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The accounting profession still gives most of its campaign contributions to Republicans, but the portion going to Democrats is growing.
Kate Plourd, CFO.com | US
April 2, 2008
For the first time in more than a decade political campaign contributions from the accounting industry are starting to shift toward Democratic candidates.
Political action committees (PACs) for the Big Four accounting firms and the American Institute of Certified Public Accountants have favored Republicans in doling out corporate campaign contributions since the late '90s. But the 2006 election seems to have instigated a shift. (For contributions by each firm and the AICPA to both parties, see charts below.)
According to recent Federal Election Commission data, PACs for KPMG, Deloitte & Touche LLP and PricewaterhouseCoopers have noticeably increased their contributions to Democrats since the party took control of Congress in the midterm elections.
For example, according to FEC filings, Deloitte still gives more of its total contribution (61.6 percent) to Republicans than to Democrats. But the percentage going to Republicans has fallen. In 2007 and the first two months of 2008, Deloitte increased the percent of its total contributions going to Democrats by 13 percent over the 2006 election season.
PwC, too, upped contributions to Democrats 12.8 percent over 2006. KPMG started increasing donations to Democrats even earlier. In 2006, KPMG gave ten percent more to Democrats than it did in the 2004 election season and has given 7 percent more in the current election season than it gave in 2006.
PACs for Ernst & Young and the AICPA have increased the percent of their contributions going to Democrats as well, although the increases are smaller. Each has contributed 7 percent more to Democrats this election season than they did in 2006.
Contributions typically increase during presidential election years because of the expensive race to the White House. But while most of the country is watching the presidential race play out, accounting firms have so far focused their largesse on legislators in Congress and the Senate.
In fact, only two accounting firm PACs have donated to a presidential candidate in the 2008 election so far. PwC's PAC gave Senator Hillary Clinton three separate donations totaling $10,000 in late 2007 (PwC also donated $10,000 to Democratic Senator Chris Dodd of Connecticut before he dropped out of the race) and KPMG's PAC donated $10,000 to Republican Rudy Giuliani in June 2007. Out of the $2.28 million in contributions from the accounting profession given during 2007 and until February 29, 2008, only $30,000 has gone to presidential candidates.
Proving the exact motivation behind corporate political donations is a difficult feat, says Rick Vanden Bergh, a professor at the University of Vermont who studies corporate strategy in the political environment. He tells CFO.com that contributions to congressional representatives and senators are more effective for firms in a regulated profession (such as accounting) because those legislators play a more pivotal role than the president in policy making and in the oversight of regulatory institutions such as the SEC.
In a recent paper called "Targeting Corporate Political Strategy: Theory and Evidence from the U.S. Accounting Industry," Vanden Bergh analyzed the corporate strategy of the accounting profession when Democrats took over in 1992, following Bill Clinton's election,
His paper argues that firms in the early 1990s made their donations with the intent of directly influencing policy decisions, though he acknowledges another theory that says firms simply shift their donations to the party with the most influence.
"It could easily be that the shift in power is driving the shift in contributions," he says. "If Obama or Clinton wins, it will be the first time in eight years that Democrats control all three branches and it would likely [cause] a major shift."