Will January 6th become an epiphany for U.S. public companies and their political spending? The insurrection at the U.S. Capitol turned a spotlight on their contributions to the 147 senators and House members who opposed certification of the 2020 presidential election results. In reaction, more than 40 companies announced they would withhold PAC support for these members or pause all PAC contributions.
Looking ahead, the paramount question is whether the unprecedented reaction is fleeting or whether it marks a fundamental change in how companies approach political spending.
The actual issue for companies goes far beyond their PAC contributions. It encompasses the full range of corporate political money. Companies spend not just through PACs but through an array of third-party groups – 527 committees, trade associations, Super PACs, and “social welfare” organizations. Over the past decade, this spending – much of it undisclosed or partially disclosed – played a significant role in the buildup to the crisis that threatens our democracy today.
Billions in company spending helped decide elections and resulted in legislative, legal, and policy consequences that often conflict with company core values, policies, and positions. It has opened companies to charges of hypocrisy. It also has raised the level of risk, sparking consumer blowback, harming employee morale, and affecting company reputation and the bottom line.
Take the case of 527 committees. Center for Political Accountability (CPA) research on the funding of, and spending by, the governors associations, state legislative campaign committees, and attorneys general associations over the past decade provides a window into the problems companies must confront. The 527s raised about $1.5 billion since the 2010 election cycle. CPA found that 46 percent of the money came from public companies and their trade associations. The three Republican 527 groups outraised their Democratic counterparts by slightly more than two to one and wielded far more clout in reshaping state and national politics and policy because of their electoral success at the beginning of the decade.
This flipped party majorities in state legislatures and undergirded subsequent gerrymandering, some racially driven; prompted attacks on climate change laws; funded a lawsuit to dismantle the Affordable Care Act; bankrolled a Supreme Court challenge to the 2020 presidential election results; and even funded robocalls promoting the rally that preceded the Capitol assault. The consequences clash with many of the donating companies’ policies, positions, or values statements on diversity, climate change, access to health care, corporate citizenship, and the presidential election outcome.
As they move beyond January 6, companies face a hard choice. They can return to spending as usual after the pause and face an aggrieved public and investors and heightened risks. Or, they can fundamentally change how they approach political spending, incorporating societal responsibilities and obligations and ethical considerations the public now expects, by adopting the Model Code of Conduct for Corporate Political Spending developed by CPA and The Wharton School’s Zicklin Center for Business Ethics Research.
For U.S. companies rethinking their political spending today, this is a time of opportunity. They will be judged tomorrow by what they do.
Bruce Freed
President, Center for Political Accountability
Dan Carroll
Vice President for Programs, Center for Political Accountability