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A year out from the 2012 presidential election, a study released Thursday takes stock of corporate political spending, oversight, and disclosure across the entire S&P 500 – the most comprehensive analysis to date of the flow of money from company treasuries to political causes. Board of director oversight of corporate political spending has expanded to 31 percent of the S&P 500, up from 23 percent in 2010. Companies that have more oversight mechanisms also spend about 30 percent more money on politics than those that do not, according to the report, which was commissioned by the Investor Responsibility Research Center Institute (IRRC) and conducted by the Sustainable Investments Institute (Si2), a non-profit, non-partisan research outfit for investors. “We confirmed, by looking at a really big universe of companies, that boards of directors seem to be taking this issue seriously, and companies are responding to calls for more oversight and more transparency,” says Si2 executive director Heidi Welsh, who co-authored the study with Robin Young. At the same time, Welsh says, the findings show that more oversight and more transparency does not translate to less spending: “It’s not a lever to reduce spending as far as we can tell now.” The report is based on a review of policies listed on the websites of the 492 U.S. companies in the S&P 500, and on state and federal political spending records compiled by the Center for Responsive Politics and the National Institute on Money in State Politics. What is known and what is not known about how companies spend their funds on local, state, and federal elections have been issues for the Supreme Court as well as for shareholders in recent years. In the Citizens United decision last year, the Supreme Court ruled that companies could make certain kinds of political donations anonymously, in the form of “independent expenditures,” which can be used to fund issue ads that promote or attack candidates. The new IRRC/Si2 study finds an increase in the number of companies that “now say they will not fund campaign advertisements for or against candidates, generally will not do so, or are reviewing their policies” – up from 58 companies last year to 77. Policies on indirect spending through trade associations also jumped from 14 percent of the companies in 2010 to 24 percent this year: “Half of the 100 biggest companies now disclose their policies on indirect spending through trade groups and other politically active non-profit groups, but this commitment evaporates at smaller companies,” the report states. However, the study also finds that only five companies openly acknowledge making independent expenditures, “even though careful scrutiny of voluntary spending reports adds a few firms to this tally,” the authors write. Similarly, they find that “only 26 companies in the entire S&P 500 index acknowledge any relationship with 501(c)4 social welfare organizations that are playing a key role in funding issue ads in campaigns.” Prior to Citizens United, starting in around 2004, shareholder activists had already begun to push for more transparency on political spending at major companies. The driving force behind those proposals is “very basic,” Welsh says. “If corporate treasury money is being spent by a company, it’s shareholders’ money and they want to know how it’s being spent. And they want to know that it’s not being spent for interests that don’t align with that of the company’s business.” The study notes that money allocated to lobbying – $979.3 million among the S&P 500 last year – vastly outweighs money spent on many state-level political activities and federally registered political candidates, which totaled $143 million. But even a little money can lead to major reputational risk, the authors say. “It’s high-impact spending,” notes Welsh. “A relatively small amount of money can come back to bite a company pretty hard.” A prime example was last year’s case of Target’s donations to a Republican candidate in Minnesota who opposed gay marriage. The company’s $150,000 donation touched off a media uproar and a national boycott. While disclosure of companies’ political spending policies is on the upswing, says Welsh, there is still a great deal of variance in what those disclosures reveal. She points to Pfizer’s disclosure as a stand-out for the level of detail it provides on the candidates the company supported by state, year, party, and election result. “A company report like that is the best,” she says. “There, you really know what the company is spending.” However, she continues, “a lot of the reports don’t do that. They will exclude things such as ballot initiative spending. They won’t indicate say, a political party… There’s really no consensus among a critical mass of companies on what all should be disclosed.”

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