In the wake of the Jan. 6 riots at the U.S. Capitol, organizations from public companies to large financial institutions, and even law firms, are reconsidering their political contributions. Many organizations immediately considered not only the views of shareholders but also the opinions of their employees and other stakeholders and quickly began evaluating whether changes to their political contribution programs should be made. Some have already publicly announced their decision to either pause political spending or to refrain from contributions to certain politicians in light of the events.

While the U.S. Capitol riots may have put corporate political contributions at the forefront of the news, this is not a new topic. With money for many political contributions coming from discretionary funds and ultimately out of shareholder pockets, shareholders have for many years expressed concerns over how, and in what amount, such funds are allocated. This concern has led to shareholder proposals in the past seeking transparency around political spending policies. While many such proposals did not garner passing votes in the past, the tide may be shifting as institutional investors are becoming more vocal regarding transparency and the alignment of political spending with stated priorities. As a result of shareholder interest and, in some cases, pressure, many public companies have begun disclosing their political contributions and related policies, absent any legal requirement to do so. For example, in 2020, over 60% of the 378 core companies that have been in the S&P 500 since 2015 had policies in place for fully disclosing or prohibiting political spending. Only time will tell whether the events of this month will create a further shift. In the meantime, it is important that corporations, especially public companies that are subject to a regulatory disclosure regime, understand the framework around this conversation.