Wharton-CPA primer urges boards to take direct charge of corporate political spending

The board-deck version of this risk is one compliance line: the company obeys campaign finance law and discloses what it is required to. That line leaves out most of the primer's map of where corporate money travels after Citizens United ^[6]. In the authors' account, reputational damage follows when money reaches a cause at odds with a company's core values, policies and positions ^[7]. Because the third-party groups are hard to track, a company can fund such a cause before anyone inside has looked at where the money went ^[6][7].

The 40 percent share puts public companies and their trade associations above $1 billion over 25 years, the largest source of 527 money ^[12][13]. The primer's other count covers more than $1 billion to six major 527 committees since 2010 ^[11]. That covers a shorter period, fewer committees and a wider group of donors, since it counts all corporations. The two totals cannot be netted to show how much of the corporate money arrived after Citizens United.

A skeptic would start with the source. The authors are Bruce F. Freed, president of the Center for Political Accountability, and William S. Laufer of the Wharton School ^[1]. The post describes CPA as leading the effort to bring transparency and accountability to corporate political spending ^[2]. The investigation threat is their forecast. "The primer couldn't be more timely as K Street and corporate America brace for possible post-midterm congressional investigations," Freed and Laufer wrote ^[3]. "Business leaders and general counsels know that their companies' political donations will be in the crosshairs," they added ^[4]. The post does not name a committee, a company or a pending inquiry.

The objection is fair, and it does not dispose of the governance case. The channels and the dollar totals exist whether or not any committee opens an investigation. So does the second exposure the authors describe: a company benefiting from government action that follows its contribution. They say media reports of such cases are increasing ^[7].

The two risks have different timelines. Investigations are a possibility that depends on the midterm result ^[3]. The Gallup finding on perceived corruption is a reading of the public a company answers to whoever wins ^[5].

The primer's remedy is active board oversight and clear internal policies ^[8]. The trade-off is direct. Board review narrows political spending to what directors are prepared to defend in public, and management gives up some freedom to spend for access. Default practice keeps that freedom and leaves directors with no record of having reviewed anything. In my view, a general counsel answering a document request would rather have that record than the flexibility. "By approaching the issue through the lens of risk and value, companies can protect themselves while also promoting their core values," the primer states ^[9].