The percentage of undisclosed money in the political system went up during last year's midterm elections. That's because of a dramatic increase in advertising by anonymously funded freelance organizations such as the American Action Fund and Citizens for Strength and Security.
Much of the money is thought to come from corporations. Now, proponents of transparency are winning disclosure battles one corporation at a time.
What Disclosure Means
The Chevron Corp. voluntarily revealed that last year, it gave $500,000 to the U.S. Chamber of Commerce. The chamber was one of the top advertisers in last year's campaigns. It ran political ads, including one hammering Sen. Michael Bennet (D-CO).
There's no way to know through disclosure whether Chevron's money specifically helped to pay for those ads. The U.S. Chamber fights hard to keep its donors secret.
But without Chevron's online publication of its political contributions, the public wouldn't know anything about its link to the chamber.
Chevron is among the nearly 50 S&P 100 companies that — along with 30 other corporations — now disclose their political spending.
It's the result of a quiet, eight-year campaign fought not in Washington but in boardrooms and shareholder meetings around the country.
Changes In Corporate Policies
Many corporations hold their shareholder meetings in the spring. That's after months of campaigns by activists to make changes in the corporate operations.
"We're asking companies to disclose and account for their political spending with corporate funds," says Bruce Freed, president of the Center for Political Accountability.
Freed is a leader in the effort for disclosure and other corporate policies regarding political money. He says the center starts by asking a company to consider changes. Sometimes that's all it takes.
"Companies in many cases will like to dispose of these issues before them, so they won't be on the proxy statement," Freed says. "Shareholders will not be voting on it."
And when these proposals do come to a vote, Freed says, while the average share of "yes" votes used to be 9 percent, now, it's around 30 percent. That might sound like a loser in campaign politics, but in a shareholders' meeting, Freed says, it's a big vote.
"And [it's] a very strong signal to management that this is an issue that needs to be addressed by the company," he says.
A Battle That's Not Worth Fighting
Many social investment funds like these proposals, as do some of the big pension funds — and even some mainline mutual funds, including Fidelity, Oppenheimer and Schwab.
Legislation to mandate this kind of disclosure failed to pass Congress last year. But the odd thing is, corporations don't seem all that engaged in the debate.
Stephen Bainbridge, who teaches corporate law at UCLA law school, says most of corporate America isn't all that eager to get into politics. "I think that there have been situations in which some of the chamber's donors have been reluctant to be [seen] publicly doing battle with the Obama administration," he says. "But at the same time, I think we have not seen the floodgates open."
Bainbridge says top management is worried about bigger things, like "say on pay," which would give shareholders the power to control executive compensation.
"I think most corporations don't perceive this sort of disclosure as being particularly problematic," he says.
So when shareholders start calling for changes, Bainbridge says, keeping political money secret often seems like a battle that's not worth fighting.
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