Trade Groups Tell Businesses to Keep Quiet on Spending

Three of the nation’s leading trade associations have a message for their member corporations: Resist activists who demand you disclose more details about your politicking than the law requires.

“The strategy of pressuring companies to voluntarily disclose the details of their spending on public policy engagement for the purpose of reducing that engagement is, in fact, their ultimate goal,” wrote U.S. Chamber of Commerce President and CEO Tom Donohue, Business Roundtable President John Engler and National Association of Manufacturers President and CEO Jay Timmons in a letter dated Oct. 13 and obtained by the Center for Public Integrity.

They added: “As these activists continue efforts to silence the business community’s voice, we will continue to engage on your behalf.”

The trade association leaders reserved particular criticism for the Center for Political Accountability and the Zicklin Center for Business Ethics at the University of Pennsylvania’s Wharton School, which in early October published an annual index ranking large companies on their political disclosure practices and policies.

Companies earn points on more than two-dozen measures, such as revealing money spent to influence state-level ballot initiatives and voluntarily disclosing contributions to politically active trade associations and other nonprofit groups.

Such politically active nonprofit groups — including the U.S. Chamber itself — sometimes directly advocate for and against political candidates and may spend into the millions of dollars to do so.

Donohue, Engler and Timmons argued that the index is little more than a “tool to be used to attack companies” and “name-and-shame” them “into either curtailing or eliminating their involvement in public policy debates altogether.” They also warned that the index could be used by activist investors to justify proxy proposals aimed at forcing companies to publish details about their political efforts.

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The men sent a similar do-not-disclose letter to their members in 2013.

Bruce Freed, president of the Center for Political Accountability, scoffed at the groups’ criticism, which he says he expects.

“The reason: it is leading to the broader disclosure of company payments to trade associations, and the U.S. Chamber in particular. The Chamber has a deep investment in secrecy,” Freed said. As for the trade groups’ letter, Freed added that “hasn’t been effective in discrediting CPA or the Index. Companies continue to treat the index as a credible, serious benchmarking.”

Officials at the U.S. Chamber, Business Roundtable and National Association of Manufacturers declined the Center for Public Integrity’s requests for comment.

The trade groups’ plea comes as the U.S. Chamber is preparing to play a major role in the 2016 congressional elections.

Consider that during the 2014 midterm elections, the U.S. Chamber spent about $35.5 million on messages naming federal political candidates, if not overtly advocating for their election or defeat, Federal Election Commission records indicate.

Of that, the U.S. Chamber spent about $6.8 million total to help elect Republicans Thom Tillis of North Carolina and Joni Ernst of Iowa to the U.S. Senate, according to the Center for Responsive Politics.

All the while, the U.S. Chamber could hide the names of people or corporations bankrolling what were primarily political attack ads: Trade groups, which are nonprofits organized under Section 501(c)(6) of the Internal Revenue Service code, are not by law required to reveal their funders.

Thank the Supreme Court’s Citizens United v. FEC decision for this. The 2010 ruling allowed corporations — including certain nonprofits and unions — to spend unlimited amounts of “dark money” to promote or attack political candidates.

A Center for Public Integrity investigation, for example, identified dozens of companies that in 2012 or 2013 gave money to the U.S. Chamber, Business Roundtable and National Association of Manufacturers.

Some contributions, which ranged from low five-figure amounts to well into the millions, specifically funded the trade groups’ government lobbying or political efforts. Companies with household names such as PepsiCo Inc., eBay Inc., Intel Corp. and AFLAC Inc. ranked among those who earmarked money for such purposes.

More recently, some companies that play key roles in one or more of the trade associations have, in practice, gone against the trade associations’ wishes as they pertain to political transparency.

Take Dow Chemical Co., whose executive vice president and general counsel, Charles Kalil, is also a member of the U.S. Chamber of Commerce board of directors.

Dow voluntarily disclosed that it contributed more than $2.91 million to the U.S. Chamber, $250,000 to the National Association of Manufacturers and about $92,000 to the Business Roundtable in 2014. It also revealed significant contributions it made to various ballot initiative campaigns and other politically active nonprofits.

“Dow endeavors to participate actively in the leadership of its key trade associations,” the company said. “However, we may from time to time find ourselves in disagreement with the prevailing views of the majority of the association’s membership.”

So-called 501(c)(4) “social welfare” nonprofits, like their trade association cousins, may also engage in direct politicking so long as this is not their primary purpose for existing.

The U.S. Chamber doesn’t generally involve itself in presidential politics, but several nonprofits are already combining to pump millions of anonymous dollars into the 2016 presidential election. They include a group backing Republican presidential candidate Marco Rubio.

More will almost assuredly become active later this year once the general election campaign begins in earnest. And they, too, may accept unlimited, anonymous contributions from corporations.