Human Capital & Careers

Campaign Contributions at the Office

Corporate PACs promote company interests, not employees' political ideologies.
Tim ReasonJuly 12, 2004

A CFO analysis has found that 58 percent of companies in the S&P 500 have political action committees (PACs). And of the executives surveyed by CFO whose companies already have PACs, 40 percent reported that they give more now, since the passage of the Bipartisan Campaign Reform Act of 2002.

“I’m not at all surprised to see greater emphasis on PACs,” says Charles E.M. Kolb, president of the Committee for Economic Development, in Washington, D.C. “That’s a good thing, because the money comes from individuals, and it’s the individual who votes.”

But that comment suggests PACs are genuinely conduits for individual giving. The reality is much fuzzier. Corporate PACs promote company interests, not employees’ political ideologies. Of the finance executives surveyed by CFO, 28 percent said they didn’t even know where their PAC contributions went, 61 percent said they had no influence (but were kept informed), and only 12 percent said they helped decide how to allocate the money.

In theory, employees give because they consider their career interests to be closely aligned with their employer’s interests. But is that the real reason? “There is pressure in corporations to be a team player,” declares Bill Allison, managing editor of the Center for Public Integrity, in Washington, D.C. “If you’re an ambitious employee in lower levels of management, you may feel that donating is in your interest.”

That pressure apparently exists at higher levels, too. In CFO’s survey, 79 percent of respondents held the title of vice president or higher (among them, 45 percent were CFOs, 17 percent controllers, and 11 percent vice presidents of finance). Yet even at those levels, 24 percent said not giving to their corporate PAC could be detrimental to their careers, and another 16 percent said they were unsure.

At many companies, employees have the option of making a regular donation — via automatic payroll deductions — to their corporate PAC. Federal Election Commission records show that among upper management, these donations are often calculated to add up to exactly $5,000 per year — the legal limit for individual donations to PACs.

Of course, federal election laws prohibit coercing employees into giving. In 1988, the U.S. Supreme Court ruled that union workers could “opt out” of paying the portion of dues that support a union’s political activities. Nonunion employees face less pressure, since they “opt in” to automatic payroll deductions. The law does not consider a payroll deduction or a supervisor’s request for a donation to be coercive, explains Bizzell, but any solicitation must include a disclaimer informing employees of their right to “refuse to contribute without reprisal.”

Nonetheless, almost 40 percent of top finance executives don’t fully believe their careers are unaffected by their workplace political contributions. (For more, see our July article “Office Politics.”)