INFO - PACS

If a company or trade association tries to disclaim responsibility for which candidates receive donations from its PAC (Political Action Committee), that would be misleading.  

Here are the facts:

• A PAC is a political committee in the United States "organized for the purpose of raising and spending money to elect and defeat candidates." [“What Is a PAC?” OpenSecrets.] Each company PAC and trade association PAC decides to which candidates it will donate.

• “A PAC is somewhat different from other entities associated with a corporation. It is a separate entity, but still managed by, and part of, the corporation. ... Establishing the PAC: ... First, a corporation’s Board should approve the creation of the PAC. ... As part of this step, the corporation should select PAC officers and adopt bylaws for the PAC’s administration.” [“Forming a Corporate Political Action Committee," Venable LLP law firm; "Forming an Association Political Action Committee," Venable LLP law firm.]

• In the case of a U.S. company (including a U.S. subsidiary of a foreign-headquartered company), the company selects the PAC’s governing body: a treasurer, and often also a PAC board. Company PAC boards are usually composed of senior executives/professionals of the company; sometimes company board members also serve on the PAC board; often the company’s lobbyists and/or government affairs staff serve on the PAC board. The PAC's governing body decides which candidates the company PAC will donate to. [“Forming a Corporate Political Action Committee," Venable LLP law firm; Federal Election Commission website.]

• In the case of a U.S. trade association, usually the trade association's board selects the PAC's governing body: a treasurer, and often also a PAC board. Trade association PAC boards tend to be composed of senior executives/professionals of some member companies of the trade association, some board members of the trade association, and/or senior staff of the trade association. The PAC's governing body decides which candidates the trade association's PAC will donate to. ["Forming an Association Political Action Committee," Venable LLP law firm.]

• By law, U.S. companies (including U.S. subsidiaries of foreign companies) and U.S. trade associations cannot donate to their PACs from their central funds, but they can use central funds to pay for the costs of establishing, administering, and soliciting contributions for their PAC; these are considered "administrative expenses". For example, the company or trade association may pay out of its central funds "all legal fees for the PAC, postage for mailings, staff time to compose solicitations, credit card processing fees, and virtually any other cost associated with the PAC.” ["Forming a Corporate Political Action Committee," Venable LLP law firm; "Forming an Association Political Action Committee," Venable LLP law firm.]

• Most of the larger donations to company PACs tend to be made by the company's board members, executives and senior professionals, and their families; donations can also be made by other employees and their families, and by shareholders. Most of the larger donations to trade association PACs tend to be made by board members, executives and senior professionals of some member companies and their families, and by board members and senior staff of the trade association and their families. ["Forming a Corporate Political Action Committee," Venable LLP law firm; "Forming an Association Political Action Committee," Venable LLP law firm; Federal Election Commission website.]

• For both companies and trade associations, donations by their PACs are made only to candidates selected/approved by the PAC's governing body. ["Forming a Corporate Political Action Committee," Venable LLP law firm; "Forming an Association Political Action Committee," Venable LLP law firm.]

• As stated in the Reuters article entitled "The new U.S. office politics: funding your boss's political causes,” some companies reportedly pressure and/or induce their employees to contribute to the company PAC. [Michelle Conlin and Lucas Iberico Lozada, Reuters, “The new U.S. office politics: funding your boss's political causes,” 11 May 2015.]

Further information about PACs:

• “Why corporate PACs have an advantage," Karl Evers-Hillstrom, OpenSecrets, 14 February 2020.

• "Political action committee," Wikipedia.

• “Corporate PAC FAQs," End Citizens United.

• “Corporations Should Reconsider the Value of Their Political Action Committees," Douglas Chia of Soundboard Governance, Harvard Law School Forum on Corporate Governance, 8 February 2021.

• "CORPORATE PACS SAVE FACE BY CLAIMING WORKER POWER: The groups often lobby against pro-worker interests — but that doesn’t stop them from rebranding as 'employee PACs'," Rachel M. Cohen, The Intercept, 23 March 2022.