Economic Scene: Charitable Giving by Corporations Is Also About Getting, a New Study Finds


Think of it like this: One way a company could please Senator Chuck Grassley, the Iowa Republican who leads the judiciary committee and is a member of the committees on finance, agriculture, the budget and taxation, would be to have a corporate political action committee donate directly to his campaign.

But there is another way, one that often slips below the radar of campaign-finance watchdogs. Why not donate to the Partnership for a Drug-Free Iowa, where the senator has been an honorary advisory board member?

A corporation could also give to the University of Northern Iowa Foundation, on whose board Mr. Grassley sat as a trustee. Over the period covered by the study, the foundations of AT&T, ConAgra Foods, General Electric, Goldman Sachs, Medtronic, Merck, Monsanto, Nationwide Insurance, Principal Financial Group and Rockwell Collins all contributed to one or the other.

Mr. Grassley’s office, when asked about the contributions, had no immediate comment.

That companies might butter up legislators by donating to their pet charities is not new. In 2010, my colleague Eric Lipton documented the contributions to the Joe Baca Foundation and the James E. Clyburn Research and Scholarship Foundation, each affiliated with a Democratic member of Congress.

The researchers who conducted the new study don’t claim that any specific charitable contribution was meant to manipulate the political process. But their work lays bare the extent to which corporate donations may respond to political, rather than charitable, motivations.

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Senator Chuck Grassley, an Iowa Republican who leads the Judiciary Committee, has played a role in two charities tied to his home state that have drawn donations from major corporations.

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Erin Schaff for The New York Times

It is possible that when the Exelon Corporation donated $25,000 to Representative Joe Barton’s effort to build a Boys and Girls Club in Texas in 2008, it did so because it believed in boys and girls, not because Mr. Barton was the top Republican member of the House Energy and Commerce Committee. Microsoft’s donation to the Seattle Art Museum may have reflected the company’s support for the arts, not its desire to please Representative Jim McDermott, who was on the museum’s honorary committee. (Mr. McDermott, a Democrat, has since retired.)

The new research uncovers patterns in the aggregate data that suggest corporate donations are often dictated by recipients’ political clout. For instance, a company foundation will donate more to charities in districts where the representatives have gained seats on a committee that is important to the company. And when the member of Congress leaves office, corporate donations to charities in his or her district will dip.

Corporations’ philanthropy often flows to the same areas as their political action committee contributions: Charities in districts where companies favor a particular candidate tend to get more corporate donations.

A charity need not have been founded by a member of Congress to get corporate money. But it helps. A nonprofit is more than four times more likely to receive grants from a corporate foundation if a politician sits on its board. And corporate foundation grants are even more likely if the politician happens to sit on a committee being lobbied by the firm.

The authors of the study examined only a subset of corporate philanthropy, money flowing through corporate foundations that must disclose the recipients of their largess. But the research suggests that the impact of corporate contributions could be much bigger than even critics of campaign-finance practices realize.

The researchers estimate that over 7 percent of charitable donations by corporate foundations are intended to buy political leverage. Applied to $18 billion worth of corporate philanthropy in 2014, that would amount to $1.3 billion, almost four times as much as total political action committee contributions that year and 40 percent more than the corporations’ lobbying expenditures.

There are a couple of lessons here. For those who favor campaign-finance reform, perhaps the most urgent message is that there are many doors that corporate America can use to buy influence. But the research also highlights the way that companies interact with society.

Corporations are likely to tally their foundations’ charity as a decided plus on the dashboard of corporate social responsibility. But politically motivated charitable giving meant to undercut regulations, promote a tax cut or otherwise gain a break could actually reduce total welfare.

As the researchers write, “If corporations’ good deeds (in the form of charitable contributions) cater to politicians’ interests, who as a result put the interests of business ahead of those of voters, the overall welfare effects are ambiguous — society benefits via increased charity, at the potentially high cost of distorting laws and regulation.”

None of this would happen, of course, if politicians weren’t so hungry for corporate money. “Companies wouldn’t do this is it didn’t pay off,” Professor Bombardini told me. “Politicians get good publicity by channeling funds that are valuable to the community. Whatever makes you look good, you want to take credit for it.”

But with a new wave of scandals engulfing some of the nation’s corporate titans, it would behoove them to honestly assess the ultimate purpose of their charity.

Facebook doesn’t have a corporate foundation. But its chief executive, Mark Zuckerberg, has pledged 99 percent of his Facebook shares to advance human potential and promote equality. Perhaps the pledge could include never deploying his company’s financial might to steer the nation’s political process for corporate gain.

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Editorial: Congress Resists the President, for a Change


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Credit
Andrea Bruce for The New York Times

In this time of political division, the broad story line of the omnibus spending bill approved late last week is largely a heartening one. With the Democratic leadership in full resistance mode and the Republicans facing a treacherous political climate in the fall elections, Congress repudiated President Trump’s extreme budget cuts in rare bipartisan fashion. In doing so, it protected a range of domestic programs the president had targeted for huge reductions, if not outright elimination, and sent an infuriated Mr. Trump scuttling off to Mar-a-Lago with yet another problem to worry about: a mediocre Congress making a lazy president look even worse by actually accomplishing something.

A cynic observing this unusual Capitol Hill lovefest could plausibly argue that it’s easy enough for Republicans and Democrats to link arms when there’s serious money to be spent. And it is: There is plenty of old-fashioned pork in this bill. Even so, it is hard to argue with an outcome that preserved and in some cases increased funding for vital health, education, foreign aid, infrastructure and environmental programs while providing a fraction of what Mr. Trump wanted for his border wall — the presumed reason for his choleric withdrawal to his Florida fortress.

There is another story line within the broader one, and it too is heartening: the willingness of the Democratic leadership to stand up to mischief-makers in Congress itself. A bill of this magnitude —$1.3 trillion altogether, including hundreds of billions for the military — is fertile ground for legislators who wish to sneak in provisions that are unlikely to survive on their own and thus need the protective cover of a big must-pass bill. As a rule, these so-called riders have nothing to do with spending and are aimed primarily at changing policy or undermining basic laws.

Most of the most damaging riders in the bill were devised by Republicans and involved environmental policy. Among other things, they would have delayed enforcement of clean-air regulations, killed two Obama-era rules aimed at reducing greenhouse gases from oil and gas wells, weakened protections for endangered species and insulated the Trump administration from legal challenges to its efforts to repeal clean-water rules.

That these and many more riders were deleted from the bill is a tribute to Senator Charles Schumer of New York, the Democratic leader, and Senate allies like Patrick Leahy of Vermont, Tom Udall of New Mexico and Thomas Carper of Delaware, all willing to annoy some powerful interests along the way. Lisa Murkowski, Republican from Alaska and chairwoman of the Senate Energy and Natural Resources Committee, had hoped to torpedo protections for old growth trees in Alaska’s forests. Thad Cochran, Republican from Mississippi, had hoped for a retirement present after 40 years in the Senate in the form of a flood-control project known as the Yazoo Pumps, a bad idea that has been kicking around for decades and would drain 200,000 acres of wetlands in the Mississippi Delta so that soybean farmers, who have drunk liberally from the public trough, could plant more crops. Both he and Ms. Murkowski were denied.

The budget for the Environmental Protection Agency, which Mr. Trump proposed to cut by 31 percent, stayed even. Funding for energy-efficiency and renewable-energy programs, facing a 70 percent cut, went up. Money for the Land and Water Conservation Fund, a vehicle for protecting threatened open space, rose to $425 million, far more than the $64 million in the president’s budget.

Continue reading the main story

Editorial: Congress Resists the President, for a Change


Photo


Credit
Andrea Bruce for The New York Times

In this time of political division, the broad story line of the omnibus spending bill approved late last week is largely a heartening one. With the Democratic leadership in full resistance mode and the Republicans facing a treacherous political climate in the fall elections, Congress repudiated President Trump’s extreme budget cuts in rare bipartisan fashion. In doing so, it protected a range of domestic programs the president had targeted for huge reductions, if not outright elimination, and sent an infuriated Mr. Trump scuttling off to Mar-a-Lago with yet another problem to worry about: a mediocre Congress making a lazy president look even worse by actually accomplishing something.

A cynic observing this unusual Capitol Hill lovefest could plausibly argue that it’s easy enough for Republicans and Democrats to link arms when there’s serious money to be spent. And it is: There is plenty of old-fashioned pork in this bill. Even so, it is hard to argue with an outcome that preserved and in some cases increased funding for vital health, education, foreign aid, infrastructure and environmental programs while providing a fraction of what Mr. Trump wanted for his border wall — the presumed reason for his choleric withdrawal to his Florida fortress.

There is another story line within the broader one, and it too is heartening: the willingness of the Democratic leadership to stand up to mischief-makers in Congress itself. A bill of this magnitude —$1.3 trillion altogether, including hundreds of billions for the military — is fertile ground for legislators who wish to sneak in provisions that are unlikely to survive on their own and thus need the protective cover of a big must-pass bill. As a rule, these so-called riders have nothing to do with spending and are aimed primarily at changing policy or undermining basic laws.

Most of the most damaging riders in the bill were devised by Republicans and involved environmental policy. Among other things, they would have delayed enforcement of clean-air regulations, killed two Obama-era rules aimed at reducing greenhouse gases from oil and gas wells, weakened protections for endangered species and insulated the Trump administration from legal challenges to its efforts to repeal clean-water rules.

That these and many more riders were deleted from the bill is a tribute to Senator Charles Schumer of New York, the Democratic leader, and Senate allies like Patrick Leahy of Vermont, Tom Udall of New Mexico and Thomas Carper of Delaware, all willing to annoy some powerful interests along the way. Lisa Murkowski, Republican from Alaska and chairwoman of the Senate Energy and Natural Resources Committee, had hoped to torpedo protections for old growth trees in Alaska’s forests. Thad Cochran, Republican from Mississippi, had hoped for a retirement present after 40 years in the Senate in the form of a flood-control project known as the Yazoo Pumps, a bad idea that has been kicking around for decades and would drain 200,000 acres of wetlands in the Mississippi Delta so that soybean farmers, who have drunk liberally from the public trough, could plant more crops. Both he and Ms. Murkowski were denied.

The budget for the Environmental Protection Agency, which Mr. Trump proposed to cut by 31 percent, stayed even. Funding for energy-efficiency and renewable-energy programs, facing a 70 percent cut, went up. Money for the Land and Water Conservation Fund, a vehicle for protecting threatened open space, rose to $425 million, far more than the $64 million in the president’s budget.

Continue reading the main story