Ever since the 2010 Supreme Court case Citizens United v. FEC, corporations have had the ability to spend money in politics. Now after the Jan. 6 insurrection, many corporate political spenders are feeling the sting of getting into bed with the wrong politicians. These corporations are learning something that I have been writing about for years — dabbling in politics comes with huge reputational risks.
This year is not the first time that electoral votes have had congressional objections. Back in 2004, there were limited objections to Ohio’s electoral college votes. In 2004 the objection was from Ohio Rep. Stephanie Tubbs Jones and California Sen. Barbara Boxer. Rep. Tubbs Jones was joined by several members of the Congressional Black Caucus, who raised the objection to draw attention to the long lines and other voting difficulties experienced by Black voters in Ohio. The objection was resolved after a few hours. A big difference from 2021 was that the 2004 objection was not accompanied by violence in the halls of Congress.
The Capitol riot presents unique risks for corporate financial supporters for members of Congress who backed President Donald Trump’s position on Jan. 6.
Independent journalist Judd Legum’s Popular Information was the first to ask corporate PACs whether they would continue their financial support for members of Congress who objected in 2021 to the Electoral College votes in swing states on Jan. 6. In 2021 multiple swing states were subject to objections (instead of just one state), and this time more than a hundred House Republicans and a dozen Republican senators originally objected. This meant corporate donors to far more members of Congress were under scrutiny for supporting what some are now calling the sedition caucus.
Popular Information broke the news on Jan. 11 that three major corporations — Marriott, BlueCross BlueShield and Commerce Bank — suspended PAC donations to the 147 Republicans who objected to the Electoral College vote. A day later they reported that dozens of corporations would also suspend political support.
A month after the insurrection, the New York Times Deal Book highlighted that Morgan Stanley, Microsoft, BlackRock, Coca-Cola and Hilton all paused donations to the 147 objecting Republicans in Congress including House Minority Leader Kevin McCarthy.
A new survey by the Conference Board provides a new data both on how broadly corporations have pulled back from on political spending. The survey of 84 companies found that “about 28 percent of companies have announced their PAC’s actions both internally and externally, while another 25 percent have announced their PAC’s decision but only internally.” This indicates the firms that have been captured by Popular Information and the New York Times likely understates how many corporations have changed their political spending behavior since the changes haven’t all been public. Moreover, the Conference Board survey indicated that “concerns about company reputation was a key factor (nearly 45 percent) in driving the organization’s response (to Jan. 6).”
As I explained in my book Political Brands and in a law review article entitled “Shooting Your Brand in the Foot,” corporate political spending comes with many reputational risks including associating a well-crafted corporate brand with a toxic politician. If a politician that a corporation has supported gets into an embarrassing scandal or legal trouble, the corporation can be harmed through guilt by association. This can lead to boycotts and other shunning.
Also if the political spending is being done transparently through a corporate PAC, then there’s another lesson to hard learn: Records of political spending online last forever. Even if firms stop giving to Sens. Josh Hawley or Ted Cruz today, all their past political support is easy to find on sources like www.followthemoney.org or www.opensecrets.org. For forever and a day, the public, including a firm’s shareholders and customers, can find which corporate PACs supported Donald Trump or his congressional enablers.
Investigations into the Jan. 6 events are on-going. The FBI continues to arrest individuals who participated in the riot from the outside. New reporting notes that the Capitol Police are investing 35 officers of their own organization for their actions that day. Then there is a police investigation. about exactly which members of Congress may have given tours of the Capitol on Jan. 5 to aid and abet the future rioters. So what is now a political nightmare could get even worse if any members of Congress that were supported by a corporation gets into criminal trouble too related to the insurrection. The downside for the donor corporations can be enormous and long lasting.
Ciara Torres-Spelliscy is a professor of law at Stetson University College of Law, a Brennan Center Fellow and the author of “Political Brands.”