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Unions vs. Corporations: Rules Concerning the Expenditure of Treasury Money on Political Spending

by Roseana Weaver

When shareholders ask corporations to disclose their political expenditures, corporations answer that they already disclose at least as much as unions. Nothing could be further from the truth. Expenditures made by both unions and corporations through Political Action Committees (PACs) are subject to the detailed reporting requirements applicable to these funds, but there the similarity ends. If a union wants to dip into its treasury to be politically active, there are detailed reporting requirements and protections for union members that simply do not exist if a company decides to spend shareholder money from the corporate treasury in the political arena. The rules requiring reporting of other direct or indirect political expenditures differ significantly between unions and corporations.

Unions are subject to strict federal reporting requirements and must file annual reports disclosing their political expenditures to both the public and to their members. These reports are available to anyone on the Internet. In particular, federal regulations require unions to disclose publicly every political or legislative expenditure of $5,000 or more along with the date and purpose of the payment (for example, “registration drive, get-out-the-vote campaign, voter education campaign, fund raising, advocating or opposing legislation (including litigation challenging such legislation) advocating or opposing regulations (including litigation challenging such regulations), a functional description of the recipient (“such as campaign advisor, lobbyist, marketing firm, fund raiser, think tank, issue advocacy group, printing company, office supplies vendor, legal counsel, etc.”) and the name and address of the recipient.

Corporations have no obligation to report even the gross amount spent for political purposes. And even corporations that voluntarily report political expenditures avoid reporting the bulk of these expenditures by making them indirectly— through payments to organizations such as the US Chamber of Commerce which, subject to no reporting requirements, then use the contributions to support or oppose various candidates and lobbying efforts.

A detailed comparison is below.

1 Instructions for form LM-2 Labor Organization annual report (11/2010). Unless otherwise indicated, all quotations are directly from this document which can be found here.