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Parsing the Pro-Corporate Ethics of the Clinton Foundation

Critics allege that the Foundation is often too generous to corporations. But it’s certainly got an admirable track record.
Hillary Clinton speaks at a press conference announcing a new initiative between the Clinton Foundation, United Nations Foundation, and Bloomberg Philanthropies on December 15th, 2014.

Hillary Clinton speaks at a press conference announcing a new initiative between the Clinton Foundation, United Nations Foundation, and Bloomberg Philanthropies on December 15th, 2014.

The 2016 election has seen no shortage of debate on the corrupting influence of money: Bernie Sanders’ primary campaign prided itself on having no billionaire donors, while Donald Trump often argued that self-funding his campaign exonerated him from owing any political favors. In between lucrative speaking fees paid to her by the likes of Goldman Sachs, democratic nominee Hillary Clinton has repeatedly vowed to be tough on Wall Street. In light of Trump’s many problems with withheld tax returns, fraud allegations against Trump University, and explicit corruption related to the Trump Foundation, some analysts see the intense scrutiny of Clinton’s finances as unjustified — especially in regard to the Clinton Foundation.

Now, amid weeks of intensified scrutiny of the Clinton Foundation — specifically whether donors enjoyed special treatment while Clinton was with the Department of State — a new sort of debate has emerged about how exactly to think about philanthropy in a political context. Never before has a presidential candidate helmed a major international charity organization (let alone with a spouse who happens to be a former president himself). The unprecedented situation has raised some significant questions: Should improprieties be considered a form of corruption, even if they led to no personal enrichment? Should the fact that the Foundation does charity work impact the way we assess Clinton’s potential conflicts of interest? Should we evaluate Clinton Foundation donations differently than we do campaign donations?

For Clinton’s defenders, the Foundation’s laudable work fundamentally weakens allegations of conflicts of interest. At Slate, Mark Joseph Stern argued that the Clintons’ work with AIDS relief “is humanity at its best. And the smear campaign against their charity is politics at its absolute worst.” Vox’s Matt Yglesias mocked the Associated Press’ investigation into donor access to the Department of State: “Imagine the worst thing a politician ever did was go out of her way to meet people prepared to cut seven figure checks to fight AIDS.” Or, as former Clinton advisor James Carville put it: “What the Clinton Foundation does, it takes money from rich people and gives it to poor people…. I think the foundation does an enormous amount of good.” About the criticism of the Foundation, Carville went on: “somebody is going to hell over this … this is saving people’s lives.”

But drawing a sharp distinction between financial and charitable interests ignores how Clinton Foundation-backed projects actually work. The Foundation is known for its pro-business strategy, often acting as a sort of intermediary between corporations and communities. The organization derives its clout not from its $250 million endowment (which is relatively meager, compared to other organizations of its stature) but from the Clinton family’s influence and power as connectors; the Foundation is, as the New York Times put it, “more a nonprofit global consulting firm than a traditional philanthropy.”

Drawing a sharp distinction between financial and charitable interests ignores how Clinton Foundation-backed projects actually work.

The Clinton Foundation’s “A” rating from independent watchdog Charity Watch highlights the ratio of overhead to program costs, but reveals little about the substance of the work on the ground, which has itself been subject to debate. Critics have argued that the Foundation’s work has, at times, benefited the rich more than the poor—a hotel and industrial park erected after the 2010 earthquake in Haiti, for example, or partnerships with financing firms to generate more lucrative markets in the developing world. To some critics, much of the Foundation’s work amounts to a sort of “charity theatre,” allowing the Davos set to rack up good public relations credentials and trade contact information with the Clintons.

Even the most celebrated programs in its portfolio — those of the Clinton Heath Access Initiative (CHAI, a technically separate non-profit that still works under the Foundation umbrella) — involve mutually beneficial corporate partnerships, and represent an approach to global health that many believe prioritizes profits over sustainable solutions. For example, in June, Clinton asserted in an interview that CHAI helped reduce the cost of HIV/AIDS drugs for nine million patients. (The claim was verified as true by Politifact, which added, “If anything, Clinton understated the number of people who have benefited from the program.”) This reduction was accomplished by employing business strategies, described by Jonathan Rauch in the Atlantic in 2007:

So the foundation went to governments in Africa and the Caribbean and organized demand for AIDS drugs, obtaining intentions to place large orders if prices could be cut. It simultaneously went to drug companies, offering them a much larger and less-volatile market for AIDS drugs in return for lower prices based on the projected higher volume. Although the foundation asked for aggressive “forward pricing” to kick-start demand, it pointedly did not ask for donations or charity…. Rather, the foundation was offering a business proposition: If we get you the demand, can you get us the supply?

In exchange, these companies were guaranteed high sales volume, orders paid in cash, tightly controlled distribution and exemption from individual countries’ licensing and legal costs. (The Foundation has since negotiated deals with name-brand companies like Pfizer as well.) This method essentially re-organized the formerly piecemeal developing world market, while keeping pharmaceutical profits high — a fact Bill Clinton lauded in a 2007 press conference, saying “I think it’s wrong to ask anyone to lose money.” In Rauch’s Atlantic feature, CEO Ira Magaziner explicitly stated that CHAI is not a charity. Indeed, once the Foundation (with the help of a tailwind of grassroots activists and other global organizations) assisted in negotiating for lower prices for HIV/AIDS drugs, it didn’t actually buy them — the bulk of the drugs’ purchase and distribution was handled by the Global Fund to Fight AIDS, Tuberculosis, and Malaria, among other international organizations.

Nothing about this process was inherently sinister: The generic drug price reductions at least partially facilitated by the Clinton Foundation has made it possible for donors (and, eventually, governments) to supply those drugs to impoverished HIV patients on a large scale. Fifteen years ago, some 70,000 patients in the developing world were taking ARVs, compared to some 11.8 million today. But, critics argue, this was accomplished on terms that were purposely very generous to multinational corporations, which expanded their presence in the developing world, maintained high profits, and solidified ties with the most powerful political family in the United States.

While private philanthropies have been an influential force in 21st-century global health, their market-based approach is not the only way to alleviate obstacles to drug access. By re-structuring the consumer base for medicines — and connecting companies with a donor who could pay for them — the Clinton Foundation does little to combat the root factors that lead to such sky-high drug prices in the first place. Bill and Hillary Clinton have both spent much of their political careers supporting trade agreements that maintain strong protections for pharmaceutical patents, which often obstruct access to drugs for patients in participating countries. (This is in stark contrast to explicit agitation for pharmaceutical patent reforms on the part of global health players like Medicins Sans Frontiers.)

While World Trade Organizations countries have the right to override these patents, their de facto ability to do so is often curtailed by Western pressure. (Bill Clinton ultimately announced his support for countries like Brazil who used this strategy, but only after strong condemnation from activists.) Furthermore, neither the Clinton Foundation nor Hillary Clinton as a politician seem likely to agitate for heavier regulations on patent-loving Big Pharma: Pfizer and Ranbaxy are both Clinton Foundation donors, and Clinton has received more donations from pharmaceutical companies than any other 2016 candidate.

Ultimately, the real issues at stake when it comes to the Clinton Foundation are less about charitable malfeasance and more about growing frustration with money in politics. Clinton’s defenders are correct that there seem to be no substantiated accusations of illegal activity on the Foundation’s part, but conceiving of its work as a purely charitable enterprise separate from financial interests gravely de-contextualizes its business-centric mission. The direct impact of such financial ties are inherently difficult to prove. As Glenn Greenwald argued in the Intercept, Clinton supporters have been arguing since the primaries that corporate donations don’t in themselves curry favor, a position that is at odds with years of conventional wisdom on the political left. And in an election featuring such prominent discussions of inequality and re0distribution, some argue the Clinton Foundation’s corporate alliances more than justify skepticism.