The Conference Board Governance Center Blog


Political Contributions Disclosure: Where Does Your Company Rank and Why Does it Matter?

By Rhonda L. Brauer, Senior Fellow, Governance Center at The Conference Board

Since the U.S. Supreme Court’s Citizens United decision in January 2010, which removed many limitations on corporate political spending, there has been increasing focus on management and board oversight of corporate political spending.  Tax-exempt entities have become a prominent means of funneling corporate and individual money indirectly into the political and public policy arena. Understandably, confused observers and participants really have no idea of how much money is being moved through the weeds of the resulting systems to influence the U.S. political processes and to impact the future of the U.S. government, economy and society.

Ongoing calls have been made for more reform, more disclosure and more oversight. After several law school professors petitioned the Securities and Exchange Commission in 2011 to establish rules for public companies to provide full political spending disclosure, this issue has become even more politicized. Regardless of the outcome of the upcoming Presidential and Congressional elections, political accountability is not going away as an issue for public companies, their investors and their other stakeholders.

In lights of these factors, what should responsible corporate boards and management teams be considering? Political spending may represent a small percentage of a company’s annual expenditures, but the topic attracts a significant amount of attention in the news media and elsewhere. As discussed below, S&P 500 companies are ranked according to their practices in this area, and companies that fare poorly in such rankings (as well as smaller, non-S&P 500 companies) may become the target of shareholder proposals.

Political spending is increasingly another way to evaluate whether a board is complying with good governance practices and fulfilling its fiduciary duties. Such spending is a use of corporate assets on which the risk and potential return can be evaluated and which should be explainable to a company’s investors, employees and other constituencies. Especially in regulated industries, participating in the political process can be a valid way of constructively advocating for a company’s positions with regulators and legislators, to further its business strategy and shareholder interests. Therefore, well-performing boards should be asking itself, its management team and often its expert in-house and/or independent outside counsel about their companies’ political spending, as well as their board and management oversight and policies in this area.

Where can boards and companies look for useful models and evolving good practices to anticipate and deal with these issues? A letter from the non-profit Center for Political Accountability (or CPA) may be the first query that many companies receive about their political spending disclosure and accountability. Since 2011, CPA has been scoring S&P 500 companies in an annual Index that it prepares with the Zicklin Center for Business Ethics Research at The Wharton School of the University of Pennsylvania (the CPA-Zicklin Index, or Index). CPA uses 24 “Indicators” in its scoring (in the areas of Disclosure, Policy and Oversight, listed on page 29 of its 2015 Index at

CPA’s annual spring and summer letters and preliminary company scores give companies an opportunity to educate their boards about how their oversight of their political spending is part of their good governance practices with regard to the appropriate use of company assets and protecting their companies from reputational harm and legal non-compliance.

In addition to reviewing past CPA-Zicklin Index reports, companies can look to The Conference Board Governance Center’s 2010 Handbook on Corporate Political Activity: Emerging Corporate Governance Issues and its 2015 update Corporate Political Spending: Policies and Practices, Accountability, Disclosure (or The Conference Board Reports). Both remain very useful educational guides with questions that boards should be asking themselves and their independent experts on these issues, to help stay accountable in their oversight responsibilities, including detailed descriptions of the various types of tax-exempt organizations (through which corporations can contribute their funds to engage indirectly in the political process); investor voting guidelines on related shareholder proposals; models for related corporate contribution principles, policies and codes of conduct; and case studies of companies that suffered reputational harm through inadequate oversight.

Know that the CPA-Zicklin Index is only a useful starting point. Some investors and other commentators have reservations about the usefulness of the CPA-Zicklin Index and, in particular, its choice and weighting of its 24 Indicators. They argue that huge gaps can exist in the disclosure of a company’s political spending and accountability, if these companies fail to disclose their spending that is channeled into so-called “dark money” vehicles:  trade associations and 501(c)(4)s (organizations originally designed to promote social welfare and cause-related activities, to help educate the public). Because these organizations generally do not identify their donors (or how much is being donated), shareholder activists may argue that this gap lets companies funnel large sums of money to these groups; and the lack of disclosure means that a high score in the CPA-Zicklin Index may be misleading and may understate a company’s actual involvement in the political arena.

As a result, considering the risks of reputational harm in this area, it is important for companies both to achieve a high score in the CPA-Zicklin Index and to be prepared for shareholder engagement and proposals seeking even greater disclosure of the company’s practices. (Lobbying expenditures, which are not specifically covered at all by the Index, can also cause such risks for companies.)

Related Shareholder Proposals on Political Accountability: S&P 500 companies may suffer not only the potential embarrassment of a low CPA-Zicklin Index score on its own and in comparison to their industry competitors. In addition, those low-scoring companies may risk having to spend additional time engaging the shareholder proponents who have been initiating proposals that ask for more disclosure and oversight.

These proposals are one of the most popular types of shareholder proposals, particularly in the social and environmental area. Some of these proposals have passed in recent years or had high enough votes (averaging annual percentage votes in the 20s, possibly – based on early returns — climbing to the 30s in 2016) to put the impacted companies in the awkward position of explaining why they are not taking more seriously a proposal that has received the support of shareholders holding a significant amount of their shares.

Many of these proponents use CPA-Zicklin Index scores to identify or (at a minimum) cross-check their own research to identify corporate targets. Of the political contribution proposals listed in Georgeson’s 2014 and 2015 Annual Corporate Governance Reviews, almost two-thirds of the proposals brought each year were brought by investors who are identified on the CPA website as submitting such proposals.  Based on an analysis of shareholder proposal data from Georgeson and the CPA, the vast majority (24 of 31) of companies that received shareholder proposals related to disclosure of political contributions in 2014 and 2015 were ones that scored in the bottom two tiers (of five) of the 2015 CPA-Zicklin Index. CPA President Bruce Freed confirmed that “Investors contact the Center and use the CPA-Zicklin Index in identifying companies to engage on political disclosure and accountability.”

Those companies that were targeted but were not in the bottom two tiers were targeted for their failure to disclosure their “dark money” contributions, notwithstanding their otherwise above-average Index scores. This lack of transparency for corporate contributions remains an area of great concern to investors, and apparently is still being vigorously resisted in some C-suites and board rooms.

Companies outside of the S&P 500 have also been the recipients of shareholder proposals on political contributions. The CPA-Zicklin Index’s 24 Indicators are a good place to start if a company receives, or is concerned that it might receive, a shareholder proposal in this area.  As a general matter, companies who receive higher scores in the Index do better in shareholder votes on these proposals. However, as noted earlier, some companies may still be targeted and the shareholder proposals may receive significant shareholder support, particularly if the companies fall short in the disclosure areas that would include “dark money”.

If a company does receive a proposal, it may want to consider if there are CPA Indicator practices that it can adopt either (i) to negotiate away the proposal or (ii) to specify the reasons for its objections in its statement of opposition to try to secure a lower shareholder vote. If a company is not scored, the company could still mention for which (or how many) of the Indicators it believes it would have received credit. That may demonstrate some accountability by showing some compliance with the seven Indicators on Policy and the eight Indicators on Oversight, even if these companies chooses not to satisfy some or most of the seven Indicators on Disclosure.

Reviewing a board’s responses to the questions in The Conference Board Reports is another potential source for showing how seriously a company takes its related oversight responsibilities.

CPA-Zicklin Index Reminders: It is important to remember that companies can engage with CPA regarding a company’s score in the Index. For those companies that wish to do so, here are a few things to remember about the 2016 CPA-Zicklin Index, which is expected to be released by the end of September, in the final lead-up to the most costly Presidential campaign in U.S. history.

  • CPA will send preliminary scores and supporting data to their company contacts for review, beginning at the end of June on a rolling basis.
  •  For companies that want to improve their preliminary scores, committee charters may need to be changed; management and board oversight policies may need to be adopted and/or revised; and systems may need to be set up to collect and disclose company-wide data that had not been collected before.  Some of these steps take time.
  • Some Indicators focus on process, and to score full points on these Indicators, specific committee oversight and company policies and disclosure are required. For those boards that are new to the importance of political activity as a matter of good governance and the associated risks for oversight failures, time is needed to educate them on the current environment and what their industry peers are doing, before bringing proposed charter and corporate policy amendments to them for approval. To begin to disclose contributions that are likely being made throughout large corporate organizations, new processes and internal controls may also need to be put into place, so that internally audited figures can be what is publicly disclosed. If a company finds itself coming close to CPA’s final 2016 deadline for making its data public, it will likely want to reach out to the CPA to see if the company’s internal timing can work with their timing. Once CPA knows when a company’s new data will be made publicly available, they may have the flexibility to give the company a little additional time before finalizing its 2016 Index score.
  • For the 2016 Index, CPA will score each company without regard to how it was scored in previous years, taking a fresh look at each company’s publicly disclosed data and policies. Therefore, even companies that were in the top half (of the five tiers) of scoring may want to take a look at how their preliminary early summer scores and related data compare to prior years.
  • If an company is not sure that the CPA has the right contact information to engage it, the company may want to reach out to Bruce Freed, CPA’s President, at or 202-464-1570 x102, or Nanya Springer, CPA’s Associate Director, at or 202-464-1570 x 103, who can answer these and related questions. In most cases, Index correspondence is emailed to a company’s corporate secretary, unless the company has provided CPA with another point of contact. If CPA does not have an email address, they will use regular mail.

On a Final Note: There are clearly enough data and company models out there for Corporate America to be more responsible in its political spending activities. This is an area where good practices in corporate governance and a strong and positive tone at the top may be able to make a difference in the future of our nation, economy, government and planet.


The views presented on the Governance Center Blog are not the official views of The Conference Board or the Governance Center and are not necessarily endorsed by all members, sponsors, advisors, contributors, staff members, or others associated with The Conference Board or the Governance Center.

About the author:

Rhonda Brauer

Rhonda Brauer
Senior Fellow
Governance Center
The Conference Board

Rhonda L. Brauer is a senior fellow with The Conference Board Governance Center.
Over her career, she has become a nationally recognized strategic and legal corporate governance expert for C-Suite executives and boards of directors of all-sized publicly traded companies in a wide range of industries, as well as in the non-profit world. Ms. Brauer began her career with Cleary Gottlieb as a cross-border transactional corporate lawyer, working in both New York and Brussels. She has supervised teams of professionals in a variety of complex legal and corporate governance consulting situations.

She recently founded RLB Governance, where she continues to promote best practices in corporate governance and company-shareholder engagement.

From 2008-2016, Ms. Brauer was a Senior Managing Director (Corporate Governance) and a member of the Executive Committee at Georgeson Inc. She provided strategic corporate governance and proxy solicitation consulting services, to help her clients obtain their desired outcomes in shareholder votes on directors, executive compensation matters, shareholder proposals, proxy contests, M&A situations and other extraordinary transactions.

Prior to that, Ms. Brauer had been Corporate Secretary & Governance Officer, as well as a member of the Senior Management Team, at The New York Times Company. Over the course of 15+ years in-house at The Times, she provided advice to the board and management on a variety of governance, shareholder engagement, securities law, M&A, transactional, treasury, and philanthropic issues. She conducted board self-assessments and helped to coordinate the Board and senior management response to a dissident’s with-the-vote campaign and a threatened proxy fight that eventually settled.

Ms. Brauer’s other past governance activities have included:

  • National leadership roles for the Society of Corporate Secretaries & Governance Professionals (of which she remains a member), including service on the National Board and its Audit & Finance Committee, and as its Treasurer and the Chair of both its Corporate Practices Committee and Chapter Task Force.
  • Member of the Council of Institutional Investors.
  • Member of the American Bar Association’s Task Force on the Delineation of Governance Roles and Responsibilities.
  • In-house advisor for The New York Times Company Foundation, The New York Times Neediest Cases Fund and The New York Times College Scholarship Program.
  • Manager, Office of the National Board of the Girls Scouts of the USA.
  • Writer of articles and speaker on panels and webcasts across the country on various corporate governance and shareholder engagement topics.

Ms. Brauer remains an active member of the New York Bar, having received her J.D. from Indiana University School of Law (Bloomington, IN), Magna Cum Laude and Order of the Coif. She received her A.B. from Cornell University, College of Arts & Sciences, Magna Cum Laude and Phi Beta Kappa. She is also a past Fellow of the Salzburg Seminar in Salzburg, Austria.

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