For corporations, political lobbying comes with a lot of pesky regulations. For politicians, charitable foundations are an easy way to look good and wield power. A perfect recipe for subverting open democracy!
A new research paper published by the National Bureau of Economic Research attempts to measure to what degree corporate philanthropy is actually just an undercover bid for political influence. The very short version of the findings, bolding ours:
For philanthropic foundations associated with Fortune 500 and S&P500 corporations, we show that grants given to charitable organizations located in a congressional district increase when its representative obtains seats on committees that are of policy relevance to the firm associated with the foundation. This pattern parallels that of publicly disclosed Political Action Committee (PAC) spending. As further evidence on firms’ political motivations for charitable giving, we show that a member of Congress’s departure leads to a short-term decline in charitable giving to his district, and we again observe similar patterns in PAC spending. Charities directly linked to politicians through personal financial disclosure forms filed in accordance to Ethics in Government Act requirements exhibit similar patterns of political dependence. Our analysis suggests that firms deploy their charitable foundations as a form of tax-exempt influence seeking.
And some context on the scale of this money:
Based on a straightforward model of political influence, our estimates imply that 7.1 percent of total U.S. corporate charitable giving is politically motivated, an amount that is economically significant: it is 280 percent larger than annual PAC contributions and about 40 percent of total federal lobbying expenditures.
Nothing corporations do is anything but self-serving, ever.