Walmart can’t donate directly to their own “pro-business” political action committee, they can’t make employees donate to it, and they can’t pay employees for donating to it. Those things would all be against the law, and would draw the ire of the Federal Election Commission. But the company is legally allowed to create incentives for employees to donate to their PAC by creating matching charitable contributions. The problem? The only charity in play is one that gives to Walmart employees. According to a complaint lodged with the FEC today, that means Walmart is still basically paying off employees to make political contributions, and should be stopped.
Advocacy groups Public Citizen and Common Cause joined together with a labor group called OUR Walmart to file the complaint, the Wall Street Journal reports.
In the filing (PDF), the groups claim that Walmart is violating the Federal Election Campaign Act both by providing a larger-than-usual matching incentive, and by providing the match only to a charity that supports company employees. The combination, the complaint says, “exert[s] improper coercive pressure on employees in Walmart’s restricted class to contribute to the Wal-Mart PAC.”
We explained the scheme at length back in December, but the short version is: Walmart is not allowed to spend their funds on their PAC, but company employees are. The company cannot require employees to donate, nor can it reimburse employees for donations or give bonuses for donating.
But Walmart can match political donations with charitable donations, which is exactly what they do. For every $1 an employee gives to Walmart’s PAC, Walmart donates $2 to charity.
There’s another catch, though. Walmart doesn’t match donations to just any charity. They don’t even let employees pick one from a shortlist. The matching 2:1 gifts go to exactly one organization: the Associates in Critical Need Trust — the Walmart philanthropy fund for Walmart employees who don’t make enough money by working at Walmart to stay food-secure or to pay their bills.
Walmart has been running their 2:1 donation program for over a decade, and they are far from the only company to do so. Other big corporations like Boeing, Hewlett-Packard, and Coca-Cola offer some similar kind of matching donation program. However, in none of those cases is the match higher than 1:1, and in those instances employees are also allowed to choose the charity that receives the matching funds.
Walmart’s strategy for encouraging their full-time employees to donate to the company’s “pro-business” PAC is clearly very effective, according to the WSJ: in just the last 20 months, the PAC has received roughly $2.8 million in individual contributions.
In a press release announcing the FEC complaint, Public Citizen said, “A 200 percent matching rate provides such a powerful incentive that the campaign contributions lose their ‘voluntary’ nature. And the corporate contributions reportedly made exclusively to Wal-Mart’s own charity, along with the campaign contributions to Wal-Mart’s PAC, are self-serving for the company.”
Policy counsel for Common Cause Stephen Spaulding echoed that sentiment, telling the WSJ that “employees themselves benefit from the donation because the match is limited to a fund that only supports Wal-Mart employees.”
The strategy of matching PAC donations with funds given to nonprofits has been legal since the late 1980s, and the FEC has been split over supporting it for just about as long. In December, former Federal Election Commission chairman Scott Thomas told Bloomberg he opposed it, saying it moves “too close to the line” of the rule that forbids companies from reimbursing employees for political donations.
Although the FEC has revisited the issue several times, they have never yet moved to forbid it.
Labor Groups Seek Probe of Wal-Mart’s PAC [Wall Street Journal]
by Kate Cox via Consumerist
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