Leadership Strategy

Corporations Send Message To Lawmakers — And Public — By Suspending Political Donations


Google, Goldman Sachs, Microsoft, and other companies and organizations have given money to lawmakers for years. This week, in the aftermath of the storming of the U.S. Capitol and in the midst of impeachment proceedings against President Donald Trump, they turned off the money spigot — at least for a while — for many federal lawmakers.

In most crisis situations, it is unusual for outside parties to have an impact or express their displeasure of how a crisis is addressed or resolved. But the U.S. is in the middle of an historic and unusual crisis, where many of rules of the road no longer seem to apply.

By withholding their contributions at what may be a turning point in American history, key members of the business world are signaling their dissatisfaction over how politicians are conducting themselves during—and perhaps contributing to— this crisis. Some companies singled out the 147 Republican members of Congress who refused to certify the results of the 2020 presidential election.

“This is a pretty major development, although it’s hard to predict how consequential it will be,” said Robert Boatright, Ph.D., professor and chair of the Department of Political Science at Clark University. He is an expert on campaign finance laws and practices.

Doing The Right Thing

“I think the message here is that these companies are holding Republicans who voted against certifying the results to be at least a little bit responsible for the insurrection. Otherwise they would have made their views clearer before January 6. But mostly the message here is to other businesses, pushing them to make similar statements,” Boatright said.

Spencer Critchley, the author of Patriots of Two Nations: Why Trump Was Inevitable and What Happens Next, said, “… these companies have done the right thing for both the country and themselves, and of course both considerations must have played into their decisions. I wish though that some hadn’t chosen to “both sides” it — you can argue “both sides do it” about lots of things, but only one side has enabled an outright attack on our democracy.

“Still, because money is involved, we can count on this being heard loud and clear by the politicians who most need to hear it. Self-interest is clearly what drives the decision-making of all except the few who are deluded enough to actually believe the baseless and self-contradictory lies about a ‘stolen election.’”

Critchley observed that,”By itself, the interruption of some donations is unlikely by itself to save our democracy, which has suffered serious and deep damage not just over the past four years, but over many years before. The fact that it needs interventions from private corporations like these…and the tech giants as well is an indication of how much trouble it’s in.”

Sending Signals To Others

A More Aggressive Role

Boatright noted the financial contributions by major companies and organizations, “…have a signaling function—many are what are called ‘lead PACs,’ whose contribution decisions send a message to smaller companies or to individual donors. 

“The decision of so many companies to make this statement at the same time puts pressure on others to follow. This, coupled with the National Association of Manufacturers’ call for Trump to resign and the moves by social media companies to restrict Trump’s access to their platforms suggests that large corporations are looking to play a more aggressive role in pushing back against Trump supporters in the upcoming year,” he noted.

Reconsidering Lobbying Efforts

Robert Foehl is an executive in residence in business law and ethics at Ohio University’s online masters of business administration program. Given the events of January 6, “…it is not surprising that a number of companies who are active in political lobbying are taking time to reconsider their lobbying efforts in light of how these events impact their stakeholders,” he said

“The public announcement of such reconsideration, like the recent public statements by companies on other social issues, signals that the companies are striving to meet the expectations of its various stakeholders, including the community or society. Of course, while timely words are meaningful, corporate action will inform us as to whether individual companies will, in fact, live up to stakeholder expectations.”

Not About The Money

“There are many reasons why the important story here is not about the money: the candidates whose money is being withheld come disproportionately from safe Republican districts, and are less reliant upon PAC contributions than other representatives.

“Republican[s]will not be the majority party in the House or Senate, so these companies don’t need access to Republican legislators in order to influence legislation, and many of these companies have said they’re only pausing their donations for six months and will certainly be able to reconsider before the 2022 election,” he observed.

A New Corporate Strategy?

Political contributions have long been used by the business community to help gain and maintain influence in the legislative and regulatory process.

Robert Kelley, a professor of management at Carnegie Mellon University’s Tepper School of Business, observed, “In the past, companies used political donations as a form of lobbying. They wanted to curry favor with those in power. Or, they wanted to get people elected who would favor their company or industry. Companies are now recognizing that it is easier for customers, employees, and activists to track corporate donations, as well as the donations of the top executives.

“These companies now have to assess the impact of their donations on those groups, esp their customers, as well as on their overall brand. Many are finding that this form of lobbying may not serve them well and may even harm them. It is more likely that these donations will be channeled in the future to PACS which do not need to disclose the names of their donors. Other companies may decide to become apolitical and work more through their industry trade associations and other business groups,” he said.

Part Of A Trend

The decision by companies to withhold political contributions is consistent with a decades-old trend of corporate activism, which was expected to continue and grow in the Biden administration.

Bill Novelli is a professor and founder of Business For Impact at Georgetown University’s McDonough School of Business. He is the the author of Good Business: The Talk, Fight,Win Way To Change The World. According to Novelli, “…the reaction of these companies seems to be part of a trend in which CEOs and their corporations are taking stands: against gun violence, climate change, racial injustice and other politicized issues. Their employees, customers and investors want —even demand—that they take positions on major social and political issues.

“There is potential peril in this: public anger, purchasing boycotts and—in today’s toxic climate—potentially worse. But the long term trend is likely to be that more companies and their leaders will weigh the risks and stand up for what they think is right,” he observed.



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