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Fight over transparency of political donations by companies

There is a heated political battle over the lack of transparency of political donations to companies, and some are calling the current status of reporting a loophole that needs to be closed.

political donations

political donations

SEC urged to make political donations more transparent

A group of government officials, comprised of mostly Democratic elected officials and shareholder activists, are urging the Securities and Exchange Commission (SEC) to require publicly traded corporations to disclose all political donations to their shareholders. Investors are entitled to certain information when making decisions on which companies they want to invest in, however information on political donations isn’t required to be shared. But some government officials say that investors have a right to know what political entities a company is contributing to.

The petition has received a substantial amount of support, however House Republicans issued legislation a few weeks ago that would make the passing of a political disclosure requirement illegal. Those in opposition of the proposal cite companies’ rights to free speech as ample reason for it to be thrown out, and that political contributions do nothing to harm a shareholder’s return on investment.

Allegation: goal is to silence the business community

“The Chamber believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line,” said Blair Holmes, a spokeswoman for the business group, who added that the advocates’ “apparent goal is to silence the business community by creating an atmosphere of intimidation under the cover of investor protection.”

In previous years, corporations typically did not directly contribute to political organizations, but instead, contribute to tax-exempt groups and trade associations that happen to make donations to politically affiliated entities. This indirect contribution model keeps corporations from directly investing in political institutions, because the actual donations are being made by another party.

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The political contribution disclosure would close this loophole and require full disclosure of all donations tied to any form of political campaign, whether directly contributed to a political campaign or indirectly through an association. Businesses would be required to publicly disclose how much they are contributing to organizations known to make donations to politically-affiliated entities, which could influence investors’ decisions on whether or not they want to invest.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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