Communicating voluntary disclosure of corporate political spending.

• Author: Nathan, Charles

Over the past several years, judicial decisions in cases involving Citizens United,.McCutcheon and SpeechNow.org have lifted caps on total political contributions, and expanded the number of avenues through which (and the amounts that) companies can contribute to political campaigns lawfully.

Corporate donations can still be made to recipients including political action committees and third-party organizations (such as trade associations). In addition, however, companies can also contribute directly to campaigns and organizations that support candidates and political causes, including Section 501(c)(4) social welfare organizations.

This unshackling of corporate political spending has made it a major target of governance advocates, the media, politicians and groups that oppose corporate political spending on ideological and/or policy grounds. In the wake of the loosening of legal donation limits, strong antipathy to corporate political contributions is frequently expressed in demands for detailed disclosure.

A patchwork of laws and regulations currently requires public disclosure of only certain kinds of corporate political contributions. This system is not only unwieldy to access, but also fails to account for political contributions made to 501(c)(4) and 527 organizations and to third parties such as trade associations, for which no contribution limits exist and no company disclosure is legally required.

The lack of mandatory disclosure of these types of contributions have led many critics to characterize the recipients as "black money pools" operating in the shadows of the political process, and keeping investors and the public in the dark about how corporate funds are being used and which candidates and issues are being supported.

Advocates for transparency of corporate political spending have been lobbying for years for legislation and SEC rule-making to fill existing informational gaps and to require public companies to disclose the entire range of their political spending, policies and practices. To date, efforts aimed at mandating comprehensive disclosure have not borne fruit. It is uncertain, at best, whether they will in the future.

Simultaneously, advocates for political spending disclosure have filed numerous shareholder proposals calling for voluntary disclosure by companies, and they are resorting to the court of public opinion to motivate companies to take that step. In fact, this category is the largest among all shareholder...