Corporate Giving Is Tax-Exempt Lobbying, Report Suggests

Corporate Giving Is Tax-Exempt Lobbying, Report Suggests

A study of giving patterns by corporate foundations suggests that corporate giving often is used as a way to seek political influence, the New York Times reports.

Based on an analysis of giving by foundations associated with Fortune 500 and S&P 500 corporations between 1998 and 2015, the report, Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence (63 pages, PDF), found that corporate foundations increase their contributions in a congressional district when its representative obtains a seat on a committee of policy relevance to the firm — a pattern also seen in publicly disclosed political action committee spending by corporate foundations. In addition, the study by researchers at Boston University, the University of British Columbia, and the University of Chicago found that the departure of a member of Congress leads to a short-term decline in corporate giving in that district, with a similar pattern holding for PAC spending.

According to the report, an analysis of corporate giving to charities that can be directly linked to politicians — often through board memberships — shows that firms deploy their foundations as a form of influence seeking. Nonprofits with a connection to Congress were more likely than those with no connection to receive contributions from corporations (by 46 percentage points) and received six times the total amount in corporate dollars. The study further estimates that 7.1 percent of total U.S. corporate charitable giving — roughly $1.3 billion — is politically motivated, nearly three times that of annual PAC contributions ($464 million) and about 40 percent of total federal lobbying expenditures ($3.2 billion).

"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 authors write, "the overall welfare effects are ambiguous — society benefits via increased charity, at the potentially high cost of distorting laws and regulation."

"Companies wouldn't do this if it didn't pay off," Matilde Bombardini, one of the report's authors, told the Times. "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."

Eduardo Porter. "Charitable Giving by Corporations Is Also About Getting, a New Study Finds." New York Times 04/03/2018. "Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence." Marianne Bertrand, Matilde Bombardini, Raymond Fisman, Francesco Trebbi Report 03/20/2018.