Supreme Court Ruling Allows Corporations and Unions to Boost Political Activity

James G. Cavanagh, Troy M. Cumings

This morning the United States Supreme Court issued its opinion in Citizens United v Federal Election Commission. This decision has profound implications on the ability of corporations and unions to use their funds to influence the election of political candidates.

In brief, the Supreme Court held:

  • It is unconstitutional for government to prohibit "independent expenditures" by corporations and unions using their own funds to advocate for or against a political candidate. "Independent expenditures" are funds that are not donated to or coordinated with a political campaign.
  • Government may, in most cases, require that corporations and unions using their funds to influence an election include a disclaimer in their political advertising and report or disclose these independent expenditures to the government.

What implications does this have for your business?

  • You may now legally spend corporate funds in UNLIMITED amounts to influence an election through advertising or endorsements. Keep in mind the dollars may not be tax deductible as a business expense.
  • Your expenditures must be independent. In other words, they may not be coordinated with a political campaign. For federal candidates, extensive regulations define what constitutes coordination. For state candidates, the candidate may not "control" or "direct" your expenditure.
  • You may still be required to include a disclaimer on any political advertising using corporate funds, disclosing you paid for it. Also, you may be required to report your independent expenditures to the FEC or Michigan Bureau of Elections.
  • This ruling DOES NOT permit a corporation or union to directly contribute funds, goods or services to a candidate. You would still need to create a separate Political Action Committee, funded by employee and shareholder contributions for a specific purpose.
  • The Michigan Campaign Finance Act's prohibition against corporations and unions making independent expenditures to advocate for or against a state candidate is likely unconstitutional under the U.S. Constitution. Hence, a corporation or union can make such independent expenditures, but must file expense reports, just as if it were a non-corporate entity or individual.
  • Unions may be more willing than corporations to spend money on independent expenditures in support of pro-union candidates.
  • If you decide to spend money to influence elections, you will need to carefully consider your particular circumstances and determine if such expenditures legally qualify as "independent," if any advertisements include required disclaimers, and if all required disclosure forms are properly and timely filed with government agencies.

If you have any questions regarding your corporation's ability to participate in the political process, please contact your Governmental Affairs lawyer at Warner Norcross & Judd LLP.