Overtime, we have seen our electoral process eroded by special interests groups and lobbyists, coupled with much money to influence elections and elected officials. The emergence of a new Republican party has launched a nation-wide effort to suppress the vote through bills that would disenfranchise millions in over 34 states, and have become law in 14.
Of equal concern, the Citizens United (see also SCOTUS blog) ruling “allows companies to spend unlimited sums in their own names or contribute to trade associations and other nonprofit groups that engage in political spending.” This further erodes the electoral process, leaving it open for more corruption and infusion of a culture of “don’t ask, don’t tell,” since disclosure of political spending is voluntary. Shareholders, however, may be the deciding factor on the issue of full disclosure for leading corporations.
Public disclosure of political spending creates a variety of risks for corporations, their boards and CEOs. Shareholders no doubt will want to know whether political donations being made are in the best interest of the company or the CEO or a board member. If you’re a pharmaceutical company that manufactures contraception pills, a political donation to a nonprofit pro-life group to support a pro-life candidate is not in line with company interests. An excellent read on how corporations and shareholders are dealing with disclosure in the wake of Citizens United is Gary Stern’s article, Dealing with political contribution disclosures.
In 2007, the Center for Political Accountability, which was formed in 2003 to “address the secrecy that cloaks much of the political activity engaged in by companies and the risks this poses to shareholder value,” united their efforts with the Zicklin Center for Business Ethics Research. After the Citizens United ruling, they used the CPA-Zicklin Index they created to assess corporate political spending under this ruling and released a report of their findings on October 28, 2011.
Of note, the report shows the unexpected is taking place: “voluntary disclosure of political spending is becoming a mainstream corporate practice, and a growing number of companies are putting restrictions on the political use of their money.” The report stresses the need for full versus partial, some or no disclosure of corporate political spending.
U.S. companies are at a crossroads. As a result of Citizens United, American corporations must now decide for themselves how, and to what extent, they will devote their treasury funds to influence elections. The decision has had immediate affect. In the 2010 election cycle, outside, or nonpolitical party, organizations reported spending $305 million, more than four times what they spent in the 2006 midterm elections. Tax-exempt groups that disclosed no information about their donors spent $135.6 million of the total.
The report also highlights the risks businesses face when engaging in political activity. An example I was drawn to focused on consumer discontent that can result in loss revenue and customer loyalty. The report lists an example of how Target’s political contribution of $150,000 in 2010 “sparked a public backlash”:
One company’s experience in 2010 highlighted the risks of political activity. A $150,000 donation by Target to a pro-business organization in Minnesota sparked a public backlash. The retail chain’s critics assailed the company over the group’s support for a gubernatorial candidate who had proposed a constitutional amendment barring civil unions for gay couples.
Although Target had received a top rating from the Human Rights Campaign’s Corporate Equality Index, it faced a boycott movement and store protests. Within weeks, an anti-Target group on Facebook and a shareholder’s resolution to revise Target’s political spending process appeared. Target later apologized. It promised a strategic review of decision-making for political spending.
The report is 33 pages in length and is well-worth a full read and signing up with CPA for regular updates. Besides presenting an excellent case for the need of corporate transparency and accountability in political spending for shareholders, the report clearly shows the power and influence of citizen-consumers.
Since disclosure is voluntary, what’s to stop a company from disclosing only non-controversial political spending? Our voice. Recent proof is the decision by Bank of America (and other major banks), who’s one of those companies that don’t fully disclose their political spending, to rescind charging customers a monthly fee for ATM usage after receiving 300,000 signatures on a petition against it. Add to that the loss of 700,000 (as of last week) customers by large banks to smaller community banks and credit unions who are dissatisfied with excessive fees and predatory practices.
Citizens United was a lousy ruling. No matter the problems it creates, real citizens can unite and change the culture of corporate influence in our elections by patronizing businesses who fully disclose their political spending and avoiding those who don’t.
As for BoFA not fully disclosing their political spending, Moxy Vote is gathering signatures to a letter they wrote requesting BoFA to make public a “report of all corporate and large private political donations as well as all lobbying expenditures and public policy agenda.” Take a moment to read the letter, sign it and then pass it on. Knowledge is power and our united voice is power unlimited.
References
Dealing with political contribution disclosures | Corporate Secretary
Tell Bank of America to disclose all political contributions | Moxy Vote
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