Charities with corporate leaders on their boards spend $130,000 annually lobbying on behalf of their affiliated corporations. That’s based on a groundbreaking study that reveals how corporations reap the rewards of their charitable activities — and how charities might be more-than-too-willing to help out their influential board members in exchange for well-paying affiliations.
The authors of the study tell the BBC the research could enable policymakers and stakeholders at charities to monitor a hitherto unknown way in which politics can infiltrate charities, but that these types of agreements are entirely lawful at present.
“Charities have something to gain by acting this way. It doesn’t always have to be corporations forcing charities to act the way they don’t want to,”
commented Sehoon Kim, Ph.D., a finance professor at the University of Florida and senior author of the new study.
“It’s a natural quid pro quo relationship that emerges from the incentives that corporations and charities have.
The American Medical Association (AMA) reveals one such instance of these incentives at work. During the 2010s, they vehemently lobbied against measures by federal authorities to limit prescriptions of opioids. This helped players such as Purdue Pharma, the manufacturer of OxyContin, blamed extensively for aggravating the U.S. opioid crisis.
It so happened that the company’s top executive, Richard Sackler, was a member of the AMA Foundation board, a tie many considered problematic at the time. But Sackler had set up millions in donations to the foundation, and other charities are probably hoping corporate board members will assist in brokering big donations for their philanthropic efforts by bringing charities together with other companies and deep-pocketed leaders.
A coordinated lobbying campaign on behalf of the new friends, therefore, quite possibly is simply the most cost-effective means for guaranteeing such donations continue unabated. Kim worked with UF Professor Joel Houston, Ph.D., and Changhyun Ahn, Ph.D., Chinese University of Hong Kong, on the analysis that is soon to be published in the journal Management Science.
They laboriously hand-sorted information on over 400 charities and over 1,000 corporations that reported board relationships, contributions and lobbying efforts that were both within and outside of the charities’ normal political activity. Researchers selected larger charities that already do some lobbying on their own interests. The lobbying charities are three times more substantial than smaller nonprofits that never lobby.
Once a new corporate board member was added, these charities altered their behavior. They were much more likely to lobby on behalf of issues outside of their own interests and to even work to pass or kill legislation that impacted their new board member’s company, even when the legislation had nothing to do with their charitable cause. It translated to roughly a 14% increase in the charity’s lobbying budget.
“These were the smoking guns that there’s something going on that’s not supposed to be happening,”
Kim said.
Since lobbying is such a cost-effective utilization of resources, and since charities can lend their warm brand name to these lobbying efforts, such assistance from charities could greatly work to the benefit of these tied corporations.
These are heretofore unappreciated channels at work when it comes to corporate political power that policymakers should take into consideration when determining how powerful corporations will be,” Kim said.
