Fundamental Questions about Corporate Donations by Robert E. Wright for American Institute for Economic Research
Unsurprisingly, the Biden administration is pushing pro-ESG (environment, social, governance) policies. I have argued against “woke” investing before, here and here, noting that ESG funds are mostly branding efforts designed to bilk investors with relatively high fees. But the problem with ESG funds and the “corporate social responsibility movement” more generally is much more fundamental.
I was immediately critical of the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission and remain so to this day. In that landmark decision, SCOTUS determined that “political spending is a form of protected speech under the First Amendment, and the government may not keep corporations or unions from spending money to support or denounce individual candidates in elections.” Even the dissents showed a profound lack of understanding of U.S. corporate history as explained here, and especially here.
Of course I don’t dispute Americans’ right to voluntarily pool money together to support a political candidate, party, or public policy and indeed find it odd that right should ever have been questioned to the point of litigation. Super PACs, in other words, are as super as the Super Bowl.
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What really grinds my gears is the implication that non-political corporations may donate funds to just about anything. As Milton Friedman argued, their sole goal should be the lawful maximization of their respective owners’ profits. ← period! Partners and shareholders may donate to whichever causes they choose, of course, but corporate executives should not be allowed to make that decision for them.
Similarly, nonprofits should donate resources only to the extent that such donations further their respective missions. Nonprofits like the United Way and grant-making philanthropies are fine, of course, but individuals who donate to operational nonprofit X (say, an orphanage) should not have their money redirected to some tangentially related cause Y (like gender reassignment surgery for orphaned tweens).
