SCOTUS Alert–Citizens United

As many know, the Supreme Court handed down its decision on Citizens United v. Federal Election Commission yesterday.  The airwaves and websites have been buzzing with political operatives on both sides of the spectrum lambasting or praising the decision.  While the attorneys continue to analyze the decision and before we know exactly how it will change the way corporations may participate in future elections, one thing is certain:  Political action committees are as valuable and relevant to corporations and trade associations today as they were before the Court made its ruling yesterday.

What we know as PAC professionals is that on-going relationships with lawmakers are key.  Even with this ruling, one of the few ways to develop and maintain those relationships is by directly supporting candidates and lawmakers campaigns for election.  Still the only way we can do that is through a PAC contribution.

What we also know as PAC professionals is that the average eligible employee or member does not understand the distinction between the ability to pay for political ads and PAC contributions, and it’s no wonder when the press reports with phrases like the ones we heard on NPR last night “The court abolished limits on corporate spending in political races.”  This kind of reporting will certainly stir up old doubts and systemic cynicism about corporate political spending in general.  Donors may be wary that PACs are in danger of being viable political tools and no longer worthy of support.

While many PAC supporters completely understand the program, our PAC survey research consistently reveals that large numbers of donors do not understand the laws and rules governing campaign finance.  The oft-cited reasons they support the PAC is to help create a positive political climate so their company can achieve its business objectives.  If suddenly the company is able to take care of a large part of this on its own, many donors will be confused about the company’s need for their support.

It is incumbent upon us in these early days after the decision to address the decision with our employees and members and clarify the continued value of their support of the PAC.  Failing to do so will create a tougher environment to continue raising PAC funds.

Consider some of these points to share with your eligible employees/members.

• Citizens United had nothing to do with political action committees (PACs) or lobbying.  The ban on corporate contributions to candidate campaigns remains intact.  Rather, the court’s decision gives corporations the right to make unlimited independent expenditures for advocating the election or defeat of candidates apart from their campaigns and broadcasting issue ads.

• The broad mission of a PAC is to provide financial contributions to candidates who share the organization’s views on public policy issues that directly affect the success of the enterprise.  This mission represents a partnership and cannot be achieved without the voluntary support of those eligible to contribute.

• The PAC is one of the only tools we have for getting lobbyists face-time with lawmakers to build all-important relationships in the wake of tougher ethics and lobbying laws. (This shift may be subtle to political insiders, but selling this concept to dubious potential donors will be another thing.)
• Although corporations are now permitted to use treasury funds to speak out about candidates and their position on public policy issues, candidates that deserve to be supported will continue to highly value PAC contributions.

Will our organization take advantage of the new allowance for corporate spending? A company’s decision to make independent expenditures on behalf of a candidate will need to be carefully considered in light of the expectations of its shareholders and other external publics and the disclosure requirements which were upheld in the decision.  Providing corporate financial support to another entity, such as a trade association, for the express purposes of making independent expenditures is a more likely scenario.  Even then, the disclosure requirement may be a disincentive for many corporations to participate. Either way, such expenditures can not necessarily achieve the same ends as a PAC contribution to a candidate’s campaign—namely to build relationships with lawmakers.  Senior leaders must be made to understand the difference.

Likewise, independent expenditure must be truly independent and cannot be coordinated with the candidate’s campaign.  The current confusion in FEC regulations about what constitutes “coordination”, could act as a real deterrent to a company or association from making such expenditures.  Does the fact that a corporate PAC has contributed directly to the candidate constitute coordination?  How about the fact that a corporate lobbyist met with the candidate (as a Member of Congress) to discuss an issue just days before the expenditure.  It is speculated that future enforcement might well focus on “coordination,” which adds additional exposure to the company involved.

Where is our senior leadership on this issue? PACs flourish only with the understanding and demonstrated support of senior leaders.  In addition to their own personal financial support, these leaders authorize adequate budgets, staffing and resources to grow and maintain the PAC.  While they should continue to see the need for PAC donations to candidate campaigns, if their company does make independent political expenditures, they will naturally want to weigh the costs and benefits of corporate giving vs. PAC giving.  For some, it may be more expedient to make corporate expenditures if the same effect can be achieved. Independent expenditures, however, cannot help a lobbyist develop a relationship with a Member of Congress without it becoming coordinated.  PAC contributions can be pledged or promised while independent expenditures cannot.

What role do we see the PAC playing in our government affairs strategy? Most companies are not going to rush into independent expenditures and will continue to rely on their PACs for political donations.  If a strong PAC will continue to be needed, government affairs strategies must include a robust communications effort with their restricted class to gain their understanding and continued support.

We will continue to review the Court’s decision and discuss its implications on political involvement of the business community.  We welcome any feedback you may have and look forward to hearing how you will be approaching this new era in your organization.

– Mike, Karen and Amie

Background: The case was prompted by the nonprofit group Citizens United’s intent to use corporate funds to promote its film “Hillary: The Movie” prior to the 2008 Democratic presidential convention in which former Sen. Clinton was seeking nomination.  After an unusual hearing of a second argument on the case, the court decided to overrule two court decisions that ban corporate advocacy spending in election campaigns (Austin v. Michigan Chamber of Commerce) and corporate and union spending on TV and radio messages—so called electioneering communications—in the weeks prior to an election (parts of McConnell v. Federal Election Commission).

In the wake of the court’s ruling, expect more uncertainty as the Congress may legislate new restrictions and the Federal Election Commission struggles to promulgate new regulations.