The Ethics of Combining Charitable and Campaign Contributions

It amazes me how many ways elected officials misuse charitable organizations to engage in ethical misconduct, especially to get around gift rules. One would think that charities would be sufficiently sacrosanct. But instead they are frequently used as an indirect form of pay to play, and they have played a major role in getting around campaign finance limitations.

The form of misuse of charitable organizations that this post will look at involves a company that wants to get around restrictions on corporate campaign contributions. It is not enough that the company's employees are allowed to give to a corporate SSF (separately segregated fund, essentially a corporate PAC). The company decided to induce such gifts by double "matching" them with its own gifts to a charitable organization that does only one thing:  help out its employees when they are in need.

The company is Wal-Mart, the charity is Wal-Mart Associates in Critical Need Fund, and the matter that has arisen is a complaint filed with the Federal Election Commission (FEC) by Public Citizen and Common Cause. The most amazing fact stated in the complaint is that the FEC has already issued twelve opinions on this very topic, allowing almost all of the situations on the grounds that there was not "an exchange of corporate treasury funds for voluntary contributions and a form of indirect compensation for the contributor's contribution."

However, there were dissents to some recent decisions, and with respect to the most recent one (where the "matching" funds were greater than 1-1, but there were multiple charities to choose from), the FEC split 3-3.

The fact that companies keep trying to find legal ways to use charitable contributions to induce campaign contributions from their employees shows how willing companies are to ignore the ethics of doing this. They do this at the cost of degrading areas of life that have nothing to do with the workplace or with elections, including, in this case, charitable giving and the feelings of compassion individuals have for their co-workers who are in need.

The legality of using charities to induce campaign contributions from their employees, instead of simply paying them the money directly, should not be dependent on whether this transaction involves an exchange of corporate funds or indirect compensation. The issue should instead be the ethics of involving charitable giving in campaign fundraising in any manner at all. This is an ethical issue rather than a legal one, and legal descriptions cannot capture the inappropriateness of combining the two. It is better that they not be combined at all.

Robert Wechsler
Director of Research-Retired, City Ethics

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