Ben & Jerry's Foundation has deficiencies in financial governance, audit finds

Review backed by Unilever comes after years-long spat fueled by ice cream company’s stance on Israel, including attempt to stop sales in West Bank

An audit of the Ben & Jerry’s Foundation, a US-based non-profit solely funded by the ice cream brand, found that it had deficiencies in financial controls and governance, according to Magnum, the Unilever unit set to be spun off next week that will own the creamery.

The audit also found deficiencies in other compliance policies, such as conflicts of interest, according to the statement from the Magnum Ice Cream Co, an independent unit of Unilever.

Magnum is set to inherit a long-standing feud between Unilever and Ben & Jerry’s, stemming from the progressive brand’s stance on the Israeli-Palestinian conflict. A rift erupted between the two in 2021 after Ben & Jerry’s said it would stop selling its products in what it termed “Occupied Palestinian Territory,” taken to mean the West Bank, a move that led some investors to divest Unilever shares.

Magnum conducted the audit as a matter of good governance in preparation for the upcoming spin-off, it said. A Unilever spokesperson echoed those reasons in a comment to Reuters, adding that Magnum is “taking appropriate steps” in response to the findings.

Ben & Jerry’s and the foundation did not respond to requests for comment. But in October, its co-founder Ben Cohen, who is an outspoken critic of Israel, said that he expects the conflict between the brand and its new owner to grow after the spin-off.

The foundation receives about $5 million annually from Ben & Jerry’s. It uses those contributions to make donations to other non-profit organizations focused on issues ranging from racial equity to environmental protection.

Ben & Jerry’s co-founders Ben Cohen and Jerry Greenfield speak with students at a Black Voters Matter Capacity Building Institute press conference at Fort Valley State University on Sept. 17, 2024, in Fort Valley, Georgia. (Todd Kirkland/AP Content Services for Ben & Jerry’s)

Magnum did not make public the details of its findings but said it has shared them with the Ben & Jerry’s Foundation and is trying to work with it on strengthening corporate governance by adopting a code of ethics, conflict-of-interest policy, term limits for trustees and due diligence and financial controls on grants.

Magnum said the trustees have not fully addressed the deficiencies. The Unilever subsidiary shared the statement in response to Reuters’s questions about the audit.

The trustees signed a code of ethics in recent weeks, according to two sources familiar with the matter, who asked not to be identified because they were not authorized to speak to the media. The sources added that the audit did not find wrongdoing, ethical malpractice or violations.

Unilever and Magnum have been upping the pressure on Ben & Jerry’s ahead of the spinoff, as the renowned ice cream brand will make up a larger portion of the new company’s sales. The brand has been one of the few voices in corporate America speaking out against policies backed by US President Donald Trump and the war in Gaza.

Ben & Jerry’s annual revenue of $1.28 billion accounts for almost 14 percent of Magnum’s global turnover, compared to just 1.8% of Unilever’s.

Earlier this year, Unilever threatened to pull funding from the charity unless it agreed to the audit. Magnum said it plans to continue to fully fund the organization, provided the issues raised are addressed.

Ben & Jerry’s other co-founder, Jerry Greenfield, who resigned as a “brand ambassador” earlier this year, is stepping down as a trustee from the foundation, the sources said. Greenfield did not respond to a Reuters request for comment.

The Unilever logo is seen above a trading post on the floor of the New York Stock Exchange, March 15, 2018. (AP Photo/Richard Drew, File)

Ben & Jerry’s secured substantial leeway in its 2000 merger with Unilever that others who have sold to big corporations have not enjoyed, including an independent board. The agreement also preserved the foundation, set up in 1985.

But the relationship soured with the 2021 announcement regarding the West Bank. The Ben & Jerry’s independent board has sued Unilever twice, most recently accusing its corporate parent of wrongfully muzzling it over statements it wanted to make on Gaza. Unilever has said the brand has evolved into one-sided advocacy on controversial topics.

Cohen has launched an effort to buy back the brand; Magnum has said the unit is not for sale.

He has said Magnum is censoring Ben & Jerry’s ability to speak out on progressive causes like Palestinian rights and US immigration, a claim Magnum denies.

In a draft prospectus for its public listing, Magnum warned that actions by Ben & Jerry’s could result in reputational damage, boycotts or investor claims.