Markkula Center for Applied Ethics

Business Ethics in the 'Wild West' of Campaign

Margaret Steen

The landscape of corporate spending on politics has been changing, particularly in the aftermath of the Supreme Court's Citizens United case in 2010. What are corporations' legal and ethical obligations when it comes to trying to influence elections?

That was the subject of a panel presentation, "Navigating business and ethical challenges in the aftermath of Citizens United," at the Business and Organizational Ethics Partnership at Santa Clara University's Markkula Center for Applied Ethics. The moderator was Daniel G. Newman, president and co-founder of MapLight, which provides data on campaign contributions. He was joined by Jim Cunneen, principal with California Strategies and former state assemblyman; Gregory Gallo, a partner at DLA Piper; and Manuel Velasquez, the Charles J. Dirksen Professor of Business Ethics and Management at Santa Clara University and the author of the most widely used business ethics textbook in the world.

"It costs a lot of money to run for office," Newman said in his introduction, and the cost is rising. Winning Congressional campaigns cost an average of $1.5 million per seat in 2012, he said, increasing the amount of time candidates have to spend fundraising. The Citizens United decision was part of a larger trend toward deregulating the way money influences elections. One effect, Newman said, is that "fewer people are spending more money to influence elections."

Although the Supreme Court, like other branches of government, did not specifically state that secret donations were allowed, "Citizens United interacted with existing law to create a giant loophole" allowing secret money, Newman said. Congress could vote to require disclosure of contributions, but it has not done so. "It's kind of like the Wild West out there right now."

This raises two key questions for business: How to contribute to politics, and how and whether to disclose those contributions.

The main reason most businesses donate to politicians is to gain access. "They want to make sure that when an issue that concerns them is before Congress, they can have a meeting with the congressman and tell their story," Gallo said. Large companies have an advantage because they have offices in a lot of different congressional districts, creating a larger group of congress members who are willing to meet with them.

Are all political contributions, in effect, buying votes?

Cunneen noted that this issue is more complex than that: Companies often give to both sides in politics, "because what they really want is a seat at the table."

Businesses "need to participate in a level playing field" along with other players including environmental groups and labor unions," Cunneen said. In addition, he noted, contributions from businesses are not the only reason for politicians to vote for laws that will help businesses in their district. They are also motivated to make sure there is no loss of jobs.

When it comes to disclosure, some businesses don't disclose their political contributions at all. Others make general disclosure, while still others are very specific.

Velasquez said companies do have an ethical obligation to shareholders to disclose contributions: Shareholders "don't give the manager their money so that the manger can make contributions to his or her favorite causes." Shareholders should not be forced to support causes that they don't support, so they should have the opportunity to sell their shares if a company is making contributions they don't agree with.

As to whether companies have an obligation to disclose contributions to the public, Velasquez said he thinks they do, though the duty is not as clear as the duty to disclose to shareholders. Disclosure to the public is helpful so that people can judge whether politicians are corrupt.

Gallo noted another advantage to disclosure: "whether or not required, it is becoming best practice for many major corporations from a corporate governance perspective."

He said the Supreme Court's decision was based on the idea that contributions would be disclosed and that independent groups would be truly independent, neither of which has turned out to be the case. He suggested that as a short-term goal, insisting on disclosure and true independence for independent groups would be a step toward a solution.

"Even if you think corporations should be able to contribute, the fact that there are ways to keep those contributions secret is really significant," Gallo said.

Margaret Steen is a freelance author.

Oct 4, 2015