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Corporate Social and Political Engagement: An Introduction

From Alexandra Reed Lajoux, writing for Directors&Boards…

Corporations have the right to free speech. Should they exercise that right?

Should corporations take public stances on social issues? Should they make contributions to political action committees or political parties? Under what circumstances do such actions create issues for corporations and their boards?

These questions are timely in an era marked by deep political divisions in the United States. Many major corporations have spoken out on matters of public controversy, and citizens have taken notice.

For our purposes, the term “social engagement” means engagement in problems affecting societal groups, such as discrimination, inequality or violations of human rights (often called “social justice” issues). The term “political engagement” refers to financial contributions made through political action committees (PACs) to support campaigns and elections for public office, as well as to the lobbying of government officials. It is common practice for corporate PACs to make donations to political parties. Corporate PACs, which are funded by employee contributions, often have a separate governing entity that decides which candidates to support.

While many corporations give to candidates on both sides of the aisle, the total dollar amount of donations since at least 2000 has been higher for Republicans (except for 2010, when equal amounts were given to Republicans and Democrats). Corporate support for Republican candidates tends to be higher because in general Republicans favor lower taxes for corporations, and this has been a critical issue for corporate finances. But after the storming of the Capitol building on January 6, 2021, well over 100 major corporations announced that they would pause or stop political contributions to the candidates (all of whom were Republicans) who voted against certifying the election of Joe Biden as President. Conversely, some conservative Republican candidates have stated that they would not accept contributions from such “woke” companies.

Since then, many corporations have resumed donations to candidates who opposed certification of the Biden election. And many politicians have begun to accept them. The resumption of these donations has occurred quietly, without press releases.

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