Nonprofit Land Bank Amasses Billions

Two major oil companies that support the Alaska drilling -- BP and Exxon Mobil -- hold Conservancy leadership council seats. Exxon Mobil has donated $5 million to the Conservancy. Another supporter of drilling, Phillips Alaska Inc., has given at least $1 million, records show.

McCormick defended the Conservancy's refusal to choose sides between what he called "ideological factions" in the Alaska debate. He described the issue as "not an argument for the Nature Conservancy." Getting involved, he said, could "completely drain our credibility." He concluded: "It's more courageous to stay on principle and get conservation through some concessions from those who use the land."

The Conservancy also has been among the last environmental groups to recognize global warming and the need to reduce greenhouse gas emissions. Two of the Conservancy's strongest corporate supporters, Exxon Mobil and GM, have opposed stiff emission-cutting efforts.

Exxon Mobil for years led the Global Climate Coalition, an industry group that debunked global warming. Exxon Mobil has long been a leading lobbyist against the Kyoto accord to reduce emissions.

One environmental group, Environmental Defense, has dubbed GM "Global Warmer Number One" because its vehicles are a major source of carbon-dioxide emissions. GM Chairman Smith headed the Conservancy's $1 billion fundraising campaign, and over the past decade the company has given the Conservancy cash and vehicles worth $22 million.

"Twenty-two million dollars is going to go a long way to help preserve biodiversity," said Terry Pritchett, GM's director of global climate issues.

McCormick finally took up the global warming issue in the Conservancy's bimonthly magazine in the fall of 2001.

"Typically, the Conservancy has avoided the political debate over global warming," McCormick wrote. "But we haven't buried our institutional head in the sand."

He said that climate change was "real," and the Conservancy needed to figure out how to confront it "with a cool temper and a vigilant eye for solutions."

Last year, the Conservancy launched an initiative adopting the approach that would supply corporations with pollution credits.

GM contributed $10 million to the plan.

Greenwashing

Scientists rate the conversion of land to human habitat -- urban sprawl -- as Earth's greatest menace. "Sprawl is without a doubt the most pervasive threat," an unidentified Conservancy scientist wrote in response to a survey in 2001, obtained by The Post. "Failure to recognize and address this threat on all levels, not just buying land, will result in a mission-critical policy failure."

Despite such assessments, the Conservancy has forged a close partnership with Centex Corp., one of the nation's largest residential construction firms. Centex and its subsidiaries have built almost 400,000 houses, many at 28 sites ringing the District of Columbia.

Centex and its divisions have given and pledged $3 million to the Conservancy. Centex sits on the Conservancy's leadership council, and the chairman of Centex Homes served on a Conservancy advisory board. Two years ago, a Conservancy chapter in Texas gave Centex Homes its Conservation Leadership Award for "corporations that have shown leadership in and dedication to conserving natural resources."

Centex also has helped the Conservancy retain its claim of having 1 million members. The charity handed out more than 40,000 free memberships to Centex employees and customers, a November 2001 Conservancy memo said. Other corporations, including Enron, also have given away memberships.

Although its advertisements feature photographs of dense forests, the Conservancy is allied with two of the nation's biggest tree consumers, Georgia-Pacific Corp. and International Paper Co.

The Conservancy defends its partnerships with loggers by arguing that it has persuaded them to adopt more conservation-friendly methods -- reduced clear-cutting, fewer access roads and wider buffer zones along rivers and streams. The Conservancy says it has also made loggers more sensitive to endangered species, such as the red cockaded woodpecker. Company spokespersons agree.

The Dogwood Alliance, a coalition of 70 grass-roots environmental groups, says the change in methods is superficial and the damage remains considerable. Further, the partnership gives loggers a public relations boost from "greenwashing," Dogwood and other environmental groups charge.

Georgia-Pacific and International Paper have used the Conservancy "to pull the wool over the public's eyes," said Trevor Fitzgibbon, Dogwood's former spokesman. "It makes it seem they are doing great things for the environment when what they're doing is destroying the South's natural heritage."

For nearly a decade, the Conservancy helped Georgia-Pacific manage environmental risks arising from its logging along North Carolina's Lower Roanoke River.

"It has absolutely changed GP's image," said Georgia-Pacific Chairman Correll, a Conservancy board member.

For its part, Georgia-Pacific has been generous to the Conservancy, donating $3 million in 2000 alone.

International Paper is on the Conservancy's leadership council. In 1998, the company sold 185,000 acres of Maine forest to the Conservancy for $35 million. The Conservancy then contracted with a Maine company to log 136,000 acres of the land to help offset costs.

McCormick sits with International Paper on the American Forest and Paper Association's Sustainable Forestry Board, a panel set up by the industry to certify that loggers are being eco-friendly.

Such ties create a "commonality of interest" between the Conservancy and International Paper, said Tom Jorling, a company vice president. "This enables us to get more legitimacy because the Conservancy has the kind of reputation it does."

Board Conflicts

The Internal Revenue Service requires charities to disclose all business deals they do with board members or their corporations. At the Conservancy, the list of such conflicts of interest is long.

Millions have gone toward property deals with such companies, including $7.88 million in transactions with Georgia-Pacific. In 1999, the Conservancy paid a Georgia-Pacific subsidiary $380,000 for 1,100 acres in Maine. In 2000, the Conservancy paid $7.5 million to the same subsidiary for 9,500 acres in Louisiana, much of it stripped of trees by clear-cutting, Conservancy documents show. The charity got a $1 million discount, according to an internal document.

Conservancy officials said the land purchases were guided by "the best available science" and based on an independent appraisal and scientific review, which they declined to make public. They said Correll recused himself from voting on the purchases.

The Conservancy's business with board members and their companies also extends to purchases of products, legal assistance and even development rights.

The Conservancy paid Orvis Services Co. $649,000 in 1998 for placing some development restrictions on its private, 1,600-acre Florida hunting preserve, records show. The chief executive of the closely associated Orvis sat on the Conservancy's board.

The Conservancy also allowed S.C. Johnson & Sons Inc. to use the Conservancy logo in ads for toilet cleaner and other products, receiving $100,000 in return. The corporation's chairman sat on the nonprofit's board.

The Conservancy told the IRS that the board members in those instances recused themselves from voting on the transactions. Since July 1, 1998, the Conservancy has reported that 11 of its board members or their companies have engaged in one or more financial transactions with the charity.

In a written response to Post questions, the Conservancy said that each deal was "entirely appropriate" and that most included discounts or donations. Such deals are permissible under IRS rules if the charity documents that its board members and their companies have not profited unduly.

Conservancy Board Chairman Anthony P. Grassi, retired chief financial officer of Credit Suisse First Boston Inc., said he sees nothing unethical in the Conservancy's doing business with board members.

Still, such financial transactions are discouraged in the nonprofit world. Known as "self-dealing," the arrangements can lead to revocation of an organization's tax-free status if the charities cannot show that they have guarded against potential abuse.

Guidelines established by the nonprofit advisory group BoardSource say: "Good judgment is affected if [a] board member's personal or professional concerns conflict with the best interest of the organization. . . . Even the appearance of a conflict of interest can damage the organization's reputation."

Credibility and Trust

While publicly enthusiastic about working with industry, Conservancy officials remain privately concerned about image. Recently, the Conservancy contracted with Wirthlin Worldwide, a consultant on consumer tastes, to conduct focus groups on the issue.

A June 2001 Wirthlin report, obtained by The Post, reassured Conservancy executives that the participants considered corporate partnerships "generally good." But it cautioned about the potential downside of selling a nonprofit's credibility and trust.

"There was a general feeling that some partnerships are created to fool or manipulate," the report said. Some of those polled worried the Conservancy might be helping the companies present a "false image to the public."

The participants were tested on their reactions to the Conservancy's hypothetical relationships with various companies: Bristol-Myers Squibb Co., Anheuser-Busch Cos., Wal-Mart Stores Inc., BP Amoco, Intel Corp. and Cadillac.

Among the results: most participants expressed negative feelings about partnerships with Anheuser-Busch ("bad"), Wal-Mart ("absurd") and BP ("inappropriate"). There is no indication that they were told BP sits on the Conservancy's leadership council.

"Many feel a relationship between [the Conservancy] and an oil company is inherently incompatible," the report said.

The study focused in part on industries with which the Conservancy had what researchers described as an "inherent conflict of interest." Not only oil, but logging, mining, and power generation. Some participants considered taking cash from such industries unethical.

"There is a minority who feel that by accepting a financial contribution, [the Conservancy] would be sending out a message that they condone the business practices of that company," the report said. "To this minority, accepting financial contributions from these types of companies is the equivalent of a payoff."

Logo for Sale

Toilet cleaner is not the only product associated with the Conservancy.

The Conservancy has rented its name and logo for use on neckties, breakfast cereal, coffee and credit cards. Companies pay six-figure fees to stamp the Conservancy's oak leaf on their packaging. Conservancy vice president Michael Coda, who developed the program, describes logo sales as a "very good deal" for the nonprofit.

"A partnership with the Nature Conservancy is good business!" Conservancy literature says, stressing that its members are "upscale, urban, and have annual incomes averaging $50,000."

The practice offends some consumer activists. When affixed on a raisin bran box, the logo does not guarantee the product inside is more environmentally friendly than the next brand on the supermarket shelf, activists say.

"That's misleading -- a consumer is going to think that that breakfast cereal was produced with some kind of sustainable agriculture," said Urvashi Rangan of Consumers Union, a watchdog group that tracks logo usage and publishes Consumer Reports magazine.

General Mills' Nature Valley granola bars have displayed the Conservancy logo since 1998. "There is nothing more environmentally friendly" about the product, Rangan said. "We have a big problem with that."

There is also no disclosure on the snacks that, until last fall, a General Mills Inc. corporate director sat on the Conservancy's board. "That's a huge conflict of interest," Rangan said. Senior Conservancy officials said they were unaware of Nature Valley's ties to their former board member.

Staff researchers Alice Crites and Lucy Shackelford contributed to this article.

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