What exactly is the scope and impact of corporate political spending? Much has been written about the risks – legal, reputational and bottom line – faced by companies engaging in this spending. But it has been unclear how donations by publicly traded companies using treasury funds compare with donations by corporate PACs, by individuals and by labor PACs. What’s more, where is company treasury money routed? What is the role of third-party groups in company political spending? How consequential is it? What does it enable, and what does it associate companies with?
The Center for Political Accountability (CPA) has used spending at the state level for its case study. It has focused on company giving to six partisan, state-focused political committees known as 527s. These groups are the governors associations, state legislative campaign committees and attorneys general associations of both parties. They are popularly known as 527s after the section of the Internal Revenue Code under which they are governed. Contributions to, and spending by, 527 groups are publicly disclosed but difficult to track.
There are several reasons CPA used 527s for its case study. First, these organizations are important conduits for political spending to groups that can receive unlimited contributions. Companies give to them and then lose control over how the money is used and where it ends up. The 527 groups make the decisions, and the companies are associated with the ultimate recipients and the consequences. Second, certain 527s have been instrumental in reshaping state and national politics and policy. This has affected the overall political, policy and risk environment for companies. Lastly, companies are overlooking the consequences of their contributions to these groups. Today, that has serious risk implications.
CPA’s research found that public companies and their trade associations have been and are the dominant funders of 527s. It is a little recognized trend that U.S. corporations and their trade associations donated close to half — more than $1 billion — of the $2.5 billion total raised since the 2010 election cycle.
Spending by 527s has been widely overlooked by campaign finance analysts and by companies, and under-covered by the news media. This has had serious consequences for state and national politics and policy, and for corporate political donors as well. As Corporate Underwriters points out, state capitals are the engine for writing many new laws and policies guiding the nation, many of them on the extreme right. Several of the 527s are helping to fuel this engine. The reports pay particular attention to three 527s with the greatest impact. What they have underwritten and continue to underwrite has contributed significantly to today’s hyper-partisan and threatening political environment….