No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Governance

Communicating Voluntary Disclosure of Corporate Political Spending

by Chuck Nathan
October 3, 2014
in Governance
Communicating Voluntary Disclosure of Corporate Political Spending

Over the past several years, judicial decisions involving Citizens United, McCutcheon and SpeechNow.org have lifted caps on total political contributions and also expanded the number of avenues through and amounts which companies can lawfully contribute to political campaigns.  Corporate donations can still be made to recipients like political action committees and third-party organizations (such as trade associations). Now, however, companies can also contribute directly to campaigns and to organizations that support candidates and political causes, including Section 501(c)(4) social welfare organizations.

The unshackling of corporate political spending has made it a major target of corporate governance advocates, the media and liberal and progressive politicians and groups, all of which strongly oppose corporate political spending on ideological and/or policy grounds. In the wake of the loosening of legal limits on corporate spending, strong antipathy to corporate political contributions is frequently expressed in demands for detailed disclosure.

A patchwork of laws and regulations currently exists that require public disclosure of only certain kinds of corporate political contributions.  This system is not only unwieldy to access, but also fails to account for political contributions made to 501(c)(4) and 527 organizations and to third parties such as trade associations, for which no contribution limits exist and no company disclosure is legally required.  The lack of mandatory disclosure of these types of contributions has led many critics to characterize the recipients as “black money pools” that operate in the shadows of the political process and keep investors and the public in the dark about how corporate funds are being used and which candidates and issues are being supported.

Advocates for transparency of corporate political spending have been lobbying for years for both legislation and SEC rule-making to fill the existing informational lacunae and to require public companies to disclose the entire range of their political spending, policies and practices. To date, efforts aimed at legally mandated comprehensive disclosure have not borne fruit. It is uncertain, at best, whether they will in the future.

Simultaneously, advocates for political spending disclosure have filed numerous shareholder proposals calling for voluntary disclosure by companies, and they are resorting to the court of public opinion to motivate companies to take that step. In fact, this category of shareholder proposal is the largest among all shareholder proposal topics—with 115 shareholder proposals relating to the disclosure of political spending and lobbying activities in 2013 rising to 126 in 2014.

The campaign is bearing fruit, with an increasing number of public companies adopting voluntary disclosure policies.  For example, according to the 2013 CPA-Zickling Index of Corporate Political Accountability and Disclosure, about 70 percent of the S&P 200 disclose political contributions made directly to candidates, parties and political action committees. Similarly, over 40 percent disclose their payments to trade associations for lobbying and political purposes and more than 35 percent disclose their payments to, or have a policy of not contributing to, 501(c)(4) social welfare organizations.

It is possible, and many would say probable, that political and lobbying disclosure will become the corporate norm, at least among larger public companies, within the next few years. Against this backdrop, it is important that companies that voluntarily disclose their political spending policies and practices—and those that are considering doing so—understand that such disclosures need to be prepared and evaluated in the context of a strategic communications plan. The critical elements of any such a plan should include:

  • An explanation of the internal corporate decision-making process, including the Board’s role in the process and in supervision of management’s political spending decisions, to quell potential concerns that such spending favors the interests of senior management above those of the corporation and its shareholders.
  • Rigorous internal coordination and controls to ensure that the amounts of political spending reported by the company are consistent with the data contained in public filings, including tax returns of recipients (such as 527 organizations).
  • Accuracy in the description of policies and practices. The world of political finance is very confusing and filled with technical terms and categories that can be perplexing to many, including communications specialists, who might not be familiar with the different categories and nomenclature. It is not enough to get the amounts right. It is also critical that those amounts are correctly characterized and that a company’s policies and procedures be couched in precise terminology.
  • A decision on breadth of disclosure. For example, if a company plans to make donations to 501(c)(4) organizations, which are not subject to mandatory reporting, will it be able to successfully limit its voluntary disclosures to other types of political spending? Advocates for corporate disclosure of political spending who recognize gaps in voluntary disclosures might well launch company-specific campaigns designed to embarrass a company into disclosure or cessation of its unreported political spending.
  • Finally, the most fundamental strategic communications decision: whether or not to voluntarily report political spending at all. Before a company decides to disclose its political spending policies and procedures, it should carefully weigh the pros and cons of doing so. The decision, after all, is still voluntary.

To sum up, voluntary disclosure of corporate political spending is a topic that arouses intense and, most often, negative passion. Therefore, it plants a proverbial target on a company’s back. For this reason, it is critical that any company confronting the decision whether to voluntarily disclose its political spending policies and practices, as well as every company that has decided to do so, understand the need to develop and implement a comprehensive strategic communications program surrounding its political spending. Piecemeal decision making, like piecemeal implementation, is all too likely to lead to negative public and investor relations. While corporate disclosure of political spending and practices remains a voluntary decision, strategic communications planning should always be mandatory.


Tags: Third Party Risk Management
Previous Post

More Empty Words for an FCPA Compliance Defense

Next Post

Discipline and Rigor in Your Internal Controls

Chuck Nathan

Chuck Nathan

Chuck Nathan advises global clients on M&A, financial transactions, governance, Board issues and shareholder matters at RLM Finsbury, a leading global strategic communications firm.  Prior to joining RLM Finsbury, Nathan was partner at Latham & Watkins, a large international law firm where in his capacity as Global Co-Chair of the firm’s M&A practice he represented companies and financial advisors in many significant, high-profile mergers and acquisitions, including Roche’s acquisition of the public’s minority stake in Genentech, InBev’s acquisition of Anheuser-Busch, and LiveNation’s merger with Ticketmaster Entertainment.
Nathan has been named by the National Association of Corporate Directors as one of the 100 most influential corporate governance professionals for two consecutive years. He is currently serving as a member of a Conference Board Governance Center Advisory Board on Shareholder Engagement, and as a member of a task force dealing with Say on Pay that has been created by the Conference Board Governance Center, the American Society of Corporate Secretaries and Governance Professionals and the Center on Executive Compensation.
Nathan is the author of many articles on M&A and corporate governance topics, is a frequent panelist at M&A and corporate governance seminars and programs, teaches M&A at Yale Law School, and has chaired a number of bar association committees. Nathan received his B.A. from The Johns Hopkins University and his J.D. from Yale Law School, where he graduated summa cum laude.
Read recent articles and blog posts authored by or about Chuck Nathan:
·         Conference Board, Debunking Myths About Activist Investors ·         Conference Board, Myths and Realities of Say on Pay Engagement ·         “Nathan the sensible” by Hoffer Kaback, Directors and Boards ·         A 12-Step Program to Truly Good Corporate Governance ·         Corporate Governance Activism: Here To Stay? ·         “Say on Pay 2011: Proxy Advisors on Course for Hegemony” ·         Future of Institutional Share Voting Revisited: A Fourth Paradigm ·         Proxy Advisory Business: Apotheosis or Apogee? ·         The Future of Institutional Share Voting: Three Paradigms ·         The Parallel Universes of Institutional Investing and Institutional Voting

Related Posts

credit score gauge

Sales at All Costs? Unified Credit Risk Management Can Squash Bad Deals Before They Happen

by Matthew Debbage
March 15, 2023

The collapse of a business doesn’t usually happen all at once. There are warning signs. Late payments, legal filings and...

ProcessUnity Unify Third Party Risk and Cybersecurity Whitepaper-f

Unify Third Party Risk & Cybersecurity for Sustainable Resiliency

by Corporate Compliance Insights
March 14, 2023

Align risk reduction efforts by bringing together third-party and cybersecurity functions White Paper Unify Third-Party Risk & Cybersecurity for Sustainable...

risk cliff

Gartner: 84% of Enterprise Risk Management Teams Have Overlooked a Third-Party Issue

by Staff and Wire Reports
February 21, 2023

A staggering eight in 10 executive risk committee members say their organizations have experienced operations disruptions due to a third-party...

thread needle

Regulatory Clarity Is Coming, But Companies Still Need to Thread the Needle on ESG

by Dean Alms
February 15, 2023

A handful of ESG-related regulations are in the works or go into effect in 2023 targeting global supply chains. Despite...

Next Post
Discipline and Rigor in Your Internal Controls

Discipline and Rigor in Your Internal Controls

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT