Corporate Campaign Spending: Giving Shareholders A Voice

From the Brennan Center for Justice: a way to preserve democracy in the face of unlimited corporate spending on political campaign advocacy.

(Brennan Center for Justice - Forward, "Corporate Campaign Spending: Giving Shareholders A Voice")

In Citizens United, decided January 21, 2010, the U.S. Supreme Court gave an unequivocal green light for corporate money in elections, by outlawing under the First Amendment, laws that limit corporate spending in elections. This radical decision overturned more than 100 years of settled law. While it is difficult to know how distorting an effect on our democratic electoral processes this decision will have, it is reasonable to expect a significant increase in corporate expenditures.

Corporate law is ill-prepared for this new age of corporate political spending by publicly-traded companies. Today, corporate managers need not disclose to their investors – individuals, mutual funds, or institutional investors such as government or union pension funds – how funds from the corporate treasury are being spent, either before or after the fact. And the law does not require corporate managers to seek shareholder authorization before making political expenditures with corporate funds.

This report proposes changes in corporate law to adapt to the post-Citizens United reality. Two specific reforms are suggested: first, require managers to report corporate political spending directly to shareholders, and second, require managers to obtain authorization from shareholders before making political expenditures with corporate treasury funds. Modeled on existing British law, these changes will ensure that shareholders’ funds are used for political spending only if that is how the shareholders want their money spent.

Download the report here.

Brennan Center for Justice