Corporate political donations

Interesting article in today's Financial Times ("Lifting the Veil of Secrecy on Corporate Political Donations"). Corporations have been accused of many misuses of their growing power, and not least among these is their political influence. In recent years, public mistrust of corporate political donations has increased in the wake of various political scandals (DeLay, Abramoff) and corporate scandals (Enron, WorldCom).

But there is increasing pressure for change: more shareholder resolutions are calling for transparency in political donations. With 21% of investors voting in favor of these, the movement still doesn't have anywhere near a majority - but this is double the percentage that voted similarly last year. A few companies have already responded by publicly reporting their political donatoins; these include Morgan Stanley, Johnson & Johnson, and McDonald's.

Some shareholder pressure is aimed at ensuring that executives make donations for the good of the company and not for their own personal aims - but it's not clear to me how companies could justify making donations in either case. It's wrong for managers to squander shareholder money, and yet it's also very wrong for shareholders to hurt the rest of the citizenry by leveraging their disproportionate political power to enrich themselves.

Another interesting feature of this article was that, according to a survey by the Committe for Economic Development, two out of three executives say they've faced pressure to make a major political contribution. Though that may be one semi-reasonable motivation, and transparency might help them decline such requests in the future.