Funds Boost Backing for Corporate Reporting on Money in Politics

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By Andrea Vittorio

Goldman Sachs Group Inc., State Street Corp., and 54 other mutual fund groups backed more investor requests for companies to report on their political spending in the first year of Donald Trump’s presidency than the year before.

Out of 114 fund groups studied recently by Fund Votes, Franklin Templeton Investments was one of only 14 that supported fewer shareholder proposals on political spending over the past year. The rest of the funds’ voting habits were largely unchanged.

“We’ve seen this trend all along,” Bruce Freed, president of the nonpartisan Center for Political Accountability (CPA), said when asked whether Trump’s election had anything to do with institutional investors’ votes. The nonprofit he co-founded has been following these votes since 2004, when a smaller group of fund families supported just 3 percent of political spending disclosure requests on average. Their support has averaged upwards of 30 percent more recently.

In today’s polarized environment, “companies are facing much greater scrutiny,” Freed told Bloomberg Law.

About three-fifths of companies in the S&P 500 now disclose some or all of their election-related spending, or they prohibit such spending, according to the CPA’s most recent benchmarking report with the University of Pennsylvania’s Zicklin Center for Business Ethics Research. The annual assessment looks at corporate contributions to elections, which must be reported, as well as oftentimes unreported payments that trade associations and other politically active groups spend on elections.

Vote Outcome Worse

Pension funds, labor funds, and other shareholders used the CPA’s proposal template to put political spending disclosure up for a vote at 22 companies this proxy season, including those that landed at the bottom of the CPA-Zicklin benchmark like Berkshire Hathaway Inc. and Expedia Inc. Another 25 proposals are being readied for next season, the center said.

The 20 largest asset managers supported more of these proposals in 2017 than they did in 2016. But, among all shareholders, the average vote in favor of each proposal fell from 33 percent to 28 percent over the same period, Fund Votes found.

“I’m at a bit of a loss,” said Fund Votes founder Jackie Cook, who conducted the analysis for the Center for Political Accountability. “I’ve never really seen a situation where the largest asset managers are moving in one direction and the actual vote outcome is moving in another direction.”

Cook said it’s mostly because funds like Fidelity Investments and Vanguard Group that tended to abstain on these proposals before more often voted against them instead.

The issue of corporate participation in the political process could soon get a champion at the Securities and Exchange Commission, if Robert Jackson, a Columbia Law School professor, is approved to fill a Democratic seat. Jackson and nine other academics petitioned the SEC in 2011 to require companies report their political spending to shareholders. Still, as a commissioner in the minority party, he wouldn’t hold much sway. In recent years, Congress has also blocked the SEC from working on such a rule.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Yin Wilczek at

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