Views on improving the integrity of global capital markets
03 September 2014

Investors to Public Companies: Disclose and Justify Political Contributions

Capitol HIll

For a couple of years now, the Securities and Exchange Commission (SEC) has said it is weighing the benefits of a proposed disclosure of political contributions by public companies. A new survey of CFA Institute members supports the idea of disclosure, but with some caveats.

Interest in corporate giving gained following the US Supreme Court’s 2010 decision in the Citizens United case, which ruled that corporations could contribute to political campaigns. According to, donations in Congressional elections that year grew to $3.6 billion, nearly 50% higher than in 2008. Growth in spending on Congressional races grew just 0.6% between 2010 and 2012.

The survey of randomly chosen CFA Institute members from the United States, which closed on 4 August, was conducted to determine whether CFA Institute members would support a disclosure requirement related to companies’ political and charitable contributions. This information already is publicly available for companies through websites such as, which looks at political giving over a number of years. The responses from this survey, however, indicate that these disclosures aren’t sufficient. Investors want these gifts to be made part of the standard disclosures included in the Management Discussion & Analysis that companies must provide as part of their year-end SEC filings.

The respondents indicated they are not so troubled with companies contributing their — as in shareowners’ — money for political purposes so long it is properly disclosed. Of the 1,511 survey respondents — a 5% response rate with a +/- 2.5% margin of error — 60% said companies should be able to make political contributions; 70% agreed they should be able to make charitable contributions. Nevertheless and regardless of the type, the respondents said that companies should have to disclose those contributions. The preferred means of disclosure was the annual 10-K that public companies must file with the SEC.


By comparison, just 27% of respondents said companies shouldn’t be allowed to make any political contribution (6% said they shouldn’t be able to make charitable contributions). And just 13% said companies should be able to make political contributions and not have to report them to shareowners (24% said the same about charitable gifts).

Disclosures should go beyond mere tallies of contributions made, said respondents. A significant percentage — 88% — said the disclosures should include information about companies’ policies on political giving. Another 85% said they should name the organizations and/or causes that received the gifts.

Portfolio managers comprised the largest contingent of members who responded, accounting for 21%, compared with 14% who said they were research analysts. At the same time, 43% of respondents have more than 20 years of experience in the investment business. Another 31% have between 11 and 20 years of experience.

Shareowners have always wanted to know how companies and company executives are investing their money. That they are as interested in knowing about political giving is certainly a new twist on that old theme.

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About the Author(s)
Jim Allen, CFA

Jim Allen, CFA, is head of Americas capital markets policy at CFA Institute. The capital markets group develops and promotes capital markets positions, policies, and standards.

1 thought on “Investors to Public Companies: Disclose and Justify Political Contributions”

  1. Muhammad Idris, Acca says:

    Generally I was in the opinion that such contribution should not be allowed in the first place since directors are just a steward of the shareholder and are suppose to deligently protect interest of the owner’s of the business such contribution can in no way benefits the owners of the business.
    Although it has become well known fact that many listed company make such contribution so disclosure of political donations should be made mandatory by SEC. Compulsory disclosure of donation will definitely help users of the financial statement understandabilty of the materiality in substance and in nature of the contributions. The required disclosure need to be appropriately sufficient. It should include details such as breakdown of the amounts, nature of the donations and beneficiary parties name and the bank account the money is paid, this is to allowed verifiability and faithfully representation of the informations.

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