U.S. corporations cannot give money directly to political action committees, but individuals can. Can corporations find a way around the prohibition? Of course they can! That’s what loopholes are for. Bloomberg News reports that corporations are getting their employees to donate to PACs in return for the corporations making matching contributions to the employees’ choices of charities. Among the corporations doing this according to Bloomberg are Wal-Mart, Coca-Cola, Boeing, and Hewlett-Packard. The loophole isn’t just a recent discovery. The practice was specifically approved by the Federal Election Commission in the late 1980s and has been reviewed and approved by the FEC seven times between 1994 and 2009. It is also a practice that is reprehensible, clearly intended to skirt the intention of the law. Election law prohibits corporations from reimbursing employees for their PAC donations, either directly or indirectly, but the corporations are making the case that making donations to charities is different than offering employees reimbursement, bonuses, or other compensation.
The employees participating in this political contribution scam don’t get charitable deductions for the charitable donations— again, to avoid having the employees specifically compensated in the transaction.
Coke and HP give employees a one-for-one match, with the charitable donations going to charities selected by the employees. Wal-Mart, however, offers a two-for-one match, but the contributions must go to the Associates in Critical Need Trust, a charity started by Wal-Mart in 2001 to help Wal-Mart employees who are facing financial hardships.
The combined PAC/charitable donation scheme is “a great way for people who contribute to the PAC to also do good for fellow associates,” according to David Tovar, a Wal-Mart spokesman. “This provides them an opportunity to support the company and the things we’re advocating for on behalf of our shareholders, our associates, our customers in places like D.C. and state capitals.” Walmart switched to the two-for-one match in 2004.