be so loyal or supportive when the next controversy comes around.

Kevin Mazur/Getty Images for Time
Darren Walker’s decision to join the board of PepsiCo means he will make $275,000 to $418,000 a year on top of his Ford Foundation salary of $789,000.

Given all these risks, it’s worth asking what the Ford Foundation might actually gain from such an arrangement. In theory, the answer is well-rehearsed: A seat on the board of a major corporation provides unparalleled access to its decision-making processes, enabling public figures like Mr. Walker to exert their influence in favor of greater social and environmental responsibility.

The problem is that such influence rarely reaches very far into the company’s core business. That’s not because business executives are bad, it’s because corporations are not designed to be engines of social justice; they’re designed to make and sell things at a profit to people who may or may not need them.

This is how Marion Nestle, professor of nutrition, food studies, and public health at New York University, put it to me an email when I asked her about Mr. Walker’s decision:

"People on the boards of corporations are expected to promote the corporation’s worldview and are paid handsomely to do so. If they fight the company on its policies, they won’t last long. Mr. Walker’s position as president of the Ford Foundation puts him in a conflict of interest on the board if he continues to try to alleviate the health consequences of poverty. ... He may think he can change the company from within, but experience does not support that idea very well. As long as the company is beholden to stockholders, its profit-making responsibilities take precedence over everything it does."

In addition, if bringing "my perspective as the leader of a social-justice organization" is the key to Mr. Walker’s move, as he told The New York Times, then PepsiCo is an odd choice to make this happen. Increasing the nutritional value of its products by, for example, reducing their sugar content would be a useful thing to do in terms of the health of consumers, but beyond that the company has precious little influence over the forces that concern Ford and other social-justice foundations. As Professor Nestle continued:

"PepsiCo is not a social-service agency; it is a multinational, publicly traded corporation whose job it is to sell products to as many people in as many places as possible in order to return dividends to investors. Most of what Pepsi sells is junk food. Its much touted Quaker Oats forms a tiny fraction of its business, which is based mainly on chips and soda. Pepsi is spending billions of dollars to promote its products in Asia and Africa, where populations do not need junk food."

Pressures and Loyalties

If social justice is the goal, then surely it would make more sense to join the board of a company like Sturm, Ruger, America’s largest gun maker, and end its lobbying against firearms regulation. Or the board of Walmart, the corporation that has the most extensive supply chains in the world that constantly put a squeeze on prices, and therefore on wages, working conditions, union membership, and benefits.

The danger here is not as crude as "window dressing" — the word Mr. Walker used in his interview with The New York Times — it’s that membership of the board brings with it a different set of pressures, loyalties, and incentives that work on even the best-intentioned members over time. As in any club, all of its members will be expected to look after each other and protect the interests of the whole.

If Ford wants to encourage the transformation of the business world, then it can engage in shareholder activism using its endowment and make more grants to nonprofit groups that have the capacity and expertise — deployed as forcefully as needed without the compromises that board membership inevitably imposes. Likewise, if PepsiCo wants the benefit of Darren Walker’s considerable experience and reputation, it can pay him to join the board after he leaves his Ford Foundation position, without the risks that may accrue to Ford and others when business and philanthropy are mixed together.

When I worked at the Save the Children Fund in London in the 1990s, corporate partnerships with companies like PepsiCo, Nestle, and Unilever were a topic of constant conversation, since the fund had a solid public reputation that these companies valued for themselves, while at the same time they manufactured baby-milk substitutes and other products that we saw as harmful to children. The same logic of insider influence was put forward as one way of curbing these practices, its pros and cons endlessly debated around what "might" or "could" happen but — according to evidence and experience — very rarely did. After all, pretty much any course of action can be rationalized.

But during one of these conversations, a colleague said something to me that provides a useful weathervane for decisions that carry unknown costs and benefits: "When in doubt, Mike," she said, "just say no."

The risks involved in making a controversial call are certainly sometimes worth taking, but selling your services to a junk-food company doesn’t seem like a very persuasive case. I think my colleague’s advice to me is just as instructive for any foundation president who is offered an apple in the Garden of Eden of corporate social responsibility. That way, you don’t get bitten by any snakes.

Michael Edwards is a writer and activist who worked for the Ford Foundation from 1999 to 2008.