Chapter 7. Charitable Donations and Political Contributions

• Author: Robert W. Tarun
• Pages: 1-14

CHAPTER 7

Charitable Donations and

Political Contributions

I. INTRODUCTION

Charitable donation and political contribution corruption issues arise not infre-

quently for brand-name multinational companies because many engage in legiti-

mate social outreach and publicize their corporate generosity and good citizenship;

because they operate in challenging countries where charitable needs are many; and

to some degree, because they are perceived as having deep pockets. At the outset the

U.S. Department of Justice (DOJ) and the Securities and Exchange Commission’s

(SEC) Resource Guide to the U.S. Foreign Corrupt Practices Act makes clear that the

“FCPA does not prohibit charitable contributions or prevent corporations from

acting as good corporate citizens. Companies, however, cannot use the pretense of

charitable contributions as a way to funnel bribes to government officials.”1 With

respect to charitable donations, the Resource Guide further provides five questions

multinational companies should consider when making charitable payments in a

foreign country, discussed infra.2 The DOJ–SEC guidance does not provide specific

advice with respect to political contributions.

Potential charitable and political payment risks are best minimized by means of

clear global corporate policies that govern any local charitable and political cam-

paign, proper due diligence and funding controls, and a clear message to foreign

country and financial managers that the company’s global policies relating to char-

itable contributions and political donations will be strictly enforced. Many compa-

nies benefit by requiring that all political donations and campaign contributions

above a certain amount (e.g., $250) have advance written approval from the parent

law or compliance departments. With the notable exceptions of In re Schering-

Plough and United States v. Titan, discussed infra, the DOJ and SEC have brought

few FCPA charitable donation and political contribution cases. There have also

been few FCPA Opinion Releases in this area.

II. GLOBAL CORPORATE POLICIES AND LOCAL LAWS

In-country managers of foreign operations or subsidiaries are frequently

approached to make local charitable donations and political contributions. The

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