November 30, 2022

Minnesota’s biggest companies open their portfolios to political candidates and risk

At first glance, a corporate policy contribution seems straightforward. Like this little one from Minnesota’s biggest company, UnitedHealth Group.

UnitedHealth Group gave $ 10,000 to Rely on Your Beliefs, a political action committee that gives exclusively to Republicans. Count on Your Beliefs then donated $ 50,000 to the Senate Leadership Fund.

The Senate Fund, a Republican super PAC, then spent more than $ 18.5 million on attack ads this month against Cal Cunningham, the Democratic candidate for the U.S. Senate in North Carolina.

UnitedHealth may not have intended to fund the negative publicity in what has become the most expensive Senate race in US history, but he is now linked to those commercials through the winding and often murky trail of money funding the 2020 US election.

“UnitedHealth Group works with a wide range of policymakers who share our commitment to building a next-generation healthcare system,” company spokesperson Eric Hausman said last week. He refused to talk about his specific political donations.

In the face of widespread social unrest and controversy, the largest companies in Minnesota and others across the country are beginning to make more measurable public commitments to the environment, racial equity, and the well-being of workers.

Companies publicly tout such efforts in newspaper advertisements, even commercials, and respond to activist shareholders who eagerly test actions against words.

But gaps remain between the values ​​companies publicly embrace and the way they spend their money on political campaigns. Part of the reason is that so many corporate donations are channeled through third party groups that protect companies from direct liability.

“Companies give to third-party groups and don’t care where their money goes,” said Bruce Freed, president of the Center for Political Accountability, which advises companies to develop responsible giving programs. “The line is drawn much further these days.”

The group’s recent report, titled “Conflicting consequences” explains how brands and corporate reputations are threatened as money flows through a network of groups and ends up in a dead end of controversy.

For example, during the 2019-2020 election cycle, the Star Tribune discovered that Medtronic’s Political Action Committee had donated up to $ 5,000 annually to Impact, a PAC led by Senate Minority Leader Chuck Schumer. . Impact, in turn, made the maximum contribution to the NARAL Pro-Choice America PAC. That, Freed said, leaves the Minnesota-led medical device company associated with the abortion debate.

“We are agnostic about companies making political contributions,” Freed said. “But if they do, they need rigorous oversight and scrutiny from the board.”

Medtronic said its political contributions are determined by a board of directors that uses “criteria such as key committee duties, leadership, a history of supporting Medtronic and industry-related issues, and representation of key committees. constituents “. Company spokesperson Ben Petok said the contribution to Impact met its guidelines and that the company’s PAC does not analyze “downstream contribution decisions” as part of its award criteria.

The 2020 US election is overflowing with cash, much of it from corporations. Federal races this year are expected nearly $ 11 billion in spending, shattering the record for the 2016 cycle, even corrected for inflation.

Reportable contributions can link companies to individuals and committees. Minnesota corporations have made millions in disclosed donations so far this year through their official PACs.

Black money flows

Larger amounts go to non-profit organizations known as 501 (c) (4) groups – or so-called “welfare” organizations – which have no limit on donations and no obligation to disclose their donors.

“This is where a business can step in and give seven figures. The group then donates to something like the Senate Leadership Fund which runs attack ads as “independent expenses,” Freed explained. He called this black money “corrosive and threatening” to democracy.

Black money groups have proliferated in politics since the landmark 2010 Supreme Court ruling in the Citizens United case allowed groups to raise unlimited amounts from businesses.

Secret donations also put companies or executives who make them at risk of inadvertent disclosure. Being discovered can cause embarrassment, damage your reputation and sometimes lead to business losses.

There have been enough inadvertent disclosures of corporate black money that more and more companies will commit to not giving 501 (c) (4) or, if they do, to disclosing the amounts, Freed said. The Center for Political Accountability’s list of companies that have committed to prohibiting or disclosing hidden money donations has grown from 75 in 2015 to 135 in 2020, Freed said.

Hormel Foods Corp. was the only Minnesota company on the Fortune 500 with a policy prohibiting corporate contributions to welfare organizations and their slightly more transparent cousin, 527 groups, in 2018, according to the database of the Center for Political Accountability.

Ecolab, General Mills and Medtronic said they made no corporate contributions to these groups in 2018, the most recent election cycle for which figures are released.

During the 2018 election cycle, Xcel Energy, UnitedHealth, 3M, Best Buy, US Bank, and Target all donated to 527 groups, who often run negative campaigns. These groups must reveal the names of the donors.

UnitedHealth was the only Minnesota company to report contributions to 501 (c) (4) groups. Others did not disclose in one way or another.

It’s a common tactic for companies to give to the two big parties and to candidates on both sides of the aisle. For example, in the 2020 cycle, 3M’s PAC gave Liberal Democrat Rep. Betty McCollum and Conservative Senate Majority Leader Mitch McConnell.

Like UnitedHealth Group, US Bank has donated to Rely on Your Beliefs and has seen its contribution tied to attack ads against Cunningham.

But a bank spokesperson Jeff Shelman said the US bank also donated to a PAC who donated $ 10,000 directly to Cunningham, a Democrat.

UnitedHealth donated tens of thousands of dollars to the Democratic and Republican Super PACs and 527 Colorado groups working against each other to State Senate control.

On the surface, this suggests that companies are not playing favorites with political parties. But campaign finance watchdogs say such donations are a way for companies to access powerful people who can influence policies favorable to their companies.

Corporate political donations almost always favor incumbents, according to the records.

C-Suite giving

While most CEOs of listed Minnesota companies avoid contributing directly to political candidates, some take the risk.

Federal Election Commission records show that Polaris CEO Scott Wine personally donated $ 121,000 to mostly Republican committees and candidates during the 2019-20 cycle. The notable outlier was Democratic Senator Amy Klobuchar, whose presidential campaign Wine supported.

“I strongly believe in economic freedom and limited government and I contribute to candidates who also support these ideals,” Wine said in a statement he issued in response to a Star Tribune investigation. He declined to comment further.

Beth Ford, chief executive of Land O’Lakes, gave around $ 30,000 of her own money to candidates in 2019-20, mostly Democrats.

“Political advocacy and action is important to Land O’Lakes and is also important to me on a personal level, which is why I donate to the Land O’Lakes PAC and personally support candidates on both sides of the world. ‘aisle who represent the communities where our members and employees live and work, those who support issues personally important to me and those who serve on committees that oversee policies that have a direct impact on our farmer-owners, their communities and our business in general, ”she said in a statement to the Star Tribune.

Doug Baker, CEO of Ecolab, gave more than $ 23,000 this election to the Republican and Democratic candidates. He declined to comment on his contributions.

Shareholder and consumer expectations affect companies and their executives, said marketer Akshay Rao of the Carlson School of Management at the University of Minnesota.

Reputational risk

For businesses, perceived hypocrisy can actually be viewed more harshly than the mere existence of a political donation.

Rao pointed to the Target Corp giveaway case. to Tom Emmer’s 2010 campaign for Governor of Minnesota. Emmer, who is now a representative for Minnesota’s Sixth Congressional District, opposed same-sex marriage and Target’s contribution led some consumers to boycott the retailer.

“Target is considered a gay-friendly brand,” explained Rao. “If the action violates a core element of your brand, you are in danger. “

Even old gifts can come back to haunt businesses and leaders.

UnitedHealth Group gave more than $ 55,000 to the Republican Attorneys General Association (RAGA) during the 2017-18 election cycle, according to the Center for Responsive Politics. Best Buy donated $ 30,000 for the same period.

The RAGA Action Fund went on to back Republican attorneys general who filed a lawsuit to overturn the affordable care law, which faces a standoff with the Supreme Court in November.

A decision to kill the ACA could deprive millions of Americans of health insurance, including allowing health insurers such as UnitedHealth to deny coverage to people with pre-existing conditions.

UnitedHealth declined to comment on its donation to RAGA.

Best Buy spokeswoman Carly Charlson said the company has been donating to Republican and Democratic attorney general groups for more than 10 years.

Current affairs matters as well as history, Rao said.

“I say to my students: you are brand stewards,” he said. “Don’t just look at what you do, but what the brands you associate with are doing. “

Correction:
An earlier version of this story distorted the time Best Buy gave to the Republican and Democratic attorney general groups.