Off Target? In the World of Politics, Be Careful Who You Back

Earlier this year, when the U.S. Supreme Court eased the rules on corporate giving to political campaigns, it was deemed a victory for the business community. However, Target recently discovered that this can be quite polarizing. When the company donated to a group supporting a Minnesota gubernatorial candidate for his approach toward economic growth and job creation, it soon received a backlash from employees for his views on social issues. Minnesota Public Radio reports:

The CEO of Minneapolis based Target Corporation is apologizing for a donation the company made to a political group supporting Republican Tom Emmer’s bid for governor.

The contribution to MN Forward prompted a backlash from Democrats and gay rights groups who called for boycotts of the company’s stores. At least one gay rights organization is praising the apology but is waiting to see whether it follows up with its renewed emphasis on supporting gay rights causes.

In a letter to Target employees, CEO Gregg Steinhafel wrote that the purpose of the $150,000 donation to MN Forward was to support economic growth and job creation, but he wrote that the contribution affected many employees in ways he did not anticipate and quote "for that I am deeply sorry."

Target spokeswoman Lena Michaud said the company will also do a strategic review of political donations and plans to lead a discussion on improving gay rights in the workplace.

"Our commitment right now is in letting people know that we’ve heard their feedback and we’re really sorry that we’ve let them down," Michaud said. "We want to continue doing the many things that Target has done as a company to foster our inclusive corporate culture and then look at ways of doing things better in the future."

The company’s tone has changed dramatically since it became public in July that the company contributed to MN Forward. At the time of the donation, Target officials said the company gave to both Democrats and Republicans and the contribution was aimed at fostering a better business climate in Minnesota. But the donation to Minnesota Forward and the group’s subsequent TV ad in support of Tom Emmer ignited a backlash that spread nationwide.

Michaud wouldn’t say if the boycott affected the company’s sales and also wouldn’t say whether Target would stop making political donations to MN Forward or other groups.

That’s what Monica Meyer, executive director of the gay rights group OutFront Minnesota, said she’ll be watching for. Meyer said she’s pleased Target apologized for the contribution, but she wants to make sure the company follows up on its promise to be committed to gay rights.

Free Speech for All

Look at most polls and you’ll see voters are in a surly mood and wanting to boot incumbents out of office. So no one should have been surprised that congressional leadership wants to move fast to pass new restrictions on speech by those who might disagree with them.

It’s called the Democracy Is Strengthened by Casting Light on Spending in Elections, or “DISCLOSE Act.”  A long and cute title, but the bill is really designed to put duct tape over the mouths of businesses and trade associations. Labor unions and trial lawyers get a pass in the bill, an important preferential treatment with real election impacts.

For-profit corporations doing federal contract business, taking TARP money, or with as little as 20% overseas ownership would be flatly shut-out of making campaign communications. CEOs of any other corporations who tried to speak up would have to go on camera in any advertisement saying they approved the ad and could face criminal complaints. Independent expenditure ads by businesses and associations would be blocked from being on the air from April through November in Indiana.

For decades, federal campaign finance rules and “reform” packages like McCain-Feingold were crafted with some balance for corporations and labor unions. The DISCLOSE Act abandons this important balance and bipartisanship. There was no attempt at a bipartisan approach here, particularly with the current chair of the House Democrat Campaign Committee (Rep. Van Hollen) and immediate past chair of the Senate campaign committee (Sen. Chuck Schumer) actually authoring the bill.

Businesses and trade associations have First Amendment free speech rights, as reinforced by the U.S. Supreme Court in the landmark Citizens United ruling last year. That pesky First Amendment getting in the way of politicians again.

You can take action in fighting this legislation via the Indiana Prosperity Project.

New Law Puts Benevolent Corporations in Protected Category

Seems like this could be a pretty slippery slope, but time will tell. As this article in BusinessWeek relays, interest in socially-responsible corporations has gained a great deal of momentum as generations both young and old seem to become more affiliated with causes (charities, environment, etc.). Maryland has put a law in place offering more protection to said businesses from shareholder lawsuits, and California may be following suit. The concept is certainly well-meant, but could it prove misguided? Or have we found the nexus where capitalism and causes meet? Please offer your thoughts in our comments section regarding the viability of such measures as you see it:

When Ben Cohen and Jerry Greenfield sold Ben & Jerry’s to Unilever (UN) for $326 million a decade ago, they did so reluctantly. They liked the payout but feared the new owners would ignore the social goals famously embraced by the ice cream maker. The board, though, felt it had no choice but to accept Unilever’s offer. "The legal advice was that the primary concern for the directors was the financial interests of the shareholders," says Greenfield.

Entrepreneurs who want to put principles before profits—even after their companies go public—may soon have the legal cover to do just that. On Apr. 13, Maryland Governor Martin O’Malley signed a law creating legal entities known as "benefit corporations" and giving them greater protection from shareholder lawsuits. California and Vermont have similar bills in the works and legislators in at least three other states, including New York, are considering them. While many entrepreneurs applaud the measures, corporate governance experts worry about the rights of shareholders.

Interest in so-called socially responsible businesses by investors and entrepreneurs has grown in recent years. More than $2.7 trillion­—about 11% of all assets under professional management—were in some kind of socially responsible investment in 2007, the latest data from Bloomberg show. More than 30,000 U.S. companies are members of socially responsible or sustainable business organizations, according to B Lab, a Berwyn (Pa.) nonprofit that certifies businesses as socially responsible.

Under the new Maryland law, benefit corporations must spell out their values in their charters, report annually on activities that benefit the public, and submit to third-party auditing of their societal impact. Becoming a benefit corporation, or shedding that status, would require approval of two-thirds of shareholders.

A California bill would have similar provisions for what it calls "flexible-purpose corporations." In Vermont, a bill creating benefit corporations passed in the state senate and is awaiting action by the lower house. Such measures would "better insulate [companies] from the pressures of short-term­ism that dominate the public equity markets," says Jay Coen Gilbert, co-founder of B Lab, which has certified 296 companies as B Corporations.