Dear Corporate CEO:
The 2012 election is expected to be the most expensive in history - and it will also be the first presidential campaign in the wake of the Supreme Court's Citizens United decision, which undermined a generation of reforms enacted in the wake of Watergate and opened the door to unrestricted corporate and union political expenditures for the first time since 1947. As a result, the demand for political contributions from the business community is intensifying.
We believe that using corporate treasury funds to influence elections is both bad for business and bad for our democracy. This new era, in which unprecedented pressure is exerted on corporate leadership to divert corporate resources from business growth and development into political expenditures, is both fundamentally damaging to shareholder value and to the preservation of the strong and fair democracy needed to support a competitive economy.
We are reaching out to you today to ask you to take a stand against this dangerous turn in American history.
We ask that, as a [fill in blank - CEO, President, Chair of Board], you pledge to refrain from political spending at your corporation and that no treasury funds will be used to influence elections, either directly or by giving to third-party groups that make political expenditures (e.g., 501(c)(4) organizations, trade associations, SuperPACs or 527s). Additionally, if your corporation is a dues-paying member of a trade association like the U.S. Chamber of Commerce, we ask that you specifically request that your dues not be used for political purposes.
Increasingly, companies such as IBM, Colgate Palmolive, Wells Fargo and others are adopting policies prohibiting spending of political funds directly or indirectly influence elections. A report by the Committee for Economic Development explained that corporations should not engage in this type of behavior because, "a vibrant and strong economy results from business competition in the economic marketplace, not in the political arena. Donor influence serves to undermine market forces by facilitating policies or regulatory requirements that diminish competition or unduly advantage particular firms or industries. Furthermore, the influence of money can sustain inefficient or outmoded businesses, thereby subverting and frustrating the creative innovation that encourages new investment, spurs business development, and keeps jobs and investment at home."
Corporate political spending is not only bad for the free market, it is also bad for a corporation's reputation. Corporate political contributions can backfire on a corporation's reputation and bottom line. In 2010, Target and Valero received unwanted attention, consumer boycotts, and protests for their support of controversial candidates and ballot measures. In a Harris Poll released in October 2010, a sizable portion (46%) of respondents indicated that if there were options, they would shop elsewhere if they learned that a business they patronized had contributed to a candidate or a cause that they oppose.
Academic research in this area has found that corporate political spending can be detrimental to shareholder value. A study at the Carlson School of Management at the University of Minnesota concluded that companies making large political contributions had poor corporate governance and lower shareholder value. The study suggests that when managers use corporate funds to make political donations, the donations may advance their political views and own careers--not the interests of the corporations they manage.
In a letter to the Securities and Exchange Commission, Professor Michael Hadani at Long Island University reviewed much of the academic research on corporate political spending and found that "firms' political spending, in particular contributions to policy makers, at best has an insubstantial impact on their bottom line and more often results in a negative effect of firm financial performance, as well as an increase in risk taking which will also erode future earnings."
Our nation greatly depends on the strength of our democratic system of governance. But current practices are weakening the vitality of our democracy. They undermine accountability, transparency and adherence to the rule of law, all of which are essential safeguards against corruption and abuse of the political process. They also encourage the diversion of precious business resources into an arms race of political spending.
We urge you to help us restore public faith in both business and government. We look forward to working with you and thank you for your leadership.
President and CEO