Corporate Behavior Is Changing With The Guidance Of The Center For Political Accountability

The founding of the Center for Political Accountability in 2003 was propitious. The goal of bringing transparency to corporate political spending has been timely for this nonprofit, nonpartisan advocacy group. It might seem surprising, but the organization spearheaded directly engaging with companies on this subject. Along with more than thirty shareholder advocates, the NGO has improved transparency and supervision of this type of business disbursement. The subject of their work also includes funds given to various types of tax exempt organizations, including trade associations, as well as soft money donations. Following its establishment, CPA has grown into a leading practitioner in improving disclosure of donations to political causes. From the beginning, the group has engaged shareholders and companies in the process. The nonprofit supports an open and responsible engagement in politics by corporations. It is guided by the belief that company boards, shareholders, investors and the general public would benefit from bringing such activities out into the open. The results of the advocacy efforts have been a rise in business ethics. To accomplish its purposes, the NGO has made full use of presently existing rules and laws encouraging such disclosure. In this regard, the group has prepared a model code. A growing number of major enterprises have used this model to guide their own codes of conduct. Prior to the proxy season of 2012, one hundred companies had committed to its proposed standard. That year, twelve more agreed to follow this guide. If the SEC decides to go through with a rule mandating political donation reporting by all public companies, a trend will become the norm. Opponents have rejected this prospect. They have taken the position the agency power does not extend to protecting the interests of voters. But they ignore that investor interests will be fulfilled in this respect. As owners, investors are entitled to such information. Additionally, as a segment of the public, they should know what political activities other corporations are supporting. It is within the powers of the agency to compel such disclosure. The Citizens United decision and its aftermath have brought a new urgency to the subject of CPA advocacy. In this new era, a number of companies have reacted by opting for making their donations behind the cover of front groups and associations. Their preference for avoiding closer inspection of such contributions is a disturbing sign. Hence, the need for transparency has become more relevant. The risks of bad publicity have been highlighted by the public embarrassment of Target and other enterprises. Target publicly regretted its decision to contribute to a group that supported a candidate who was against gay marriage. This was not before it was subject to store protests, boycott activity and negative social media publicity. A shareholder resolution was introduced to prevent a repeat of this activity. Prudential Financial, PepsiCo, Dow Chemical, UPS and Pfizer have also been subject to shareholder action for contributions disappointing their shareholders. These firms learned the hard way that such contributions can lead to serious penalties. There are risks in such behavior for shareholders, the contributors and their boards alike. In the era of Citizens United, a company should expect heightened scrutiny from the media, interested members of the public, politically oriented NGOs and prosecutors. However, at present more than half of the Fortune 100 companies have adopted some type of disclosure policy. There remains room for many more to adopt transparent practice. The Center for Political Accountability has found itself a pivotal player in the new election spending era spiked with risk