An Absence of Transparency: The Charitable and Political Contributions of US Corporations
- 303 Downloads
Although stockholders may benefit from information regarding the frequently substantial charitable and political contributions of the corporations they own, US corporations are typically not required to disclose any information about such payments in annual financial statements or information submitted periodically to regulatory agencies. This lack of transparency is confounded by disclosure requirements of private foundations, which a corporation may choose to establish for the purposes of administering charitable giving for the corporation. The resulting disclosure fog engendered by extant regulations may be confusing to those corporation owners who would like to know what corporation contributions are being made to charities and politicians. This article enumerates the magnitude of the charitable and political gifts of 40 of the most generous public corporations in the USA, the current disclosure requirements for public companies, the role of foundations, rationales for withholding relevant information from owners, and ethically questionable strategies that corporations may use to manage those disclosures for their benefit.
KeywordsCharitable contribution disclosure Political contribution disclosure Corporation transparency
Compliance with Ethical Standards
Conflict of interest
S. Douglas Beets declares that he has no conflict of interest. Mary G. Beets declares that she has no conflict of interest.
This article does not contain any studies with human participants or animals performed by any of the authors.
- Ackerman, A. (2016). Senate democrats renew push for corporate disclosure of political spending. Wall Street Journal (January 21), A5.Google Scholar
- Allison, B., & Harkins, S. (2014). Fixed fortunes: Biggest corporate political interests spend billions, get trillions. (November 17). https://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes-biggest-corporate-political-interests-spend-billions-get-trillions/.
- Bagley, C. E., Freed, B. & Sandstrom, K. (2015). A board member’s guide to corporate political spending. Harvard Business Review (October 30), 13–16.Google Scholar
- Bartkus, B. R., Morris, S. A., & Seifert, B. (2002). Governance and corporate philanthropy: Restraining Robin Hood? Business and Society, 41(3), 319–344.Google Scholar
- Bebchuk, L. A., & Jackson, R. J. (2013). Shining light on corporate political spending. Georgetown Law Journal, 101, 923–967.Google Scholar
- Blumenthal, P. (2012). ‘Dark money’ in 2012 election tops $400 million, 10 candidates outspent by groups with undisclosed donors. (November 2). http://www.huffingtonpost.com/2012/11/02/dark-money-2012-election-400-million_n_2065689.html.
- Blumenthal, P. (2013). Corporate ‘dark money’ to get free pass after sec drops disclosure proposal. (December 2). http://www.huffingtonpost.com/2013/12/02/corporate-dark-money_n_4372574.html.
- Carter, E. (2010). What is a private foundation? (June 25). http://charitylawyerblog.com/2010/06/25/what-is-a-private-foundation/.
- Carter, E. (2013). Is it time to form a corporate foundation? (September 27). http://charitylawyerblog.com/2013/09/27/time-form-corporate-foundation/.
- Cascino, S., Clatworthy, M., Osma, B. G., Gassen, J., Imam, S., Jeanjean, T. (2016). Professional investors and the decision usefulness of financial reporting. (March) http://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FProfessional%2520investors%2520and%2520the%2520decision%2520usefulness%2520of%2520financial%2520reporting.pdf&AspxAutoDetectCookieSupport=1. Accessed 1 Sept 2016.
- Charity Navigator. (2016). Giving Statistics. http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=42#.VvldGOIrIdU. Accessed 13 March 2016.
- Chronicle of Philanthropy. (2013). Annual Philanthropy Survey of Public Corporations. (Dataset provided upon request).Google Scholar
- Cohen, R. (2012). SEC commissioner calls for corporate disclosure of contributions to political nonprofits. (February 27). https://nonprofitquarterly.org/2012/02/27/sec-commissioner-calls-for-corporate-disclosure-of-contributions-to-political-nonprofits/.
- Common Cause. (2012). New poll: Americans condemn high levels of corporate political spending, overwhelmingly support strong transparency and accountability reforms. (October 25). http://www.commoncause.org/press/press-releases/new-poll-americans-condemn-high-levels-of-corporate-political-spending.html?referrer=https://www.google.com/.
- Confessore, N. (2013). State comptroller sues Qualcomm for data about its political contributions. New York Times (January 3), C8.Google Scholar
- Cummings, J. (2015). Transparent win for political disclosures. (March 23). http://www.bloombergview.com/articles/2015-03-23/battle-for-corporate-political-disclosure-gets-a-win.
- Dos Reis, J. A. F., Meyer, V., & Meyer, B. (2012). Political strategies and organizational effectiveness: The case of contribution to political campaigns by Brazilian corporations. International Journal of Management and Administrative Sciences, 1(5), 15–26.Google Scholar
- Drutman, L. (2015). How Corporate lobbyists conquered American democracy. (April 20). http://www.theatlantic.com/business/archive/2015/04/how-corporate-lobbyists-conquered-american-democracy/390822/.
- Elliot, J. (2012). Are corporations claiming tax breaks for super PAC donations? (March 19). http://www.thewire.com/politics/2012/03/are-corporations-claiming-tax-breaks-super-pac-donations/50067/.
- Farrell, C. (2010). Philanthropy: Companies seek greater returns in tough times. (January 14). http://www.bloomberg.com/news/articles/2010-01-14/philanthropy-companies-seek-greater-returns-in-tough-timesbusinessweek-business-news-stock-market-and-financial-advice.
- Foundation Center. (2014). Foundation Stats. http://data.foundationcenter.org/#/foundations/corporate/nationwide/top:giving/list/2013. Accessed 9 March 2016.
- Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine (September 13), 5–7.Google Scholar
- Frostenson, S., & O’Neil, M. (2014). 10 companies that gave the most cash in 2013. (July 13). https://philanthropy.com/article/10-Companies-That-Gave-the/150507.
- Gilbert, L. (2013). Time for corporations to disclose political contributions. (October 2). http://thehill.com/blogs/congress-blog/politics/326131-time-for-corporations-to-disclose-political-donations#.
- Gillmor, P. E., & Bremer, C. M. (1999). Disclosure of corporate charitable contributions as a matter of shareholder accountability. Business Lawyer, 54(3), 1007–1022.Google Scholar
- Goad, B. (2014). New push for disclosures on corporate giving. (September 4). http://thehill.com/regulation/finance/216736-new-push-for-corporate-giving-disclosure.
- Hale, T. N. (2008). Transparency, accountability, and global governance. Global Governance, 14(1), 73–94.Google Scholar
- Heavey, S. (2013). Giving USA report: 2012 Charitable giving grew almost 4%, corporate donations grew 12%. (June 18). http://www.huffingtonpost.com/2013/06/18/giving-usa-report-_n_3457244.html.
- Hindery, L. (2013). Further unmasking corporate political spending. (December 4). http://www.huffingtonpost.com/leo-hindery-jr/further-unmasking-corpora_b_4386215.html.
- Hodgson, P. (2015). Do you know which candidates your company is funding? Fortune (August 5), 31–32.Google Scholar
- Howard, A. (2016). IRS Opens up form 990 data, ushering nonprofit sector into the age of transparency. (June 16). https://sunlightfoundation.com/blog/2016/06/16/irs-opens-up-form-990-data-ushering-nonprofit-sector-into-the-age-of-transparency/.
- Inglis, J. B. (1968). The British Companies Act of 1967. Journal of Accountancy (January), 42–45.Google Scholar
- International Financial Reporting Standards. (2005). Conceptual Framework. http://www.ifrs.org/Meetings/MeetingDocs/IASB/Archive/Conceptual-Framework/Previous%20Work/CF-0507b07b.pdf
- Lopez-Rivera, M. (2013). How the Chronicle compiled data on giving by big companies. Chronicle of Philanthropy, 24(2), 4–5.Google Scholar
- Lunder, E. K., & Whitaker, L. P. (2013). 501(c)(4)s and campaign activity: Analysis under tax and campaign finance laws. http://fas.org/sgp/crs/misc/R40183.pdf.
- Marcus, J. (2013). Foundations are increasingly running U.S. higher ed, spending millions to influence. (October 1). http://www.huffingtonpost.com/2013/10/01/foundations-higher-ed_n_4023826.html.
- McRitchie, J. (2015). Investors seek disclosure of corporate lobbying expenses. (March 13). http://www.corpgov.net/2015/03/disclosure-of-corporate-lobbying-expenses/.
- Merle, R. (2017). SEC chair White concerned about Trump administration’s plans to roll back financial reform. Washington Post (January 17), B3.Google Scholar
- Morris, S. A., & Bartkus, B. R. (2015). Look who’s talking: Corporate philanthropy and firm disclosure. International Journal of Business and Social Research, 5(1), 1–14.Google Scholar
- Myerson, B. (2006). Corporate philanthropy is also open to abuse. Capital. (March), 16.Google Scholar
- New York Times (2014). The SEC and political spending. (October 29), 4.Google Scholar
- North Carolina Department of State Treasurer (2015). Cowell, state treasurers call on SEC to strengthen disclosure of corporate political contributions. (April 21). https://www.nctreasurer.com/inside-the-department/News-Room/press-releases/Pages/Cowell-State-Treasurers-Call-on-SEC-to-Strengthen-Disclosure.aspx.
- Overby, P. (2015). Foundations to SEC: Force corporations to disclose political giving. (May 19). http://www.npr.org/sections/itsallpolitics/2015/05/19/408010757/foundations-to-sec-force-corporations-to-disclose-political-giving.
- Pearce, J. A. (2015). The rights of shareholders in authorizing corporate philanthropy. Villanova Law Review, 60(2), 251–282.Google Scholar
- Porter, E. (2015). Corporations open up about political spending. New York Times. (June 9), 8.Google Scholar
- Posnick-Goodwin, S. (2010). Funding with strings attached. California Educator, 15(1), 1.Google Scholar
- Saunders, L. (2012). Is your political donation deductible? Wall Street Journal. (September 28), A11.Google Scholar
- Skroupa, C.P. (2012). Investors want disclosure of corporate political contributions and lobbying expenditures. Forbes. (April 20), 36–37.Google Scholar
- Smith, J. (2013). America’s most generous companies. Forbes. (July 16), 24–30.Google Scholar
- Stern, K. (2013). Why don’t corporations give to charity? (August 8). http://www.slate.com/articles/business/moneybox/2013/08/corporations_don_t_give_to_charity_why_the_most_profitable_companies_are.html.
- Sunlight Foundation (2014). Fixed Fortunes. http://influenceexplorer.com/fixed-fortunes/#data-intro.
- Vandewalker, I. (2013). The SEC takes a step toward transparency in corporate political spending. (March 11). http://www.huffingtonpost.com/ian-vandewalker/the-sec-takes-a-step-towa_b_2432626.html.
- Weisman, J. (2014). G.O.P. error reveals donors and the price of access. New York Times. (September 24), 2.Google Scholar
- Winkler, A. (2013). Political corporate contributions won’t be aired in daylight. (December 5). http://www.thedailybeast.com/articles/2013/12/05/political-corporate-contributions-won-t-be-aired-in-daylight.html.