Following the Capitol riot in early January, some corporations swiftly announced that their political action committees (PACs) ceased donating to federal lawmakers who objected to certification of the presidential election. But the results of a new survey reveal that those announcements represent just part of the story.
The Conference Board poll found that only about a quarter of surveyed companies have publicly announced the response of their PACs, and that the number of corporate PACs that ceased contributions to all federal lawmakers was equal to those that stopped them to just the objectors. The results also show the unprecedented nature of the response: Nearly 90% of the survey respondents said that, in the past five years, their PACs had never taken similar action in broadly suspending or canceling contributions.
The findings also reveal that the companies whose PACs took action cited senior management’s (not just the CEO’s) views, a belief in the importance of democracy, and concern about corporate reputation as drivers of their decision. Just 3% of the corporate PACs decided to permanently stop contributing to the objectors, and for the vast majority of companies planning to resume PAC contributions, the path forward is uncertain: about a third noted that they plan to collect more information on potential recipients before resuming their PAC giving.
The Conference Board survey represented the responses of a cross-section of 84 large firms, including public, private, and nonprofit corporations. Respondents were primarily Chief Legal Officers, Chief Government Relations Officers, Chief Communications Officers, and other senior members of management. The survey was conducted between January 25th to February 2nd. Additional insights include the following:
Only 28% of companies have publicly announced the steps their PAC has taken.
- About 28% of companies have announced their PAC’s actions both internally and externally, while another 25% have announced their PAC’s decision but only internally.
A majority of respondents stopped PAC contributions, divided evenly between those who have suspended all PAC contributions to those in Congress and those who have targeted their actions against those who voted against certification.
- 55% have stopped PAC contributions.
- 27% stopped contributions to those who voted against certification, either temporarily (13%), permanently (4%), or for an as-yet-undetermined period (11%).
- 28% suspended PAC contributions to all those in Congress.
- The remaining 47% did not take action via PACs for a variety of reasons, including that they do not have a PAC, they are still considering what to do, or they have affirmatively decided not to take a specific response (18%).
Corporate responses to January 6th focused on restricting political contributions and condemning violence; relatively few have commented directly on efforts to block certification of the Presidential election.
- About 46% of companies indicated that they have not taken steps beyond restricting PAC contributions, in response to the events of January 6th.
- While about 32% indicated they made a public statement condemning the violence at the Capitol, only about 9% said they made a public statement against the effort to block certification.
- Interestingly, of the companies whose PACs suspended or canceled contributions specifically to members of Congress who voted against certification, only 17% of them made a public comment condemning the effort to block certification. This suggests that, when it comes to addressing the objectors, companies let contributions speak louder than words.
Underscoring the unprecedented nature of the Capitol riot – and the corporate response – nearly 90% of companies had not taken similar action in recent years.
- 87% stated they had not taken similar action in broadly suspending or canceling PAC contributions in the past five years.
Multiple factors drove the decisions by PACs, with senior management’s views, a belief in the importance of democracy, and concern about corporate reputation being key reasons.
- About 52% cited the views of senior management as a key driver, with somewhat fewer (44%) saying the views of the CEO played a critical role.
- 46% cited the belief that a stable democracy is necessary for a stable business environment, with 25% citing concerns about democracy apart from business considerations.
- While concerns about company reputation was a key factor (nearly 45%) in driving the organization’s response, concerns about the views of specific constituencies were lower. Employees ranked first (34%), followed by customers (21%) and investors (17%).
The chief government relations officer – even more than the CEO – was the most commonly involved member of senior management involved in the decision.
- These responses were largely internal group decisions: The Chief Government Relations Officer was involved 76% of the time, followed by the General Counsel (64%), the CEO (61%), and Chief Communications Officer (50%).
- Notably absent were external consultants, ranking last at about 6%.
Corporate boards played a limited role in recent PAC decisions.
- Under Federal Law, corporations have the power not only to sponsor political action committees, but to exercise control over their PACs, but it is very common for corporate-sponsored PACs, which are funded by employee contributions, to have a separate governing entity that makes decisions about which candidates to support.
- Not surprisingly, while about 27% of firms informed their corporate board of directors at the time of the decision, just 11% consulted with their board and nearly 7% informed the board beforehand. In only 4% of the cases did the corporation’s board of directors make the decision.
- Many respondents who cited “Other” (30%) noted that their corporate board of directors was not involved or that its involvement was not applicable.
- “Boards often play a general oversight role with respect to company-sponsored PACs: ensuring that the PACs have appropriate controls in place to ensure legal compliance, to align with the company’s interests, and to protect the company’s reputation. But high-profile situations that have a major impact on a company’s reputation can nonetheless put the board in the hot seat,” said Paul Washington, Executive Director of the ESG Center at The Conference Board.
“Boards should review their companies’ range of political activities, including their own role, as companies prepare for discussions with investors during this upcoming proxy season.”
For those companies planning to resume PAC contributions, the path forward is unclear.
- More than a third of companies (37%) plan to collect more information on potential recipients before resuming PAC contributions. About 21% plan to revise the criteria for contributions to address supporting democratic processes, and another 17% plan to adjust the process for approving contributions.
- But 51% of companies selected “Other” when asked the steps they are planning to take before their PACs resume contributions. Many said they were unsure of the plan going forward, while others said they would revise their giving criteria to be more aligned with their company’s values.
Nearly all (95%) of the 84 firms responding to the survey had annual revenues over $1 billion: 45% have revenues $25 billion+; 22% have revenues between $11-24 billion, and 29% have revenues between $1-10 billion. Of the respondents, 69% were public companies, 24% were private for-profit firms, and 7% were non-profit organizations.