May 15, 2011; Source: New York Times | The Supreme Court had its say in the Citizens United case, allowing corporations virtually unlimited political influence through donations to 501(c)(4) social welfare organizations. Comedian Stephen Colbert recently told the Federal Election Commission, “I believe that the Citizens United decision was the right one. There should be unlimited corporate money, and I want some of it. I don’t want to be the one chump who doesn’t have any.” Makes sense, but the still standing question is whether those donations should be kept secret from the American public.
Now the founder of the Vanguard Group, John Bogle, says that the political donations of corporations should be determined by shareholders and “not self-interested corporate managers.” As it is now, many corporations don’t even tell, much less involve or empower, shareholders about their political donations
In March, the Securities and Exchange Commission voted “to allow proxy proposals that require public companies to permit their shareholders to weigh in on their political spending.” In June, the shareholders of Home Depot will vote on a “nonbinding resolution of support for the company’s policies on, and future plans for, political contributions.”
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Seventy percent of corporate shares are controlled by money managers rather than individual shareholders, but Bogle says the institutional investors “have been unwilling to challenge political activities by corporate boards, even when those activities are not in their shareholders interests.”
To Bogle, the Citizens United case, which unleashes untold amounts of corporate political money, allows corporations to “exploit provisions in the law governing nonprofit groups to make lavish political contributions without disclosure, making it easier than ever for cash to subvert our political system.” He calls for all institutional investors to require proxy statements of each corporation that would say “the corporation shall make no political contributions without the approval of the holders of at least 75 percent of its shares outstanding.”
But what about tax exempt institutional shareholders? Foundations and nonprofits also hold a large swath of corporate shares and bonds. Will nonprofit institutional shareholders display the mettle that for-profit money managers have in calling for disclosure on donations to 501(c)(4) nonprofits? Or will the concept of disclosure of the names and amounts of donors make them suspect that the standard of donor disclosure might at some future point be extended to disclosure of donors to 501(c)(3)s? When it comes to corporate donations to Colbert or anyone else, it’s disclosure time.—Rick Cohen