April/May 2010 / Features
The Perils of Citizens United
The U.S. Supreme Court’s decision in Citizen’s United allows corporations to fund advertisements that advocate for or against candidates for public office. This has unleashed a strong backlash against corporate election spending. Polling reveals strong opposition to the Citizen’s United decision. Nearly three-quarters of voters support reinstating limits on corporate and union spending. Eighty percent believe corporations should have to obtain shareholder approval before spending money on elections.
New disclosure regimes under consideration by Congress and the states will create a greater chance that corporations will be held responsible for such ads by shareholders, customers, directors and the general public. Many corporations are not ready for this new environment. For years, politically active corporations avoided public attention by giving money to trade associations and other outside groups that sponsored issue advertisements allowed under federal law. Because federal law did not require those groups to publicly disclose their donors, corporations could avoid being associated with messaging they underwrote.
Like any decision that risks harming the company’s relationship with stakeholders or its image with the general public, decisions on election spending should be overseen by management. At the beginning of each election cycle, senior executives and directors should sit down with their government affairs and legal departments and craft a detailed election spending plan.
