Economy & Budget

Funding Liberalism With Blue-Chip Profits

Liberal blogger David R. Mark recently wrote, “Those that call themselves ‘compassionate conservatives’ would never think to touch their fat-cat supporters. It’s much easier to spin the ‘economic benefits’ of helping huge corporations fatten their bottom lines.” Liberal academic Thomas Frank, in his book What’s The Matter With Kansas?, claims that the corporate world “wields the Republican Party as its personal political sidearm.” Both Mark and Frank express a common view that corporations are major funders of the political right, and that when corporations make contributions to nonprofit advocacy groups they give to groups on the right because those groups are pro-business.

On its face, this makes sense. After all, conservatives generally support lower taxes, less government regulation, and freer trade, public policies that are supposed to coincide with the interests of corporations. Why wouldn’t corporations eagerly fund their political supporters? In a Washington Examiner editorial, Professor Thomas F. Schaller lamented the “‘infrastructure gap’ that persists between the well-funded and highly organized Republican right and the relatively underfunded and generally disorganized Democratic left.”

Of course, the conventional wisdom admits some high-profile exceptions. Certainly New Jersey Gov. Jon Corzine (D.) was one of the most liberal members of the U.S. Senate, consistently achieving scores of 90% and higher on the legislative scorecard of the left-wing activist group, Americans for Democratic Action. Yet before he entered politics, Corzine was head of Goldman Sachs, one of the largest investment banks in the world. Nonetheless, the popular assumption is that groups on the political right should have their coffers filled with corporate money. By contrast, the political left, because it is thought to favor policies inimical to business interests, ought to have scant corporate support.
We decided to test this hypothesis by examining giving by the charitable foundations of the top 100 corporations on this year’s Fortune 500 list. For this analysis, we defined the terms “political right” and “political left” broadly but with some specificity. Nonprofit public interest and advocacy groups on the political right favor lower taxes, less government regulation, and less government spending on social programs but more on defense programs. We also put on the right groups that defend traditional values, the right to bear arms, stricter immigration laws and tougher criminal laws.

We put on the political left nonprofit groups that advocate higher taxes, more government regulation, more spending on social programs and less on defense, and groups promoting more liberal values, more gun control and relaxed immigration and criminal laws. We looked at grants to groups across the political spectrum including advocacy organizations such as the Natural Resources Defense Council and the National Right to Life Committee, think tanks such as the Heritage Foundation and Brookings Institution, and public interest law firms such as the Institute for Justice and the Southern Poverty Law Center.

If the political right and major corporations are as closely aligned as popular perception suggests, then the corporate foundations examined in this report ought to be more generous to groups on the political right than those on the political left. That’s not what we found.

Common Perception Wrong

In this analysis, we examined only those Fortune 100 companies that operated nonprofit charitable foundations that made grants to groups we identified as on either the political right or left. That reduced the number to 53 corporate foundations. (See page 20.) We examined the most recent tax- return filings for these foundations (IRS Form 990) and compiled the dollar values for grants and matching gifts to left-wing groups and right-wing groups.

The results are the exact opposite of the common perception. The Fortune 100 foundations gave more money to the political left. In fact, the grant-making was lopsided: The political left received nearly $59 million, while the political right received only about $4 million, a ratio of 14.5 to 1.

The Wildlife Conservation Society, which took in a huge $35-million grant from the Goldman Sachs Foundation, was the top beneficiary on the political left of Fortune 100 foundation giving. It was followed by the Conservation International Foundation ($4.5 million), the National Council of La Raza ($2.9 million) and the Nature Conservancy ($1.9 million).

The American Enterprise Institute received $575,000, which was the largest single Fortune 100 grant to a group on the right, followed by the Competitive Enterprise Institute ($325,000) and the Employment Policies Institute ($275,000).

Competitive Advantage

Why do they do it? To understand why corporations give more money to the political left than to the political right, it is critical to understand that businesses are not inherently “pro-market.” Indeed, some business leaders may support tax increases and more government regulation because they believe it gives them an advantage over competitors. Many are not averse to more government spending if it boosts their profits.

Using government to gain advantage over the competition may explain some of the grants made by the corporate foundations. For example, the IRS Form 990 for the corporate foundation of General Motors shows that it gave grants of $50,000 to Resources for the Future and $10,000 to the World Resources Institute, both supportive of energy policies favoring ethanol production and use. Would GM have made the grants had it not made a major investment in a fleet of E85 vehicles that are designed to run on fuel that is 85% ethanol?

Similarly, the foundations of the timber giants International Paper and Weyerhaeuser fund many groups that support the Endangered Species Act, which has imposed drastic restrictions on the use of forests claimed to be the habitat of allegedly endangered species. International Paper Foundation’s latest tax return shows it made grants of $10,000 to the American Forest Foundation, $30,000 to the Conservation Fund, and $3,000 to the Nature Conservancy. The Weyerhaeuser Foundation gave money to the American Forest Foundation ($201,180), the Conservation Fund ($30,000), and the Nature Conservancy ($74,500).

Restrictive forest-use policies hurt small timber companies far more because they cannot pay what it takes to fight a government regulatory onslaught abetted by environmental advocacy groups. Is it so far-fetched to suggest that International Paper and Weyerhaeuser understand that they gain more than they lose by supporting political groups that back the Endangered Species Act?

Liberal CEOs

But competitive advantage is only one possible explanation for why Fortune 100 giving leans leftward. Another reason is personal political preference. Besides Jon Corzine, many other corporate leaders support left-of-center causes and candidates. For instance, James Dimon, CEO of JPMorgan Chase, has made political contributions to high-profile Democratic lawmakers and candidates, including Sen. Hillary Clinton (N.Y.), Sen. Barack Obama (Ill.), former House Minority Leader Richard Gephardt (Mo.), Sen. Evan Bayh (Ind.), unsuccessful North Carolina Senate candidate Erskine Bowles, Sen. Ken Salazar (Colo.), former Senate Majority Leader Tom Daschle (S.D.), Rep. Harold Ford (Tenn.), and the Democratic Senatorial Campaign Committee. Dimon has also given to Republican Senators Mike DeWine (Ohio) and Richard Shelby (Ala).

Robert Benmosche, who until last year was CEO of MetLife, is another left-leaning corporate chief. His list of contributions includes Democrats Hillary Clinton, Sen. Chris Dodd (Conn.), Sen. Charles Schumer (N.Y.), Rep. Charles Rangel (N.Y.), and the New York State Democratic Committee.

Not surprisingly, JP Morgan Chase Foundation donated just less than $1.2 million to groups on the left, but no money to groups on the right. It gave more than $31,000 to the NAACP, more than $59,000 to Planned Parenthood, and $1,000,000 to the far-left Association of Community Organizations for Reform Now (ACORN). The MetLife Foundation followed a similar pattern. While it did donate $40,000 to groups on the political right in 2004, it gave more than $1.2 million to groups on the political left, including the Children’s Defense Fund ($5,000), the Economic Policy Institute ($275,000), and the National Council of La Raza ($180,000).

Charity as Investment

“Strategic giving” is another explanation for the Fortune 100 foundations’ giving patterns. Giving to charity is a form of investment strategy, in which donations advance the company by increasing market share, keeping employees happy, or creating good public relations.

The need for good PR may help explain corporate gifts to environmental groups such as the Keystone Center ($459,610), the Nature Conservancy ($1,903,388), the Trust for Public Land ($670,034), the Wilderness Society ($104,790), and the World Wildlife Fund ($680,637). Some corporations, such as Johnson & Johnson, which produces medical supplies, and Pfizer, which makes pharmaceuticals, would seem to have little reason to placate environmentalists. But perhaps they understand that few terms confer more saintly status than the moniker “environmentalist.”

What better way to credibly claim the environmental mantle than to give to environmental groups? In 2004, Johnson & Johnson gave more than $100,000 each to the Nature Conservancy, the Trust for Public Land, and the Wilderness Society, and $450,000 to the World Wildlife Fund. Pfizer gave more than $250,000 to the Keystone Center and more than $130,000 to the Nature Conservancy.

The charity-as-investment strategy may also account for grants to left-of-center minority organizations. Corporate foundations may reason, for example, that grants to groups identifying with Hispanics, the fastest growing segment of the U.S. population, will help them tap the Hispanic consumer market. Bank of America is a case in point. It has engaged in extensive efforts to tap into the Hispanic market, including launching Spanish-language ads in 2003 in the Hispanic-heavy states of Texas and California. In 2004, Bank of America Foundation donated $40,000 to the Cesar E. Chavez Foundation and $31,000 to the Mexican-American League Defense and Education Fund (MALDEF).

Ford Motor Company also has commercial reasons for reaching Hispanics. It’s likely that Ford believed donating to leftist groups that represent themselves as spokesmen for the Hispanic community was one way to do more business. In 2001 the Ford Motor Company Foundation donated more than $200,000 to the National Council of La Raza, $50,000 to the Congressional Hispanic Caucus Institute, $15,000 to MALDEF, and $4,500 to the Michigan chapter of the League of United Latin American Citizens.

Extortion and Indifference

The final two explanations for why big corporations give to the left are perhaps the most exasperating: Corporations hope to make trouble go away, and they don’t know the nature of the groups they fund.

Left-wing groups are far more likely than groups on the right to organize boycotts and protests to embarrass corporations into caving into activists’ demands. Some groups, such as the radical Rainforest Action Network, use so-called “civil disobedience” to disrupt corporate meetings and operations. Instead of stiffening corporate resistance, their tactics frequently help open company checkbooks.

Jesse Jackson is the master of the corporate shakedown. His tactics are tried and true. Jackson first fires off a letter to a corporation criticizing it for not hiring enough minorities. He demands a meeting. If the corporation defends itself and rejects the demands, Jackson publicly accuses it of racial insensitivity, announces a protest and calls for a boycott. Since corporations recoil at charges of racism, they usually attempt to appease Jackson and agree to a meeting. The upshot is that Jackson can claim a historic breakthrough that also produces a corporate contribution to Jackson’s Rainbow Push Coalition.

It is worthwhile to note that many corporate foundations have programs that match donations made by company employees. Corporations sometimes observe that they can hardly be expected to monitor small employee gifts that they match. For instance, on the Bank of America Foundation tax return we found a matching $300 gift to the Sea Shepherd Conservation Society and a $50 gift to the Progress Unity Fund. The Sea Shepherd Conservation Society maintains a fleet of ships that sink fishing vessels. The Progress Unity Fund is the parent organization for International Act Now to Stop War and End Racism (A.N.S.W.E.R.),which is best known for organizing protests against the War on Terror. In fact, the group’s leaders support the communist dictatorships of Cuba and North Korea. Nicole Nastacie explained that Bank of America does not pass judgment on employees’ personal philanthropy. “We respect our associates’ individual charitable giving choices by matching associate gifts to all eligible 501(c)(3) organizations,” she said.

If the Fortune 100 represents corporate America, then the belief that corporate America is more generous to public interest and advocacy groups on the right is clearly wrong. Unfortunately, that misperception is embedded in American consciousness. How often are groups on the left derided as “corporate lackeys”?

Will the pattern change? Corporate foundations could make a start by better monitoring their matching grants. But real change requires that they commit themselves to free-market principles that are the basis for the liberty that lets enterprise grow and prosper. If corporations use their foundations to stifle competition and buy off opponents, there is little hope that they will be bulwarks of freedom—no matter what liberal commentators believe.

This article is reproduced from the August 2006 edition of Foundation Watch, a Capital Research Center publication.

Company Total Giving

Giving to Political Left

Giving to Political Right
Abbott Laboratories (2004)

$23,039,015

$18,376

$0

Aetna (2004)

$8,828,905

$121,050

$0

Albertson’s (2004)

$2,038,070

$250,000

$0

Alcoa (2004)

$16,999,076

$390,000

$62,000

Allstate (2004)

$13,988,998

$500,500

$0

Amerada Hess (2004)

$9,673,267

$88,100

$0

American Express (2004)

$23,247,401

$63,736

$16,120

Archer Daniels Midland (2004)

$1,552,836

$1,100

$4,089

AT&T (2004)

$13,899,924

$540,600

$84,200

Bank of America Corp. (2004)

$35,727,694

$211,293

$12,045

Caterpillar (2004)

$15,407,405

$160,360

$0

Cisco Systems (2004)

$4,397,619

$425,000

$17,500

Citigroup (2003)

$55,524,404

$1,109,000

$55,000

Dow Chemical (2004)

$10,643,145

$193,300

$0

Exxon Mobil (2004)

$51,068,151

$1,180,500

$2,705,000

Federated Dept. Stores (2004)

$12,161,819

$1,000

$0

Ford Motor (2004)

$89,941,276

$6,160,762

$1,000

General Electric (2004)

$59,761,733

$697,743

$276,415

General Motors (2003)

$31,802,075

$1,408,800

$227,500

Goldman Sachs Group (2004)

$36,850,250

$35,525,000

$0

HCA (2004)

$8,017,089

$25,375

$0

Home Depot (2004)

$6,799,782

$155,000

$0

International Paper (2004)

$5,371,322

$77,460

$0

J.P. Morgan Chase & Co. (2004)

$45,914,081

$1,192,833

$0

Johnson & Johnson (2004)

$42,871,365

$1,472,946

$10,000

Johnson Controls (2004)

$6,125,188

$69,050

$41,980

Kroger (2004)

$2,658,095

$5,500

$0

Lockheed Martin (2004)

$7,183,885

$125,500

$0

Marathon Oil (2004)

$3,415,314

$101,000

$24,000

Merck (2004)

$41,636,724

$15,295

$0

Merrill Lynch (2004)

$27,036,037

$25,772

$0

MetLife (2004)

$27,445,352

$1,263,000

$40,000

Morgan Stanley (2004)

$4,661,953

$20,000

$0

Motorola (2004)

$5,088,709

$30,000

$0

Nationwide (2004)

$13,078,870

$15,220

$5,000

New York Life Insurance (2004)

$7,293,005

$283,000

$0

PepsiCo (2004)

$15,179,442

$1,065,000

$10,000

Pfizer (2004)

$28,782,824

$501,358

$48,454

Procter & Gamble (2004)

$23,158,523

$341,900

$50,000

Prudential Financial (2004)

$26,188,398

$827,276

$10,504

Sprint Nextel (2004)

$5,444,815

$15,335

$5,000

St. Paul Travelers Cos. (2004)

$10,964,449

$191,035

$180

Time Warner (2003)

$5,046,802

$76,390

$0

United Parcel Service (2004)

$36,552,445

$269,875

$143,000

UnitedHealth Group (2004)

$10,707,600

$2,000

$0

Valero Energy (2004)

$10,421,785

$64,000

$0

Verizon Communications (2004)

$56,968,636

$48,703

$42,888

Wachovia Corp. (2004)

$40,983,073

$730,000

$0

Wal-Mart Stores (2004)

$154,537,406

$732,350

$2,530

Washington Mutual (2003)

$8,696,151

$60,000

$0

WellPoint (2004)

$4,976,208

$80,000

$155,000

Wells Fargo (2004)

$64,747,007

$81,600

$124,000

Weyerhaeuser (2004)

$9,775,569

$673,300

$53,500

TOTALS:

$58,928,393

$4,049,405

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