"Business executives seem to have realized that secret political contributions carry real risks to corporations and their shareholders." It's about time.

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Corporations Open Up About Political Spending
By Eduardo Porter, June 9, 2015

In November 1999, Time Warner swore off “soft money” contributions to political campaigns. At the time, it might have seemed like a mistake. The company was about to join with America Online in a deal that would require approval from federal regulators. Yet Gerald M. Levin, Time Warner’s chairman, argued that soft money not only distorted American politics, it sullied the company as well.

We have come, it seems, full circle. Soft money is no longer the vehicle of choice for companies wanting to influence American voters. But ever since the Supreme Court ruled in the Citizens United case that corporations can contribute unlimited amounts to “independent” election efforts, business has faced no real constraints on ways to funnel cash, often anonymously, into the political process.

And yet, many in corporate America seem to be undergoing a similar conversion.

In March, the state comptroller for New York, Thomas P. DiNapoli, announced that the New York State Common Retirement Fund, which owned some $20 million worth of the shares of United States Steel, had persuaded the company to publicly disclose its corporate political contributions.

It was not the first. Twenty-eight public companies — including major corporations like Comcast and Delta Air Lines — have adopted or agreed to adopt political spending disclosure procedures since New York’s fund started pressing the case five years ago, after the Citizens United ruling.

“Shareholders need transparency in order to determine whether corporate political spending benefits the company’s long-term value,” Mr. Di Napoli said in a statement.

As the nation embarks on yet another presidential election cycle that is expected to break all spending records, the question is, What does this mean for money in politics?

There is little question that the enormous sums flowing into candidates’ campaign coffers undermine democracy, breed cynicism and shape policy to the preferences of powerful donors. Unbridled campaign contributions invite nightmare situations in which those at the pinnacle of society purchase the power needed to preserve the yawning inequities of the status quo.

So Mr. DiNapoli’s success in bringing corporate contributions to light is welcome. But more surprisingly, it also poses a challenge to the popular narrative of the role of money in American politics.

It undercuts the notion that corporations are champing at the bit, eager to purchase American elections on the sly. Corporate governance, it seems, can impose at least some of the restraint that Congress and the Supreme Court — in lifting limits on corporations under the argument that they have many of the same rights as people — have refused to demand.

Remember the mockery that descended on Mitt Romney in 2012 when he declared, “Corporations are people, my friend.” But to those hoping to curb the vast amounts of money flowing into the political process, attacking the concept of corporate “personhood” misses the real target.

If the political process is being purchased, the buyers are — mostly — real people. Very rich people, like Sheldon G. Adelson and Charles G. Koch on the right, Thomas F. Steyer and George Soros on the left.

Unlike most American corporations, these people have clear ideological preferences. They have interests to protect, too. They are American democracy’s main risk.

Business executives seem to have realized that secret political contributions carry real risks to corporations and their shareholders.

In the 2014 congressional election cycle, political spending funded by anonymous donors to 501(c) nonprofits — businesses, unions and others (one can’t tell) — amounted to $173 million. That was about 25 percent more than four years earlier. But it was a small share of the $3.8 billion or so spent on last year’s election over all.

Companies have other ways to play. Political action committees (PACs) that aggregate money from executives and other employees spent almost twice as much. Of course, companies also spend many millions more lobbying.

Yet the relatively modest campaign contributions from corporate treasuries, coupled with corporations’ growing willingness to disclose political activity, confirm social scientists’ findings that big companies are not rushing to pour money into the political process under the table to further their objectives.

Ultimately, it makes sense. Political investments, often solicited in an atmosphere that amounts to little more than a shakedown, may not pay off. They can hurt corporate brands, as well as alienate potential customers and shareholders with different political views.

“It is a pay-to-play atmosphere that puts companies on a slippery slope,” said Charles Kolb, former president of the Committee for Economic Development, a corporate think tank that supports disclosure. “They are wasting their money.”

Watertight anonymity might protect a corporation from damaging its reputation through some ill-conceived donation. But anonymity is often breached. Moreover, it carries risks of its own by exposing companies to extortion by the operatives running politicians’ dark pools of cash, who know exactly who contributed or refused to contribute to their efforts.

“The question for Microsoft is not, ‘Should companies have a voice in the democratic process?’ but how do we exercise that voice?” said Dan Bross, Microsoft’s senior director for corporate citizenship.

“We have a responsibility to shareholders and society to do it in a transparent and accountable way,” Mr. Bross said.

The Center for Political Accountability, an advocacy group in Washington pushing for full disclosure of political spending, has a privileged vantage point about how companies view the costs and benefits of campaign donations.

Since it started banging the drum in 2003, it has reached disclosure agreements with 141 companies in the Standard & Poor’s 500-stock index, according to Bruce F. Freed, who runs the center.

In an evaluation of the top 300 companies in the S.&P. 500, the group found that more than six out of 10 either disclose political spending made directly to candidates, parties and committees, or do not make such contributions. Almost half disclose at least some information about payments to trade associations, like the United States Chamber of Commerce, that put money into election campaigns.

“Although surging secret spending has fueled public suspicion and even allegations of political scandal, many of the nation’s leading public companies have announced opposition to the practice,” the center noted in its latest report on political disclosure and accountability.

“By standing up for sunlight and adopting public disclosure policies,” the center continued, “they are laying the foundation for a new route to political disclosure.”

Perhaps the increased transparency will also instill more moderation. Forcing executives to justify political activities on the corporate dime, and allowing shareholders to object, could limit political spending altogether.

Not everybody is on board. Leaders of the Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers, which channel millions in political contributions, have excoriated the center’s efforts as a campaign to “quiet American business.”

And much corporate cash remains in the shadows. Only one in five companies assessed in the report on political accountability “fully” disclose their political contributions to trade associations.

But as Mr. Freed noted, the disclosure effort has the wind at its back. “We have surmounted the major obstacle, the acceptance that political spending poses a risk,” he said.

And this suggests the highest priority for campaign finance reformers. Seek to place constraints directly on the 1 percent. Don’t worry so much about the public companies they may run.
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