Bloomberg News

Aflac and Chubb Join Ranks of Companies Expanding Disclosure

September 25, 2012

Aflac Inc. (AFL:US) and Chubb Corp. (CB:US) are among a growing number of companies revealing their corporate contributions, some of which may go to nonprofits and trade associations spending millions of dollars on U.S. elections without disclosing their donors.

A study out today found 45 of 88 companies providing information about corporate donations, up from 36 a year earlier.

The trend toward corporate disclosure runs counter to a growth in campaign spending by nonprofits that don’t have to identify their donors. Even as Republicans on the U.S. Federal Election Commission and in Congress block efforts to force nonprofits to identify their donors, some corporate contributors are voluntarily disclosing their support.

“It shows forward movement,” said Bruce Freed, president of the Center for Political Accountability, which conducted the study with the University of Pennsylvania Wharton School’s Zicklin Center for Business Ethics Research. “Companies are showing that they consider this to be important. They’re acting on their own.”

Freed’s Washington-based group is among those advocating for greater disclosure of corporate contributions. By forcing companies to identify where their money is going, executives have to answer to shareholders and directors about their corporate contributions to outside groups that may not have the best interests of the company at heart.

Merck, Pfizer

For example, four of the seven biggest sellers of birth control drugs and devices, including Merck & Co. Inc. (MRK:US) and Pfizer Inc. (PFE:US), gave to a trade association that financed efforts to elect Republican lawmakers seeking to limit access to those products.

And Target Corp. faced a boycott by gay rights groups in 2010 after the company donated $150,000 to a business group supporting Minnesota Republican gubernatorial candidate Tom Emmer, who opposed same-sex marriage.

“Disclosure leads a company to think three or four times,” Freed said. “You do have some investors who will raise questions.”

A coalition of organizations has asked the Securities and Exchange Commission to require publicly traded companies to disclose their donations to nonprofits.

Squandered Money

“A lot of the research shows that the money tends to be squandered following the political biases of the CEO,” said Craig Holman of Public Citizen, a Washington-based advocacy group that favors stronger disclosure rules. “The objective is not to prevent political expenditures; it’s to make sure those expenditures are reasonable and for the benefit of the company itself.”

Former Federal Election Commission Chairman Bradley Smith called it “a bad thing” for groups to pressure companies into disclosing their donations, especially when shareholders “regularly defeat” such proposals.

“Many corporations are feeling pressure from faux ‘shareholder rights’ groups to adopt such policies, or to exit the political arena entirely,” said Smith, chairman and co- founder of the Center for Competitive Politics, an Alexandria, Virginia-based group that opposes campaign finance regulations.

The growth in spending by nonprofit groups that hide their donors is a byproduct of the Supreme Court’s 2010 Citizens United decision, which removed restrictions on corporate and union spending on behalf of candidates.

Blocking Legislation

Senate Republicans have blocked legislation that would have required all groups spending money on campaigns to identify their contributors, and the FEC has deadlocked along party lines, 3-3, on considering rules to require such disclosure.

Such organizations as U.S. Chamber of Commerce; Crossroads GPS, founded with the help of Karl Rove, former chief political strategist for President George W. Bush; and Priorities USA, put together by ex-aides to President Barack Obama, have spent $97 million on the 2012 elections, surpassing the $79 million they spent for 2008, according to the Center for Responsive Politics, a research group in Washington that tracks campaign spending.

Some companies have disclosed their support of nonprofits, including Chevron Corp. (CVC:US) and Prudential Financial Inc. (PRU:US), both of which helped fund the U.S. Chamber of Commerce. The oil companies’ trade group, the American Petroleum Institute, helped fund Americans for Prosperity, a nonprofit backed by energy executives Charles and David Koch that this year has spent $31 million to help elect Republican candidates.

Corporate Donations

Columbus, Georgia-based Aflac will start revealing corporate donations to outside groups, said Jon Sullivan, a spokesman. The company’s website said Aflac will report contributions of more than $50,000 to trade groups and other nonprofits.

Warren, New Jersey-based Chubb for the first time disclosed contributions of more than $1 million to trade groups, including $425,000 to the Chamber of Commerce and its legal reform institute.

Campaign finance lawyer Jim Bopp Jr., who has sued to overturn disclosure requirements, said he has no problem with companies acting on their own, without a government mandate.

“It should be up to the companies,” he said. “If they think they get a competitive advantage by disclosing their contributions, we are fine with that. That’s the marketplace.”

Political Campaigns

The nonprofits spending millions on political campaigns also have been targeted by New York State Attorney General Eric Schneiderman, who has sought tax returns from those groups incorporated as social welfare organizations so they can keep their donors secret.

“The recent activities of some tax-exempt organizations and businesses have been matters of great concern to New York,” Schneiderman wrote in a letter sent yesterday to Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, and House Ways and Means Committee Chairman Dave Camp of Michigan.

The two Republicans, whose party’s candidates have benefitted from $79 million in nonprofit spending compared with $15 million for Democrats, earlier objected to Schneiderman’s efforts to obtain tax returns directly from the organizations.

In a letter sent last week, the lawmakers told Schneiderman to request the information from the Internal Revenue Service, not from the groups themselves.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.


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Companies Mentioned

  • AFL
    (Aflac Inc)
    • $61.24 USD
    • 0.00
    • 0.0%
  • CB
    (Chubb Corp/The)
    • $91.95 USD
    • 0.49
    • 0.53%
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