Corporate America presses pause on political contributions

Introduction

Weeks before a 2018 special U.S. Senate election in Mississippi, a video came out in which Sen. Cindy Hyde-Smith, a Mississippi Republican running for the seat, could be heard saying that if a political supporter “invited me to a public hanging, I’d be on the front row.” 

Her comments set off a furor. Corporate donors  such as Walmart, Major League Baseball, Google, and the pharmaceutical company Amgen, issued highly unusual requests for Hyde-Smith’s campaign to refund contributions from their corporate political action committees. 

The Hyde-Smith incident foreshadowed what is happening in the wake of the violent breach of the U.S. Capitol: an unprecedented wave of corporations, trade associations and GOP-supporting groups vowing to cut off contributions to Republican members of Congress who objected to certifying the presidential election — a group that includes Hyde-Smith. 

The extent of the breach between the GOP and business, traditional allies, is still playing out, and the situation remains volatile. But it hits Republicans at a time when Democrats are assuming control of both houses of Congress and the White House, and the minority is typically a less advantageous position from which to raise the funds the party will need to win back seats. 

“We have taken the destructive events at the Capitol to undermine a legitimate and fair election into consideration and will be pausing political giving from our Political Action Committee to those who voted against certification of the election,” a Marriott spokeswoman said in a statement.

Other corporate donors said they will suspend political giving entirely, at least for a time. And some companies, such as Shopify, the online store platform that had operated stores for President Donald Trump’s campaign and business, terminated service. 

The list of corporate entities pausing or altering their political contributions includes corporate monoliths such as JP Morgan, Blue Cross Blue Shield Association and Marriott, as well as major trade associations like the National Association of Realtors. Others said they will re-evaluate their political giving with the attack on the U.S. Capitol and the objections to certifying the election in mind. 

Of course, corporate PAC dollars, legally capped at $5,000 per candidate per election, are hardly the largest source of candidate dollars. Fundraising varies by candidate, but Republican candidates for the House raised, on average, about 20% of their total campaign contributions from all PACs, including corporate PACs, during the 2020 election cycle, according to data analyzed by the nonpartisan Center for Responsive Politics, which tracks money in politics. For Republican candidates for the Senate, the average was less. But checks from PACs are reliable, and these well-known brands have influence beyond the amount they give.

It may not be permanent. Corporations have typically relied on Republicans to fight for policy priorities such as lower taxes and deregulation, and may need them again. It’s early in the 2022 election cycle, so companies instituting a temporary or limited pause to political contributions have time to begin giving again later.

Nonetheless, businesses are taking an unprecedented strong stance on the foundational issue of supporting democracy, said Sheila Krumholz, executive director of the Center for Responsive Politics — and that’s significant. 

“There could be permanent fallout; I don’t know what that looks like yet,” Krumholz said. “I think what’s more realistic is that this will continue to snowball, but at some point in this cycle I believe it will be back to business as usual and it may mean that they’re not giving to the objectors but that doesn’t mean they’re kind of packing their tasseled loafers and going home.”

Money to Republicans, of course, may not stop completely. Many of the newly announced policies on giving leave companies room to write checks to non-campaign committee entities, such as leadership PACs or super PACs though it is unclear that they will do so.  In addition, Republicans are unsure how the spate of corporate announcements will affect fundraising for their party committees. A question mark especially hangs over the GOP’s Senate arm, currently headed by Sen. Rick Scott, a Florida Republican who objected to certifying some of the election results. Scott this week downplayed the concerns, telling CNN that “if you want opportunity, and lower taxes and less government, you’re going to support Republicans.” 

But Krumholz and others agreed the announcements are a big step, whatever comes next. “The fact that these companies would step out in this moment… means there’s a fundamental belief about how the democratic system should work,” said Meredith McGehee, the executive director of Issue One, a nonprofit that advocates for reducing the role of money in politics.

This breach has been a long time coming. Corporate CEOs criticized Trump two years ago, after he said counter protestors at a white supremacist rally in Charlottesville, Virginia, should share the blame for the violence. 

Following that incident, the Center for Public Integrity reached out to nearly four dozen large public companies to ask whether they would continue contributing to funds or political committees related to the Trump administration, such as donations to his inaugural committee. None, at the time, committed to withholding money. But this time, the newsletter Popular Information contacted 144 companies that had in the past supported senators who Jan. 6 objected to certifying the election, and dozens said they would suspend or halt contributions in some way. The list includes some of the same companies — such as JP Morgan, Coca-Cola and Amgen — that declined to commit to doing so after Charlottesville. 

Now, though, longtime GOP political strategist Scott Reed said companies have lived with “an incredibly unstable Washington” for the past four years, and Republicans will have to “bring some stability back to the business community so they can focus on economic growth, a bedrock of Republicanism.”

Reed acknowledged that Republicans’ fundraising problems go further than the corporate uprising. Democrats have done a better job fueling their campaigns with dollars from small donors. In contrast, Republicans have relied on a few giant financiers, the biggest of which, casino magnate Sheldon Adelson, died Jan. 12. 

Corporations and trade associations expect to be asked about their political contributions. Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce, a heavyweight spender of money to influence elections, told reporters at a press conference Jan. 12 that he knew the question was coming before asking Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber, to answer it. 

“There are some members that, by their actions, will have forfeited the support of the U.S. Chamber of Commerce. Period, full stop,” said Bradley, though he declined to name them.

As this plays out, businesses will have to decide how political contributions could affect their business and some may “start re-evaluating whether or not to have a corporate PAC,” said Douglas Chia, a former assistant general counsel and corporate secretary for Johnson & Johnson who now consults on corporate governance and is fielding questions from clients. Some companies, famously including Apple Inc., forgo them. 

What the loss of support will mean at the ballot box is far from certain. Take Hyde-Smith. The corporate contributors who denounced her comments in 2018 have largely stayed away from contributing to the senator during the 2020 election cycle, according to an analysis by Mississippi Today. 

But the senator easily won reelection last year.