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Monthly Archives: July 2012

This year, Corporate America will spend close to $5.0 billion dollars to influence federal, state and local public policies and gain access to the multibillion dollar government market for private sector goods and services.

In Texas, lobbying and candidate spending totals about $ 20 million per year, and can be much higher in odd-numbered years when the Texas Legislature is in session.

Further, the proliferation of “Super PAC’s” – bolstered by the US Supreme Court’s recent affirmation of their 2011 decision – provides an outlet for corporate money to advocate for issues and candidates.   Through March 31, 2012, major Super PAC’s had raised $ 176.7 million and you can bet they’ll spend it all.

It’s hard to blame them.  Legislation and regulation at all levels can significantly impact a company’s bottom line.

While the public remains cynical about the “backroom” world of politics and our ability as citizens to impact policy decisions – which, some will argue, drives down public participation in the political process even further – many in the business community have gained a better understanding of the fact that that they and the elected officials who shape public policy and business regulations share a common constituency–the public.

Corporate America has a tremendous story to tell on many levels – as the engine that drives our economy; employing millions of Americans; fueling a tax base that funds governments and its programs at all levels; making significant philanthropic contributions to help the less privileged, and allowing employees to perform thousands of hours of volunteer work in our communities. 

But the “good story” of Corporate America is just not communicated effectively, consistently, nor often enough.  Ultimately, business must do a better job in the art of public affairs to succeed in government affairs.

The question is:  how can a company communicate strategically, use its internal resources effectively, build strong alliances, and utilize the tactical “toolbox” to play the game of politics – and win?

The arena has traditionally been dominated by activist interest groups who have learned how to gain and use public support effectively, often aided and abetted by the mainstream media.

The recent decision on ‘Obamacare’ and gubernatorial recall election in Wisconsin generated enough emotion and public activism to conclude that the landscape has changed significantly in the last 6-12 months.  (Incidentally, at one point during the original health legislation debate in 2009 over $ 1 million per day was spent on influencing ‘Obamacare’).

Today the public – particularly political independents and mainstream Americans — may be more engaged and ready to impact important policy issues than ever before, presenting an opportunity for businesses to capture that emotion at the grassroots level to advance free market-based policy and usurp the traditional agenda setters.

Corporate America can play the high-stakes game of politics more effectively with a guiding strategic communications game plan touching all aspects of their business, and engaging the public proactively, openly and honestly. Enlightened corporate leaders are looking for new ways to engage the public on issues of mutual interest—and do so proactively, rather than reacting to a crisis once the agenda has been imposed on them by others.

Good corporate citizens have the trust of the community and its leaders and that trust often creates the necessary link to advocate a company’s position successfully or generate public support for a policy issue.

Why is it important that companies do this?  The traditional, one-track, relationship-only approach to influencing policy and regulation just won’t suffice anymore.  The world of public affairs has evolved to encompass a wide variety of disciplines, from strategy and messaging, to social/digital advocacy, alliance development, and community and public relations, among others. 

The most sophisticated companies seek to make influencers, stakeholders and customers their ally. Such an objective is ambitious and attainable, but building that relationship – particularly one that can be sustained over a period for time – is no easy task.

Corporate America has an opportunity to create a new paradigm and environment, one in which companies engage the public, add some “sunshine” to the process, and make the public part of the solution to policy and regulatory challenges.

Whatever a large or small company, it is wise to look closely at the business plan and assess the impact of politics – particularly federal, state and local public policies and regulations – on the bottom line, and establish a long-term strategy for strategic and consistent communications with key audiences.  Such an assessment can provide the foundation for successful communications throughout the organization and into the public arena – from the ground up.

That’s the key to winning politics over the long term.

Note:  Our original commentary on this topic appeared in Texas CEO Magazine on May 20, 2010 (http://texasceomagazine.com/departments/the-business-of-winning-politics/)

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The U.S. Supreme Court’s health care ruling last Thursday dominated the headlines but a decision they issued on Monday shouldn’t be overlooked, particularly as we celebrate the origin of our freedoms on Independence Day this week.

The Court overturned the state of Montana’s law limiting corporate campaign spending and closely followed a Manhattan Institute report showing that political spending by companies is a good investment.

While the Montana ruling deals with elections, and the Manhattan report focuses mostly on lobbying, they’re both tied to the delicate balance that exists between government, business, and the First Amendment.

The Court affirmed their 2011 Citizens United vs. Federal Election Commission ruling that states cannot limit the ability of companies and unions to influence elections by spending money, which is considered a form of free speech.  (Sidebar:  both the Montana decision and the original Citizens decision were decided by a one-vote difference, 5-4 each time, further accentuating the importance of who’s in the White House to pick those that sit on the highest court in the land; we’ll leave the health care ruling to another day).

There’s a lot of grumbling about the influence of ‘corporations’, with the inference that there’s nefarious activity associated with their involvement in politics, but let’s not forget that corporations are defined as a ‘. a group of people authorized to act as a single entity (legally a person) and recognized as such in law,’ and often with shareholders and boards of directors as a check and balance.   Not much different that what unions have done for years with much less oversight.

Certainly an honest debate can be had on the subject but as of Monday it’s been affirmed as the law of the land.

At least topically related, the Manhattan Institute released a report last week (Corporate Political Spending: Why the New Critics Are Wrong) finding that “corporate political efforts generally have positive effects on a firm’s market value and its shareholder returns.”   Find the report here:  http://www.manhattan-institute.org/html/lpr_15.htm

The report was co-authored by a founder of the Progressive Policy Institute.  As the name would suggest, it’s generally a left-leaning organization not known for being sympathetic to corporate interests.

Nonetheless the report finds that “most firms, like most individuals, behave rationally and strategically in their spending decisions on campaigns and lobbying, devoting resources in ways that, they have reason to expect, will benefit the corporation themselves and their shareholders.”

The study looked at corporate political spending 1974-2011, most of which flowed through traditional Political Action Committees (PACs).   As the Wall Street Journal notes (“Political Spending Pays”), “corporate political spending yields a variety of benefits such as lower taxes, more favorable regulation or in some cases earmarks that help the business, improving returns to shareholders by 2-5% per year, depending on the study.”

The amount of money companies spend to protect their interests in Washington is significant; in 2010, the total amount spent on lobbying was about $3.5 billion.  The S&P 500 companies spent $1.1 billion on political contributions and lobbying in 2010, according to the Investor Responsibility Research Center Institute.   And some would argue for very good reason, because decisions are made every day by Congress, in State Legislatures, and at the local level that impact a business’ bottom line.

The Manhattan study notes that most of the political spending is done by companies that are heavily regulated, or by government contractors.  Of course the regulatory trend today is toward much more government regulation of both companies and individuals, which costs us all more. 

As the Journal concludes, the political spending is necessary because “politicians have created a gargantuan state that is so intrusive that businesses have no alternative than to spend money to defend themselves and their shareholders from such arbitrary looting as the medical device tax in ObamaCare.”

Monday’s SCOTUS ruling trumping state law now presumably opens the door for companies to act at the state level as they can at the federal level.    If you buy into the conclusions of Manhattan, expect companies to look closely at the Montana ruling and the role of the new, so-called “Super PAC’s” in the electoral arena.   If you’re a fan of the First Amendment and believe that what’s good for business is good for the country, you have to like the trend.

Craig Casselberry
C 512.762.7366 

cc@quorumpublicaffairs.com