Navigating the new world of corporate political spending

Although pundits are assuming that an avalanche of corporate money is about to be unleashed on the midterm elections, this reasoning belies the complexity of the decision facing companies on whether and how to engage in the election process.

The Supreme Court has ruled that corporations have the constitutional right to spend unlimited funds expressly advocating the election or defeat of candidates. Although pundits are assuming that an avalanche of corporate money is about to be unleashed on the midterm elections, this reasoning belies the complexity of the decision facing companies on whether and how to engage in the election process.

It is important to recognize what has and has not changed. Corporations were always allowed to run issue ads that do not directly ask voters to cast their ballots one way. These ads could run to 30 days before a primary or 60 days before a general election. Under the Supreme Court ruling, corporations still cannot directly contribute to or coordinate expenditures with any candidate, but what corporations can do now is run independent campaigns that directly call on voters to elect or defeat a candidate right up to Election Day.

But to take advantage of this new right, a company must be prepared to go on air with ads, disclosed under its own name, which in no uncertain terms says, “Vote for” or “against” Senator Smith. That is a fraught proposition. Flooding a campaign with election ads puts a company in the media crosshairs. It almost certainly offends consumers who support the opposing candidate. And if that spending does not lead to the preferred candidate winning, the company's leadership has to explain its wasted expenditure to shareholders, while also dealing with an elected official carrying a grudge.

Corporations can try to mitigate this risk by funneling money through dummy nonprofits (Citizens for X) that would be named in the “paid for” line on the ads. But regulations would still require companies to disclose these expenditures publicly. It would not require much research for the blogosphere to spark a backlash against a company that not only worked to defeat a certain candidate, but also tried to disguise their role behind a front group.

None of this is to say that companies will uniformly eschew the ability to advertise on behalf of candidates. After all, in today's environment legislative, regulatory and legal outcomes matter more to the bottom line of more companies than ever before. But the case for engaging in direct election advertising – as opposed to backchannel lobbying or broader issue-focused campaigns - is hardly a slam dunk.

Communications consultants advising clients on how to navigate this new terrain will do well to carefully weigh the upside of possibly helping elect a presumably sympathetic candidate, with the potential downside risk of negative public exposure, consumer backlash, and alienating a lawmaker who might one day be in a position to make decisions affecting that company's operations. Considered in that context, many CEOs may find themselves telling the Supreme Court: “Thanks, but no thanks.”

Arik Ben-Zvi is an MD at The Glover Park Group where he has worked on national and international election campaigns.

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