Field Notes: The Need for Corporate Political Transparency

The Hon. President Barack Obama 

The White House
 

1600 Pennsylvania Avenue, NW 

Washington, D.C. 20500 

RE: Take action on money in politics; immediately issue an executive order to promote transparency in corporate political spending 

Dear President Obama: 

Investors have been seeking full disclosure of the funds corporations spend to influence elections for more than ten years, but with increasing urgency since the U.S. Supreme Court’s ruling in Citizens United v. FEC, which exponentially amplified the risks of this spending:

• Corporations are concentrating their spending in closely contested races and flooding money into elections, often outspending candidates themselves, defining campaign narratives and practicing the “gutter politics” you properly denounced in the 2015 State of the Union. 
 
• In mockery of the majority opinion reaffirming disclosure in Citizens United, hundreds of millions of dollars are being invested in our elections by donors who remain anonymous, leaving voters in the dark about the people and interests to whom candidates are beholden. 
 
• The staggering sums raised and spent are empowering a very narrow class of super-rich donors, with a self-interested agenda. They have undue power to affect who runs for office, who wins election, and what winning candidates do. And as you acknowledged in The Audacity of Hope – in the pre-Citizens United world – these individuals, across party, have a different worldview and different policy preferences than average Americans. Economic inequality and political inequality are now reinforcing each other – and choking democracy in the process. 
 
• The McCutcheon decision and the increased campaign spending authorized in the December “CRomnibus” spending bill will bring even more money into future elections, further bolstering the power of the super-rich donor class. 
 
• Candidates – including elected officials – must spend ever-increasing amounts of time fundraising, further distancing themselves from the overwhelming majority of their constituents and leaving them with less time to study issues and develop sound public policies. 
 
• This flood of big dollar contributions has overwhelmed the voices of everyday Americans, the very people who are our government’s prime constituents and who are supposed to count most in our democracy. Against this backdrop, it is imperative that you act. There is no single solution to the problem of Big Money dominance. In fact, there are many desperately needed solutions. Today, we urge you to act on one option immediately – require corporations to disclose political spending to shareholders. 
 

As the dominance of undisclosed corporate spending continues to corrupt our democracy, corporate political transparency is imperative for the efficient functioning of our capital markets and as a risk management tool for shareholders, corporate management, and directors. 

We urge you in the strongest terms to issue immediately an executive order requiring full disclosure of political spending by business entities receiving federal government contracts, and furthermore require federal contractors to affirmatively certify that they are in compliance with 52 U.S.C. 30119 ban on direct or indirect political contributions. 

An executive order shining a light on political spending by contractors would attack the perception and the reality of such “pay-to-play” arrangements. It need simply require that every federal contractor disclose its political spending and that of its senior management and affiliated political action committees post-contract award. By requiring this, the public may judge for themselves whether contracts are being awarded and administered based on merit rather than political favors, as the Court in Citizens United desired. 

Corporate political transparency is necessary for the efficient functioning of our capital markets and as a risk management tool for shareholders, corporate management, and directors. Corporations claim this spending is necessary to protect their interests, but shareholders have no way to monitor these activities, or assess their risks. 

In addition, trade associations and similar groups have become significant conduits for ‘indirect’ corporate political spending. These organizations are not required to disclose the source of their funding, often leaving companies in the dark about the use of their money as well as exposing them to unnecessary and dangerous risks. 

Disclosure will help us distinguish between companies that compete and win through superior products and services, and those, like Enron, that merely appear to do so due to gain superior access to lawmakers and push anti-public interest and environmental positions. 

The executive order would also require them to disclose the outside spending that was authorized by the Supreme Court in Citizens United. The majority in Citizens United properly noted that disclosure requirements “do not prevent anyone from speaking.” The justices also declared that: 

“Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so- called moneyed interests.” 

The flip side of transparency is secrecy and the specter of hundreds of millions of dollars in secret campaign cash coming from companies that derive much of their wealth from government contracts. In order to keep in check actual or perceived corruption in government contracting, it is imperative that there be full disclosure of campaign contributions and expenditures by federal government contractors. 

An Executive Order on government contracting would be just one modest step toward fundamental reform – but nevertheless a significant move forward. 

We the People desperately need your leadership to preserve our democracy. Please act now. 

Sincerely,

Confluence Members:

As You Sow
Bonwood Social Investments
Bullitt Foundation
Catalyst Fund / Liberty Hill Foundation
Christensen Global Fund
Clean Yield Asset Management
Forsythia Foundation
George B. Storer Foundation
Heron Foundation
Incourage Community Foundation
Jessie Smith Noyes Foundation
John Merck Fund
Kalliopeia Foundation
Merck Family Fund
Penney Family Fund
Pi Investments
Rockefeller Brothers Fund
Solidago Foundation
Swift Foundation
The Educational Foundation of America
The Nathan Cummings Foundation
Treehouse Investments
Trillium Asset Management
Wallace Global Fund
Zevin Asset Management, LLC

Read the full press release on the Confluence Philanthropy website.

Click here for more quick reads featuring interesting articles on philanthropy and impact investing.