It may seem early to you to be thinking about Christmas, but not to Congress. In fact, it’s just that time of year again when Congress uses annual appropriations bills as a Christmas tree for all of its favorite ornaments. In this year’s financial services spending bill, according to Law360, the House freezes SEC funding, requires a cost-benefit analysis on Dodd-Frank rules and precludes the SEC from adopting any rules requiring disclosure of corporate political spending. At least the House is consistent; they tried to prevent political spending disclosure rules last year too. The provision hardly seems necessary. Bloomberg has reported that, in a speech in October 2013, Mary Jo White “lauded the SEC for resisting past calls to mandate reporting of political contributions, emphasizing that the independent agency should stay away from politics.” Of course, not adopting political spending disclosure rules might be construed as a political decision also. As discussed in this PubCo post, there has been more than a little pressure on the SEC to move forward with rules requiring disclosure of political contributions. And President Obama has also come under pressure, as 50 public advocacy groups requested that the president issue an executive order requiring political disclosure by corporations that receive federal contracts, according to the NYT.
Incrementally, however, corporations may be moving in that direction on their own. According to the Center for Political Accountability at the Wharton School, the 2014 CPA-Zicklin Index of Corporate Political Disclosure and Accountability (which is produced by the CPA) “offers solid evidence of a growing momentum among American corporations to disclose the details of their political spending. More companies are also requesting that their trade associations not use their dues and other payments to fund political activities. We are also seeing an increased level of corporate board oversight and voluntary disclosure when it comes to corporate political spending.”
The 2014 study defined corporate political spending as “expenditures from corporate treasury funds, direct and indirect, used to sway votes on political candidates and ballot issues.” To arrive at total scores, the study ascribed points to each company analyzed based on 24 questions (attached to Index as Appendix C) relating to public disclosure, availability of policies, board oversight and other processes.
While the 2014 Index studied the top 300 companies in the S&P 500, only 200 were studied in 2013. Accordingly, there were 191 companies studied for the second year in a row. From 2013 to 2014, the average final score of these companies improved from 51.0 to 56.4. A total of 102 companies improved their scores for political disclosure and accountability, with average scores improving from 47.1 in 2013 to 59.6 in 2014. More specifically,
- 40% of these companies improved in the category of adopting or disclosing policy;
- 38% improved in the category of board oversight; and
- 29% improved in the category of disclosure of spending.
Of the top 300 companies in the S&P 500 studied in 2014, 99 had reached agreements with shareholders to disclose political spending (presumably as a result of a shareholder proposal or the threat of one), and 139 had not received a shareholder proposal on this topic. Of the 139 companies,
- 34 disclose information on their direct expenditures (candidates, parties, committees, national 527 groups and independent expenditures) or say they do not make these types of expenditures;
- 19 also disclose information on payments to 501(c)(4) groups, or say they do not make these types of payments; and
- 13 also disclose information on payments to 501(c)(4) groups and trade associations (which can use corporate dollars for political purposes and are not required to disclose their donors).
Among the top 300 companies, 20 received top-five rankings for political disclosure and accountability. Improvements were seen across industrial sectors, with the top-ranked corporate sectors being Utilities, Health Care, and Materials.
Of the top 300 companies for 2014,
- 133 (44%) disclosed some information on their direct contributions to candidates, parties and committees, while 50 (17%)stated that their policy was not to make direct contributions;
- 127 (43%) disclosed some information on their payments to trade associations, while 18 (6%) said they asked trade associations not to use their payments for election-related purposes;
- 128 (43%) disclosed some information about their contributions to 527 groups, including national governors associations and super PACS, while 41 (14%) stated that their policy was not to give to 527 groups;
- 120 (40%) disclosed some information about their payments in connection with ballot measures, while 29 (10%) stated that their policy was not to engage in those activities;
- 82 (27%) disclosed some information about their independent expenditures (public communications that expressly advocate the election or defeat of a candidate but are not coordinated with a candidate or political party), while 62 (21%) stated that it was their policy not to make independent expenditures; and
- 72 (24%) disclosed some information about their payments to politically active social welfare organizations, so-called 501(c)(4)s, while 27 (9%) stated that their policy was not to contribute to 501(c)(4) groups. Of course, that means that 67% said nothing about 501(c)(4) contributions, and, as noted above, those organizations are not required to disclose their donors.
With regard to Board oversight of expenditures, 164 companies (55%), stated their boards regularly oversaw corporate political spending. Board committees reviewed company policy on political spending at 109 companies (37%), political expenditures at 131 companies (44%) and company payments to trade groups at 82 companies (27%). Of the 300 companies in the study, 197 (66%) had dedicated space on their corporate websites for corporate political spending and disclosure.
And this column from the NYT argues that the focus on corporate political spending is misplaced anyway: “if the political process is being purchased, the buyers are — mostly — real people,” very rich real people on both sides of the political spectrum.