Institutional EYE

Commentary on Corporate Governance Issues

Political donations: A framework for corporates and boards

March 22, 2019

Given the influence policy has on the fortunes of a business, it is naïve to expect that businesses will stay away from political parties. It is easy to imagine a scenario where each business gives more, thereby nullifying any advantage they hope to gain. It is in this context that political donations by companies should be directed towards a larger cause and not just to get policy tweaked in their favour. Such contributions must redefine the purpose they serve i.e.  use this to push for greater transparency in political funding or political parties filing better quality accounts tax returns in a timely manner or nominating candidates who don’t face criminal charges.

 

A decade ago funds were shy of asking companies to change. Today these investors acknowledge their responsibilities and are far more engaged and demanding of companies.

 

Corporates, through their collective donations, are in a far better position to be a force of good: they must push for a healthier polity.

IiAS’ proposed framework for corporate political donations

  • Decide on the amount the firm wants to donate

  • The amount should be approved by shareholders

  • Put in place guidelines on how this money will be spent

  • Board should maintain oversight over these donations

  • Disclose all donations

  • Move to small annual contributions

Corporate donations must be used to push for reforms in the democratic process, over and above the corporate agenda

To read the full report ‘How should companies and boards think about political donations:  A framework’ by clicking this link.

 

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