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Should companies use funds from the corporate treasury to advocate directly for or against political candidates in contested elections?This basic question — now made immediate with the opening of the election season in the Iowa caucuses — raises dilemmas for boards and business leaders:
- Should we adopt detailed governance rules or keep decisions informal and in a small group?
- Should we be passive and avoid such spending, or be active and get involved in partisan politics?
- Should we voluntarily disclose all expenditures or keep expenditures hidden unless disclosure is required by law?
- Should we support generally moderate candidates who can compromise on major structural issues facing the U.S., or narrow, even ideological candidates who will advocate for issues of immediate concern to the corporation?
These are some of the most salient issues of campaign finance facing CEOs and boards of directors as the nation heads into what will certainly be a bitter election year, with both houses of Congress and the Presidency up for grabs. As well, it is a time of political gridlock on major social, economic and budgetary issues, and the choices leaders make pose real risks and opportunities — financial, legal, reputational and political — for companies.