Corporate political spending comes out in the open – slowly
Companies have lots of ways to use their money for political influence. Shouldn't shareholders know where those contributions go?
Do you know the political slant of your portfolio? Every election cycle, US businesses pour hundreds of millions of dollars into campaigns, parties, and politically affiliated groups. Some of that money is reported, some isn't. Now a movement to get corporations to disclose voluntarily their political contributions is gaining ground. Recently, the Monitor's Laurent Belsie interviewed Bruce Freed, executive director of the Center for Political Accountability, a nonprofit, nonpartisan group based in Washington. Here are edited excerpts of their conversation: Campaign spending for all offices could top $5 billion this year. How much of that is from corporations?Skip to next paragraph
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Mr. Freed: I think a significant amount is coming from businesses. It's difficult, though, to come up with a precise figure because of the absence of disclosure.
It seems like a tangled web.
Money that's given through company political action committees is easy to track because that's reported to the Federal Election Commission. Money that would be given at the state level, which could include corporate money, can be tracked easily if a state has good disclosure requirements.
The problem is that disclosure at the state level is spotty. And when companies give corporate funds – which would be soft money given to 527s and those types of groups – that's reported only by the recipient, not by the contributor. But then you have companies giving a great deal of money through trade associations and through other tax-exempt organizations. Those would be 501(c)(4)s. There's no disclosure of that.
So ... when I tell you that it's really difficult to come up with a precise figure, that's the reason why.
Would you say that most of this money is disclosed or undisclosed?
I think a significant amount of it is undisclosed. And that presents a very serious problem for shareholders and for the public – and for the companies themselves.
What are 501(c)(4)s?
[They] are known as social-welfare organizations. But they're nonprofit. There are certain restrictions on what they can spend money on. But the fact is, they can be used to engage in political activity up to a certain line. And ... the fact is they can engage in significant political activity.
Can investors check the political spending of the companies they own?
It's very difficult. The Center for Political Accountability has been leading a shareholder effort to get companies to adopt policies that require disclosure and broad oversight of their political spending. In those cases where a company has agreed to [disclose political spending] and is reporting, an investor can find out. But that's just 34 companies of ... the S&P 200 [a list of the 200 largest companies in the S&P 500]. So it's a limited number of companies.
Your group is pushing companies to disclose political contributions. How is that going?
The effort is moving along very successfully.... We're now talking with at least 10 companies. I expect that by the end of the 2008 proxy season a quarter of the companies in the S&P 200 list will have agreed to disclosure and broad oversight of their political spending. And a growing number of those companies, by the way, are agreeing to disclosure not only of the soft money but of their payments to trade associations and other tax-exempt organizations that are used for political purposes.