Should companies stop campaign contributions?

A Starbucks shareholder suggests the company ban political spending and action committees to preserve its image. The coffee chain's board says such donations do just that.

By Jason Notte Mar 18, 2013 2:52PM
A Starbucks Corp., sign is displayed outside a coffee shop in London, U.K. / Chris Ratcliffe/Bloomberg via Getty ImagesWhat's the point of the Supreme Court's Citizens United decision in 2010 freeing up corporate campaign contributions if companies don't shovel truckloads of money at candidates to protect their political interests?


At least one Starbucks (SBUX) shareholder seems to think that not making those contributions is a far more powerful statement than just passing out venti servings of funds to any candidate who might be coffee-friendly. According to Reuters, shareholder John Harrington wants to prohibit the company not only from making political donations, but from forming a political action committee to throw its weight around Washington, D.C.


Harrington, who owns 800 shares of the company and is chief executive of Napa, Calif., Harrington Investments, is putting his proposal up to a vote at the company's annual shareholder meeting on Wednesday. In his view, a large political contribution or vociferous political action committee “compromises your fiduciary responsibility because you don't know how people are going to vote once they are elected.”


Starbucks' board sees it a bit differently and has encouraged shareholders to vote against the ban. With various commodities including milk, coffee and sugar in the mix and with regulated ingredients like caffeine facing increased scrutiny, the board says eliminating political contributions would diminish its ability to affect public policy. That leverage, the board claims, allows Starbucks to "critical to delivering long-term value for our shareholders.”


Starbucks has made political contributions before, but it's been most effective in the political arena when it withholds that sweet, energizing latte money from campaigns needing a boost. Two years ago, Starbucks Chief Executive Howard Schultz organized a hundred of his fellow CEOs in a pledge to stop campaign contributions until Washington came up with a plan to fix the nation's debt. Granted, that led to the sequester cuts the nation is dealing with today, but it was a far more influential political maneuver than Schultz' more recent complaints to The Seattle Times about the burden of new health care laws on his business.


His shareholder Harrington has a lot of support when it comes to keeping corporate backing of the political process transparent and at a minimum. The Sustainable Investments Institute, which tracks political spending and corporate governance issues, found that 37% of voting Visa shareholders and 31% Accenture's supported proposals to disclose contributions for lobbying, according to filings from both companies. Though campaign finance experts acknowledge that political contributions are companies' best defense against policies opposing their interests, they also know that passing a politician a stack of cash can have unintended consequences for a company with a corporate identity so tightly tethered to social responsibility.


"The problem is that the closer your contributions get to someone who can help your company, the closer they look like bribery," said University of Delaware professor Charles Elson, director of its John L. Weinberg Center for Corporate Governance. "It's probably best for companies to just get out of it altogether.”


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6Comments
Mar 18, 2013 4:08PM
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"The problem is that the closer your contributions get to someone who can help your company, the closer they look like bribery," said University of Delaware professor Charles Elson, director of its John L. Weinberg Center for Corporate Governance. "It's probably best for companies to just get out of it altogether.”

 

I agree with this statement and I would also add that companies risk alienating half of their customers that may sit on the opposite side of the political spectrum from the candidate to which they're contributing funds.

Mar 18, 2013 9:39PM
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How about if it were made illegal for legislators to accept money from lobbyists? That would fix most of the problems with our nation in one fell swoop.
Mar 18, 2013 11:29PM
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"...the board says eliminating political contributions would dimini**** ability to affect public policy."  This is simply another way of saying the company needs to bribe politicians: otherwise donations would not "affect public policy."
Oct 8, 2013 4:35PM
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Contributing any money to a politician/ lobbying needs to be banned. These individuals are effectively taking away the point of the public voting. This gives businesses more of a vote than 100 or more voters WTF.   Give the vote back to individuals. In addition put in term limits. I think bills need to be separated so as to not push through some very bad bill that gets voted in just because they all want another bill to pass.      I've seen the radicals pushing religious agendas into politics. This is a country of multiple cultures. There is a reason our fore fathers put in place to keep a division between the church and the state. When you get the church pushing politics(a tax exempt enterprise) it is just plain wrong.
Oct 8, 2013 7:14PM
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They say Mexico, Russia and other noted countries are politically  corrupt--just check out ours.
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