Corporate Political Donations: A Mirror on Company Values
BFA hosts Citizens for Responsibility and Ethics in Washington (CREW) to analyze corporate PAC spending
In a post-January 6 world, the business community continues to wrestle with how corporate political spending may have a detrimental effect on our representative democracy. On May 17, Business for America (BFA) hosted a briefing on the risks of corporate political spending and how businesses can take positive action. The discussion featured Robert Maguire, research director with Citizens for Responsibility and Ethics in Washington (CREW), and Elizabeth Doty, director of the Erb Institute’s Corporate Political Responsibility Taskforce at the University of Michigan.
CREW has been at the forefront of studying individual company and PAC donations, as well as benchmarking corporate financial contribution levels. The work of CREW gained increased interest following the riot at the U.S. Capitol on January 6th, 2021. Their recently issued report highlights the companies that have kept their vows to suspend corporate political donations to the 147 members of Congress who voted not to certify the 2020 presidential election, sometimes referred to as the Sedition Caucus.
Now that the general election is less than six months off and expectations are growing that the GOP will regain control of one or both chambers of Congress, many companies are beginning to once again make political contributions to those members of Congress and Republican-led PACs, according to the CREW report.
As noted by Maguire, just 85 of the 249 companies and industry groups that made commitments to withhold political contributions after January 6 have kept them. During the past 18 months, Sedition Caucus members have received more than $2.6 million from corporate and industry group PACs that had originally committed not to do so.
Maguire explained that the threats to our democracy are growing: “January 6 is every day now. We are seeing a systematic attempt to undermine democracy, to erode people’s faith in democracy, and these people who hold these outrageous conspiracy theories about widespread voter fraud are running in states to try to become the people who run and administer elections around the country. As one retired conservative federal judge said, ‘2020 was a dry run for 2024.’”
Due to the efforts of CREW, OpenSecrets, and other organizations, corporate political contributions are receiving more public scrutiny. Maguire noted that many stakeholders are paying more attention, including employees, shareholders, and customers.
BFA’s Richard Eidlin indicated that with transparency and disclosure, corporate political spending can be a positive tool to impact change — and support a healthy democracy. BFA members are taking steps to align their overall mission and support of broader social goals to political contributions. The Erb Institute’s Elizabeth Doty described several factors that businesses should consider when aligning their political spending with their values — including transparency, accountability, and responsibility — for all corporate political activities, such as campaign contributions, lobbying and advocacy (including trade associations), external communications and influence, and internal employee communications.
“We are now seeing [political donations] much more in the news and much more of an issue in terms of reputational risk, employee risk, and challenges to finding systemic solutions as political distrust and polarization grow. Huge amounts of executive time are being spent sorting through the question of ‘how do I respond’ or whether to give to certain politicians. Many companies are getting stuck in a reactive mode rather than having a real plan,” Doty said.
The Erb Institute’s working group is collaborating with companies to share strategies on adopting internal practices and securing C-suite buy-in for an overall corporate political responsibility (CPR) strategy.
Maguire added that democracy’s erosion will damage the business climate and impede companies’ ability to innovate, grow, and effectively serve their customers and communities. He concluded that in looking at the erosion of democratic institutions, CREW is challenging companies to evaluate the short-term benefits of corporate contributions against the long-term damage to democracy and make a commitment to do better.
BFA will soon be announcing a new business working group in partnership with the Erb Institute to review principles and practices around corporate political spending strategies. Interested in learning more? Contact BFA.