Employees and shareholders are set to have more influence over how dollars flow from corporate political action committees, as companies and trade associations re-examine their approaches to political donations in the wake of the Capitol uprising.
In the days following Jan. 6, at least 27 corporate PACs announced policies that would consider accreditation voting when making donations, according to analysis by Bloomberg News and Bloomberg Government. At least 40 others have stopped all PAC contributions. Republicans ended up contesting electoral certifications in Arizona and Pennsylvania, with 147 GOP lawmakers voting for one or both objections.
When or if the breaks are lifted, the freezing of members of Congress who opposed certification of the elections could be only the beginning, as positions on equality issues, climate change and social justice policies are taken into account more.
“The events of January 6 were a game-changer for corporate PACs,” said Caleb Burns, a partner at Wiley, whose practice includes advising companies and their PACs. “It got them thinking beyond traditional business issues, such as taxes and regulations, and reignited a conversation about the kinds of issues a PAC should consider when making contributions.”
He cautions PACs not to let single policy issues or isolated votes dominate their donation criteria, and instead to consider the “panoply of issues involved in business success.”
Corporate PACs are funded by employees of that company, and trade association PACs receive money from employees and PACs of member companies. PACs can give $5,000 to candidates for their primary and general elections, and up to $105,000 a year to congressional party committees.
American Airlines Group Inc. announced a three-month break. API BP, Conoco Phillips Co. and JPMorgan Chase & Co. have not made PAC contributions for six months or more. United Parcel Service Inc., Ford Motor Co. and Coca-Cola Co. suspended PAC contributions but declined to comment on how long this would last.
“There’s a lot of pressure on them, especially publicly traded companies, through shareholder activism,” the former rep said. Greg Walden (R-Ore.), who headed the Republican National Committee of Congress.
The challenge “will be whether they can stay focused on the issues that matter to the business and those who support those issues,” he said, noting that there has been a shift towards “secondary issues ” these last years.
“It’s up to the employees — the ones making the donations — and they’ll have a say in that,” Walden said of political donations. “Boards of directors are affected by pressure from shareholders. And that will influence it.
change of the sea
Most PACs that have announced a pause in political donations are also reassessing their standards for deciding how PAC donations are distributed.
Micaela Isler, executive director of the National Association of Corporate Political Action Committees, said many PACs had held board meetings, participated in “listening tours” or held town hall meetings with of employees and extensively reviewed their donation criteria.
Some companies have expanded their PAC boards to diversify the group that makes decisions about where campaign money goes.
“It will make us all better, quite frankly, on the road,” Isler said.
It’s not unusual for a PAC to revise its donation criteria and respond to current events or controversial statements from a candidate, but the scale and scope of public reckoning is new, said Kristin Brackemyre, director of PAC and government relations for the public. Business Council.
“It’s definitely unprecedented,” she said. “I know it’s a word that gets used a lot, but I think it’s applicable in this situation.”
Wall Street Giant BlackRock Inc. has halted its PAC giving “indefinitely” and is conducting a review that assesses “how we will focus our political activity going forward,” Kate Fulton, its US public policy officer, wrote in a memo in January. Archer-Daniels-Midland Co. is reviewing its policies to “ensure that these policies fully reflect ADM’s values as a company,” it said in a statement.
Global agriculture company Cargill Inc., which has suspended political donations, has a “steering committee of employees and stakeholders evaluating our donation policies and protocols as a company to ensure our donations are aligned with the our company values,” a spokeswoman said, in addition to “our corporate ethics policies and our expectations for diversity, equity and inclusion.
Two months later, those reviews are underway, the companies told the government Bloomberg.
The breaks reflect “a sea change,” said Matthew Sanderson, co-head of the political law group at Caplin & Drysdale. “It changes the way companies view PACs as a source of risk, and also changes how they might manage some of those risks.”
The path to follow
In late February, the Public Affairs Council held its annual national conference on PACs and the “issue on everyone’s mind” was how to restart contributions after an insurgency-inspired hiatus in PAC donations, Brackemyre said. .
Every company and trade association’s “path forward is going to be a little different,” she said, noting that some might have “difficult decisions” that may warrant careful consideration from employees, the public or members of Congress.
Walden, who retired from Congress earlier this year and now runs a consulting business, cautioned against taking hard stances.
“Are you really going to stop giving to someone in a key position, who may have been your cause’s biggest champion on Capitol Hill because of a vote that had nothing to do with your cause ? Is this a sustainable position? he said.
“The higher you go up that ladder — up to ‘I’ll never give X again because of this vote’ — the harder it is to get out unless you’re serious about it,” he said. declared. “And then it’s fine, but I don’t know all the side effects it could have on the relationship.”
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