Politics and the Boardroom: Reputational risk has placed political spending on the board agenda.

• Author: Hall, April
• Position: ENDNOTE

Soon after the insurrection at the U.S. Capitol, the finger pointing began. Was it the divisiveness of the political landscape, the struggle between "us" and "them"? Were moderates who thought the anger of the far edges of each party would eventually calm down complied?

And did some of the country's largest companies fan the flames by making contributions to political action committees (PACs) that supported actions like challenging the election results long after their certification by the states?

Given the number of companies and lobbying groups that announced a "pause" in their political contributions after Jan. 6, there's an implicit recognition that these contributions will be perceived in a negative light, especially funds given to elected officials who contested the results of the election. The length of these pauses ranges from 30 days to indefinitely.

Charles Schwab Corporation made its move permanent by announcing it would dismantle its PAC entirely, donating the balance of the committee's funds to the Boys & Girls Club of America and to historically Black colleges and universities.

"In light of a divided political climate and an increase in attacks on those participating in the political process, we believe a clear and apolitical position is in the best interest of our clients, employees, stockholders and the communities in which we operate," a Schwab press release said.

The Capitol riot was a tipping point. But does it take an insurrection to prompt a reassessment of corporate political spending? Here's a personal story.

A few months ago, my mother- and father-in-law pulled their significant investment funds from Schwab after examining the brokerage's PAC spending. They found a stark misalignment between Schwab's record of contributions and their personal values.

A vice president of Schwab reached out to them by email. He opened the correspondence by calling their move "an irrational decision" and insisted that how the PAC spends the money contributed by its employees and directors did not impact the company in any way.

My in-laws' account by itself wasn't large enough to sway a company that handles trillions of dollars to re-examine its political spending, obviously. But they were formerly among those clients Schwab named in its recent statement.

The story of my in-laws illustrates in a small way, just as the attack on the U.S. Capitol illustrates in a large way, that corporate political spending can...