BP oil spill poses PR dilemma for nonprofits

Four years ago, when the giant oil company BP donated $1 million to the Aquarium of the Pacific in Long Beach, the contribution seemed like a good deal for both an oil company trying to burnish its environmental credentials and a venue trying to draw more visitors.

Then, last month, a BP oil rig exploded in the Gulf of Mexico, causing one of the largest oil spills in U.S. history. With the BP Sea Otter Habitat set to open this week, a potential feel-good moment has turned into a public relations landmine.

The aquarium is planning a press preview Thursday, but BP officials might not attend.

“They said they did not want to hurt the reputation of the institution,” said Jerry Schubel, the aquarium’s president. “They even asked, ‘Would you prefer that we not be there?’ I said, ‘No. Without your support we could not have done this.’ I hope they continue to support us.”

Since the spill, aquarium officials have discussed how best to handle BP’s sponsorship of the new venue, Schubel said, although he added that there had been no debate about removing BP’s name. “That never occurred to me. We’re comfortable about the course we have taken,” he said. In the wake of the spill, the aquarium will host a forum this fall on ocean oil drilling, he said. “The challenge is, ‘What can we learn from this going forward?’ ”

Nonprofit institutions often face difficult decisions when big corporate givers hit highly publicized rough spots. One of the largest examples in recent years involved Enron, which was a major giver to cultural and educational charities.

The University of Missouri kept its Kenneth Lay Chair in Economics, despite faculty objections that the Enron chief executive’s $1.1-million contribution in 1999 had been tainted by the scandal that engulfed the Houston energy company two years later.

The university came to a different conclusion in 2004 about its newly opened Paige Sports Arena, which was named in honor of Elizabeth Paige Laurie by her parents, who made a fortune from Wal-Mart and contributed $25 million. The venue became the Mizzou Arena after ABC’s “20/20" revealed that young Paige had paid a fellow student to do her course work at USC.

How institutions handle such questions depends largely on whether the donor’s scandalous acts are directly at odds with the recipient’s mission, said Paul Dunn, an expert on corporate ethics at Brock University in St. Catharines, Ontario, and author of a 2008 study, “Strategic Responses by a Nonprofit When a Donor Becomes Tainted.”

At an art museum, “you may have a donor who says, ‘I’m very concerned about the environment, therefore I wouldn’t give to your museum because BP has polluted the gulf,’ ” Dunn said. But he doubts that such complaints could gain traction. “I fail to see a connection between oil [pollution] and paintings —- other than that paintings have oil in them.”

But the Aquarium of the Pacific, where BP’s initials are modestly inscribed next to a map of the sea otter’s range, could face some heat. “People can see a direct link there. Aquatic animals are being harmed by the disaster,” Dunn said.

“Any organization that has BP’s name on it throughout the world should be saying, ‘We have a potential issue here,’ ” he said.

There are many such organizations. BP’s corporate largess is evident at cultural institutions worldwide. In the Los Angeles area, besides the aquarium, BP has donated $25 million each to the Los Angeles County Museum of Art and public television station KCET since 2004.

Executives at LACMA and KCET said last week that they have not heard of any negative comments about BP’s sponsorship — either before the gulf disaster, or since.

But the oil spill clearly has bruised BP’s corporate image, with Congress, environmental groups and President Obama slamming the oil company’s handling of the crisis.

Terry O’Day, executive director of Environment Now, a Santa Monica advocacy group, said the Aquarium of the Pacific may yet have to make a tough call. “Generally I tend to say, ‘Take the funds and do your good work.’ ” But the gulf spill “does recast things in a different light. This has to be an example that’s on the moral line for them. They’ll have to wrestle with that.”

Like O’Day, Joel Reynolds, director of the Natural Resources Defense Council’s programs in Southern California, wouldn’t say whether BP’s name should remain on the exhibit. But “the reality is that anything associated with the name BP is going to be tarnished as a result of this catastrophe.”

BP’s environmental record in Southern California was blemished before these gifts. After a 1990 tanker spill off Huntington Beach, it paid $21.9 million in cleanup and settlement costs. In 2002, it paid the state $45.8 million to settle a suit over pollution from leaking gasoline storage tanks. Later, leakage of smog-forming chemicals at its refinery in Carson resulted in $81 million in fines and other payments.

BP’s Houston-based charitable foundation averaged worldwide donations of nearly $48 million annually from 2006 through 2008, according to its most recent federal filings. BP is one of the corporate sponsors of the Audubon Aquarium of the Americas in New Orleans.

Toby Odone, a spokesman in London, said Friday that the gulf oil spill will “have no impact whatsoever” on how much the BP Foundation gives, or which recipients it chooses.

Melody Kanschat, LACMA’s president, said there’s no need for museum leaders to strategize over how to address possible complaints.

“We would tackle any issue as it came up,” Kanschat said.

At KCET, BP was the leading funder of “A Place of Our Own” and “Los Ninos en Su Casa,” award-winning educational programs aimed at caregivers of young children. As if the station would consider taking BP’s name from its studio if the worst fears in the gulf came to pass, Executive Vice President Mary Mazur declined to answer. “You’re asking me to look into a crystal ball and speculate, which is something I’m not able to do,” she said.

At the aquarium, officials are getting ready to welcome the public to the newly expanded sea otter exhibit, with its new corporate name.

Schubel, the aquarium’s president, said despite the oil spill, the aquarium is still open for future partnership with BP. He is aware this might upset some environmentalists.

“I worry about these issues all the time,” he said. “But I worry more about how the aquarium can do the right thing, which is to help the public understand.”