It's a full-on political pause.
In a move signaling how Washington and business ties can be tenuous, dozens of big US companies say they have suspended political donations in the wake of the turmoil at the US Capitol. Some said they were revaluating their policies, while others targeted lawmakers for not accepting the presidential election results. “Their view is that the current situation needs to be addressed head-on and decisively," says Nels Olson, global leader of Korn Ferry’s Government Affairs practice. "Hitting politicians in the pocketbook is one key way to take a stand.”
The message they are sending, Olson says, is that they don’t want either of the major US political parties to give in to their respective fringes. Most of the fundraising halts are for three to six months, although at least one company says it will sit out an entire election cycle. While campaign financing usually slows down after a major election, experts say the fact that so many firms have announced fundraising halts is significant. Companies have, in one way or another, provided financial support to American politics for nearly as long as there have been American politics.
This January was already going to be a transitional moment for corporate America’s relationship with politicians. A change in ruling parties always involves a swap in government leaders and policies, which means companies have to forge new relationships or improve existing ones. There are always differences between administrations, but the difference in tone and tenor between the outgoing Trump administration and incoming Biden administration might be one of the biggest in US presidential history.
It’s unlikely that companies and their leaders will stay away from campaign contributions forever. Donating money to individual politicians gives companies an opportunity to amplify their voices on policies and issues. And increasingly, the most effective CEOs and other leaders, driven by a sense of purpose, are becoming more involved in policy. “It’s not possible for CEOs and companies to be neutral,” says Evelyn Orr, vice president and chief operating officer of the Korn Ferry Institute.
Indeed, companies are increasingly becoming more tied to environmental, social and governance goals, which often demands that organizations, and their leaders, take stands, says Peter McDermott, a Korn Ferry senior client partner who works with investor relations professionals. Making political contributions is a way for other stakeholders to check to see if the firm and leaders are living up to their stated values. Experts say that there is a notable and growing consensus in the business community that this is a significant inflection point in the relationship between business and politics.
That said, a company might not want to overhaul everything it does just to have a voice with the new administration. “As with talent recruiting decisions, corporate leaders typically shouldn’t make long-term business decisions based on short-term political realities,” Olson says.