A radical change or a slow return to normal?
It has always been risky for corporations to pump money into politics. The insurgency in the United States Capitol earlier this month showed how risky it can be for companies to align themselves with certain causes and political candidates.
After a group of pro-Trump extremists stormed the chambers of Congress on Jan. 6, several Minnesota businesses announced plans to suspend political donations in one way or another. Some have vowed to end donations to Republican lawmakers who opposed certification of the Electoral College vote; others have chosen to suspend all political donations.
But it’s not yet clear if these changes will stick, or if they’ll even serve as an effective way to change politics for good. Some observers see the changes as “too little, too late”. And indeed, why stop political donations when there are no major elections?
Larry Jacobs, a professor at the Hubert H. Humphrey School of Public Affairs at the University of Minnesota, acknowledged that widespread promises to stop political donations are “unprecedented”.
“What we see corporate America doing is tantamount to a corporate strike against Republicans who have tried to undermine American democracy,” he said. Even so, it is uncertain whether the strike will last until the midterm elections in 2022.
“I think what we’re likely to see is a pick-up in giving around the 22 election,” Jacobs said, “but that will target conservative Republicans who follow the legal and constitutional process.”
Certainly, the return of political donations is not new. Some of Minnesota’s biggest companies know him well. Consider Target Corp., which came under fire during Minnesota’s 2010 gubernatorial race for donating thousands of dollars to a political action committee (PAC) known as the Minnesota Forward. This group then funneled money to Republican candidate Tom Emmer, who opposed same-sex marriage.
The retailer, a long-time gay rights advocate, was widely criticized for the move. Some have even sworn to boycott.
“It was a black eye for Target,” said Paul Vaaler, a professor at the U of M School of Law and Carlson School of Management. “It wasn’t good for the Emmer campaign either, and it made the companies look partisan.”
Of course, that didn’t stop Target or any other company from continuing to donate in the years that followed.
Most big corporations make it a point to donate to politicians on both sides of the aisle, though the unrest on Capitol Hill might change that. In 2020, Target’s PAC gave $217,500 to Republican federal candidates, or about 53% of its total donations, and $191,500 to Democratic federal candidates, or nearly 47% of total donations, according to the non-partisan Center for Responsive Politics (CRP).
“What companies are trying to buy is access,” Vaaler said. “It’s less about ideology and more about issues.” For some businesses, that might mean donating to a candidate who supports tax changes that are more favorable to their business.
UnitedHealth Group PAC had a similar split, though donations favored GOP candidates somewhat more: About $656,100, or 55% of total donations, went to Republican federal candidates, while $526,500, or 44.5% , went to the Democratic candidates.
These numbers may seem mind-boggling at first, but it’s important to remember that corporate PAC dollars are only a fraction of overall political donations. Moreover, the importance of enterprise PACs has already diminished in recent years.
According to data from the Center for Responsive Politics, donations from traditional PACs accounted for just 5% of all political donations in the 2020 presidential election. That’s down from 9% in the 2016 election.
So where does the rest of the money come from? Individual donations far exceeded CAP funding, according to the CRP. Individual donations account for nearly 64% of all donations in the 2020 presidential race, according to the center.
Even then, if companies decide to start giving PACs again next year, they will need to carefully rethink how they give money and weigh any possible public backlash.
“Companies will need to think about these investments differently. … Could it come back and bite them? said Mike Porter, Distinguished Service Professor in the Marketing Department of the Opus College of Business at the University of St. Thomas. In the age of social media, it has never been easier to publicize a company’s political spending.
In Porter’s view, companies will need to be as transparent as possible about their political spending. And, of course, they will have to make a business case for donations.
“If you have shareholders, you still have to justify that expense,” Porter said. “It’s still in the budget somewhere.”
[Editor’s note: On Friday, March 5, the U.S. Chamber of Commerce – the country’s biggest business advocacy group – sent a memo to members noting that it does “not believe it is appropriate to judge members of Congress solely based on their votes on the electoral certification.” The group also said it “will evaluate our support for candidates – Republicans and Democrats – based on their position on issues important to the Chamber, as well as their demonstrated commitment to governing and rebuilding our democratic institutions.”]