SEC Commissioner Calls for Corporate Disclosure of Contributions to Political Nonprofits

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February 24, 2012; Source: Wall Street Journal

A core value of Nonprofit Quarterly’s commitment to an active democracy is maximum possible transparency. In the wake of the damage wrought by the Citizens United decision of the Supreme Court, we are frequently reminded of former Justice Louis Brandeis’s statement, “If the broad light of day could be let in upon men’s actions, it would purify them as the sun disinfects.”

At the Securities and Exchange Commission last week, Commissioner Luis Aguilar seemed to be channeling Justice Brandeis, arguing that the SEC should mandate a “system of disclosure related to corporate political expenditures—and that failure [to do so] results in investors being deprived of uniform, reliable, and consistent disclosure regarding the political expenditures of the companies they own.” He said that the SEC and corporations together must “ensure that investors are not left in the dark while their money is used without their knowledge or consent.”

Aguilar isn’t simply riding a personal hobby horse. This is a burgeoning issue in the corporate world. Fifty of the 465 corporate shareholder proposals in 2011 dealt with disclosure of political donations. Last August, several distinguished law professors submitted a formal petition to the SEC for rulemaking on political spending, presenting cogent arguments for mandating increased disclosure. Why would corporations resist disclosure? Aguilar noted the typical issues, including the fact that some investors might not want to invest in companies that made political to politicians and causes that they do not support (while others may not wish companies they invest in to make political donations whatsoever).

That is the same argument that major nonprofit leadership organizations have bleated over the years to resist calls for corporate disclosure of charitable donations. If the nonprofit sector’s national leadership organizations remember the core role of nonprofits in America’s democracy, they will back the call for mandatory disclosure of political donations—and add in disclosure of corporate charitable and philanthropic donations as well. After all, the primary instruments for undisclosed corporate campaign financing are 501(c)(4) “social welfare organizations” which fund super PACs or themselves spend on behalf of their secret donors.

The nonprofit sector’s all-or-nothing defense of donor anonymity makes nonprofits the handmaiden of the corporate sector’s exercise in behind-the-scenes electoral influence. As former Justice Brandeis, said, “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Well put, Mr. Justice. –Rick Cohen

  • James Jackson

    I agree that it is time for corporations to become transparent about their political contributions which most studies have shown to be an extremely poor investment . Shareholders, especially, should speak out.