Tech

Capitol riot: Why bans on political donations from Facebook and corporate America are misleading

Corporate America on Monday raced to talk tough about how it would punish Republican politicians who sowed the insurrection at the Capitol last week.

A diverse set of companies said they would not donate any more money from their corporate political action committees (PACs) to GOP officeholders involved in obstructing the certification of the Electoral College vote. Some Silicon Valley giants like Facebook, Google, and Microsoft foreswore all political donations altogether.

It could presage real change. But on its face, it’s not all that it seems.

While donations from PACs sound like a big deal, they reflect an increasingly small proportion of the total money in American elections. That’s especially true in the opening months of an election cycle’s off-year, and some corporations — like the three tech companies — on Monday made clear that their penalization was temporary.

To be sure, the decision has symbolic significance: Corporations from Wall Street to Silicon Valley have long sought to position themselves as honest with brokers with both parties, willing to work with Democrats and Republicans on issues important to their industries. They employ members of both parties in their Washington lobbying offices, and their donations from their corporate PACs were a prong in that strategy and largely bipartisan as well. Many (though not all) of the companies making the announcements on Monday specifically said they would withhold donations from the Republican officeholders specifically.

So the decision to at least temporarily reassess that bipartisan ethos is indeed significant. The head of Instagram, Adam Mosseri, gave voice to that reconsideration in a tweet on Monday when he said that Facebook does “try and be apolitical, but that’s increasingly difficult.”

But beyond the symbolism, the impact of these corporations’ decisions could prove relatively minor.

Take Facebook, which on Monday said that it would be “pausing all of our PAC contributions for at least the current quarter, while we review our policies.” But in the first quarter of 2017 — the most recent quarter after presidential election — Facebook donated just $64,000 to politicians.

What would matter more, for instance, would be if Facebook board member Peter Thiel, a billionaire funder of conservative outside groups, paused his millions of dollars in annual contributions.

Moves like that matter more because donations from business interests largely flow outside of corporate PACs in America’s campaign-finance system. Corporations and linked individuals these days can finance outside groups that spend on behalf of candidates but are not a candidate-run committee, such as “super PACs” or political nonprofit groups. No company in recent days has said that their decisions will apply to these types of donations, nor could that always be verified given that nonprofits don’t have to disclose the origins of their donations in the first place.

Corporate PACs contributed just 5 percent of the money raised in the 2020 election, down from 9 percent in 2016, according to the Center for Responsive Politics. That’s partially because PAC contributions are capped at $5,000-a-donation, a limit that hasn’t been increased since 1974, while super PACs and other outside groups can take in donations of unlimited amounts. Another factor is that savvy politicians on both sides have cultivated small-dollar donor bases that are making up larger and larger percentages of the total money in elections.

Direct corporate donations can add up to real money in some individual down-ballot races, such as for a moderate, backbench House Republican who doesn’t face a competitive race and so takes it easy on fundraising. About 20 percent of the money raised by House Republicans’ campaign committees came from PACs, the Center for Responsive Politics says. But even for them, PACs are playing a smaller and smaller role: That figure was over 40 percent in the 2016 cycle.

Donations from corporate PACs attract a lot of attention — including from a company’s civic-minded employees — because they are public and because the link to the company is so direct, unlike, say, one from an executive in their personal capacity. So in some ways, the donation suspensions after the Capitol riots are a perfect way for a company to loudly register its formal disapproval without inflicting too much pain and rupturing a relationship that it may need when the next tax or trade issue comes up in Washington.

Democratic candidates have increasingly come to a similar conclusion, especially in competitive primaries: Many politicians have promised not to accept corporate PAC money to their committees, equipping them with a powerful line to attack an opponent for a lack of purity that is arguably more important than the few $5,000 checks they otherwise could accept.

So what would really matter? What would probably prove more significant for American elections would be if these donation bans become more permanent, or if corporations dissolve their PACs entirely; if companies’ billionaire executives and board members pledge to follow their corporate policies in their own disclosed and undisclosed personal giving; or if they fundamentally reshaped their lobbying strategies to not engage with GOP legislators or the entire Republican Party in Washington.

Last week could serve as a broader reset in how big business approaches Washington. But the pause in corporate PAC giving would just be the beginning.

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