Targeting Target: Retailer's Talks With Gay-Rights Group Break Down

Efforts by Target (TGT) to mend a rift with the gay community ground to a halt Monday after the retail giant rejected proposals to donate money to gay-rights organizations to offset an earlier donation to a group backing the election of a conservative, anti-gay gubernatorial candidate.

In response, the Human Rights Campaign said it would continue to protest against Target, which gave $150,000 to pro-business organization MN Forward in its effort to help elect Republican Tom Emmer governor of Minnesota, where Target is based. The donation has sparked calls for a Target boycott.

In the past two weeks, HRC said it put forth two tentative agreements, but the retailer declined both of them.

"If their initial contribution was a slap in the face, their refusal to make it right is a punch in the gut, and that's not something that we will soon forget," HRC President Joe Solmonese said in a statement. HRC also said it plans to make an equivalent contribution to help elect a pro-equality governor and legislature in the state.

Closely Watched Confrontation

The nonprofit is weighing whether to suspend Target's perfect "100" score in its Corporate Equality Index, a measure of gay-friendly workplace policies. HRC is also eying Best Buy (BBY), another Minnesota-based retailer that has made donations to MN Forward. The gay-rights group said it has sent a letter to Best Buy management but hasn't yet heard back.

For now, Target is taking a wait-and-see approach. The controversy has prompted calls on Facebook and other social-networking sites to boycott the retailer. Groups in support of Target have surfaced, too.

Target's handling of the confrontation is being closely watched as it is the first case in this election cycle of a company hit by national protests caused by a campaign donation, the Los Angeles Times reported. Earlier this month, liberal advocacy group Moveon.org called for a boycott against the retailer, arguing that Target is, in essence, trying to buy elections.

On Tuesday, Moveon.org released a TV ad urging Americans to boycott Target. The 30-second ad will run on national cable and local Minnesota broadcast channels for a week. The ad states in part: "Boycott Target. Our democracy is not for sale."

Opening the Floodgates to Political Funding by Corporations

Target made the controversial $150,000 donation in July. The company, along with several others, took advantage of a recent Supreme Court ruling and have poured money into MN Forward, raising nearly $1.2 million ahead of the state's primary elections, held last week.

In January, the U.S. Supreme Court ruled in a bitterly divided case that the government cannot ban political spending by corporations in candidate elections. The decision was seen as opening the floodgates for well-heeled companies to fund candidates that favor their business interests.

Earlier this month, in response to the outcry caused by the political donation, Target CEO Gregg Steinhafel issued a statement apologizing for the hurt the $150,000 donation may have caused Target employees and consumers. "Going forward, we will soon begin a strategic review and analysis of our decision-making process for financial contributions in the public policy arena," the letter read.

Still unclear is what damage the protests will have on revenues and profits at Target. The company is due to release quarterly earnings early Wednesday for the three months ending June, well before the controversy surfaced. It may not be until November before any impact of the boycott can be measured.