Corporations have made some of their first significant political donations since a 2010 court ruling permitted them — and surprisingly, they’re not monetary.
Some companies have discovered a more cost-effective way to support a favored candidate while ensuring their money is used wisely: giving hundreds of thousands of dollars of free goods or services, known as “in-kind” contributions.
Documents filed Monday with the Federal Election Commission (FEC) showed the activity propping up what has become a major super PAC supporting the presidential campaign of Rep. Ron Paul, Texas Republican. The technique has allowed small businesses to take a stand by doing what they do best.
As such, the first forays into political speech by corporations, especially those in the media, marketing, technology and communications fields, have been closer to actual speech than the massive check writing that critics of relaxed campaign finance laws feared.
Texas-based Smiley Media, an advertising and marketing firm, donated $421,000 worth of services at the behest of its CEO, Stephen Oskoui, to Endorse Liberty, a super PAC run by Paul supporters, providing online advertising for the group.
On the same day last month, Gunter Marksteiner, the CEO of WHDT World Television in Florida, donated $165,000 of airtime to Endorse Liberty and a similar amount to another Paul super PAC.
The concept makes sense: When a business donates services, political groups can get the most return for the least sacrifice from supporters because they are not paying the markup that comes with purchasing goods from a for-profit company. Business leaders give up only the actual cost of the goods or services provided.
It also allows executives to tap into spare resources, such as excess employee time or a warehouse of unneeded materials — or even create jobs and expand their company’s reach.
Control over investment
Any major donor wants assurance that his money will be spent wisely, Mr. Marksteiner said, and having the PAC spend the money at his firm meant he could ensure that by helping shape the advertisement.
“I said if you’re going to run TV ads, you’re definitely going to want long form, … and let’s make sure it’s something that can be reused.”
Unlike a bumper-sticker company that can give away its products for less than retail, the price for television political ads is fixed by federal broadcasting rules at a station’s lowest commercial ad rate, Mr. Marksteiner said, so anytime a network runs a political ad — whether purchased or donated — it essentially is giving away airtime at cost.
Partly because the CEO couldn’t give away airtime more cheaply than an outsider could get it, he made the donation individually.
“It became clear they hadn’t done this before and it was more expensive than they thought,” Mr. Marksteiner said of the PAC. “And I called them up and said, ‘Don’t worry about it. I’ll cover it.’ “
Then, putting on the hat of corporate officer, he did the group a favor by pulling some logistical strings, he said.
“I moved things around and cleared enough time so they could run a documentary-style spot,” he said.
Mr. Marksteiner previously prohibited negative ads with unprovable accusations, effectively ruling out those from super PACs supporting Mitt Romney or Newt Gingrich. He said he wasn’t willing to risk his station being complicit in potentially libelous content.
“My position was other candidates are perfectly welcome to advertise on WHDT if they had something to say, and the only people with something positive to say that came forward were the Ron Paul people,” he said.
The end result of his donation was the first and only entree into the television market of a group that has otherwise been online-focused — a strategy Mr. Marksteiner encouraged the PAC to deviate from in Florida.
“People in Florida are much older and they don’t go online,” he said.
Endorse Liberty spent $2 million on online advertising campaign with Google in January, with its only other major buys from WHDT and Smiley Media.
Realized and unrealized fears
The volunteering of services could compound an existing problem with super PACs: They risk decentralizing a message away from candidates, leading to conflicting or piecemeal narratives. Super PAC administrators could feel pressure to accept free work from a company when they might have chosen a different or more established one if they were paying.
But while PAC administrators can turn down in-kind contributions, employees of a firm have less say. They could cause employees who disagree with their boss’s political preferences to feel unwanted pressure if they have a role in doing candidate-specific work, such as manufacturing buttons with his name — much more so than would be caused by the company’s CEO quietly mailing a check.
In-kind contributions were the biggest boons to Endorse Liberty with the exception of its sudden major benefactor, Monday’s disclosures showed: The founder of PayPal gave $1.7 million last month, making Peter Thiel of San Francisco one of the largest players in the presidential race.
Other than the ones that provided free services, the only corporations to give to the super PAC were Reno-based Polka Dot Publishing at $10,000, get-rich-quick website CoachVan.com at $500 and a green-energy consulting firm at $250.
That cuts to the heart of the in-kind contributions’ significance: The onslaught of million-dollar checks from major corporations feared by critics of the Supreme Court’s Citizens United ruling largely has never materialized. Companies such as Pepsi, for example, have seemed reticent to risk the backlash of alienating half of its customers by clearly aligning itself with one party.
The more important tenet of the campaign finance change was the removal of the existing $5,000 cap on donations to political committees by individuals. Executives who made millions of dollars helping run those companies soon discovered it was more prudent and effective to write checks from their personal bank accounts.
But the potential for divisiveness is particularly pronounced in a primary election, where even businessmen with similar ideological predilections have different preferred candidates, so the potential remains for corporate donors to emerge, including major financial firms — whose main product is money.
• Luke Rosiak can be reached at email@example.com.
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