Many laws have been passed over the years limiting the ability of corporations to participate in politics, but recent Supreme Court decisions have struck down many such laws. Corporations now enjoy new power to directly contribute to political campaigns. But has this changed politics? And, if so, for better or worse?

1. CORPORATIONS
MODULE II: POLICY
LESSON 3: POLITICAL ACTION
Professor Seth C. Oranburg
Duquesne University School of Law
Spring 2020

2. Learning Objectives
■Remember key facts about the history
of corporations under Constitutional
law
■Understand recent changes in
Supreme Court law
■Evaluate whether corporate money in
politics is good or bad for democracy

3. 1787 – The Founding
■ Very few business corporations existed
■ “Corporations” were mainly churches, charities,
and municipalities
■ Incorporating required an act of state congress
– No “free incorporation”
■ Constitution does not expressly refer to
corporations

4. 1819 – Dartmouth College
■ Corporation is an “artificial being” that
“possesses only those properties which
the character of its creation confers upon it
either expressly or as incidental to its very
existence”  limited corporate rights
■ Yet a corporate charter is a binding
contract between the state and the
promoters

5. Antebellum Corporate
Jurisprudence - Contraction
■SCOTUS further limits corporate
rights
■E.g., out of state corporations are not
“citizens” under the Privileges and
Immunities Clause of Art. IV;
therefore, states can regulate or even
keep out corporations chartered in
other states

6. Late 1800s Corporate
Jurisprudence - Expansion
■ States increasingly allowed free incorporation
■ Size and number of business corporations grew
exponentially
■ SCOTUS recognizes that a corporation is a “person”
under the 14th Amendment
– Corporation get rights to equal protection and due
process
– Corporations gain constitutional protection over
their contract and property interests

7. 1906 - Hale v. Henkel -
Contraction
■ Constitutional protections do not apply to
business corporations’ non-commercial
activities
■ Corporation is not a “person” for purpose
of privilege against self-incrimination
■ But corporation can still claim 4th Am.
Protections against unreasonable
searches and seizures

8. 1907 – Tillman Act
■Prohibits corporations from
spending treasury funds on
campaign contributions or
ads to any particular
candidate

9. 1971 – Federal Elections
Campaign Act (FECA)
■ Allowed corporations and unions to establish Political Action
Committees (PACs)
■ PACs receive contributions directly from shareholders,
executives, and employees, with their consent – but PACs
cannot accept general treasury funds
– PACs can spend these moneys on political campaigns
■ Corporations can spend treasury funds on “issue ads” and
donations to charitable and educational organizations
including “think tanks” that advocate political views
– So long as treasury funds do not go toward any particular
candidate

10. Lobbying
■ Corporations can lobby members of
Congress
■ Lobbyists must register and disclose any
payments they receive
■ Note that many activities you might think
of as lobbying – TV ads, congressional
testimony, letter writing campaigns, etc. –
and not subject to lobbyist disclosure rules

11. 1978 – First National Bank of
Boston v. Bellotti
■ SCOTUS invalidated a MA law that banned
corporations from placing political ads for or
against pending referenda
■ Held that the state failed to show compelling
justification for targeting the corporate speech
– No showing “that the relative voice of
corporations has been overwhelming or even
significant in influencing reference in
Massachusetts.”

12. 1986 – Federal Election
Committee v. MCFL
■The federal ban against using
treasury funds to finance voting
advocacy is invalid against
nonprofits who are “formed for
the express purpose of
promoting political ideas”

13. 1986 – Austin v. Michigan
Chamber of Commerce
■ The federal ban against using treasury
funds to finance voting advocacy is valid
against for-profits corporations
– Given the “unique legal and economic
characteristics” of corporations,
regulations are needed to avoid “the
corrosive and distorting effects of
immense aggregations of wealth”

14. c.f. Bellotti with Austin
■Why was the regulation in Bellotti
unconstitutional, yet permitted in
Austin?
■Tensions in SCOTUS
jurisprudence heralded a new case
on the horizon to resolve the
issue…

15. See Citizens United.

16. Citizens United v. Federal Election
Commission, 558 U.S. 310 (2010)
■The free speech clause of the First
Amendment prohibits the
government from restricting
independent expenditures for
political communications by
corporations
■Overruled Austin

17. Justice Steven’s Dissenting
Opinion
■Citizens United majority ruling is
“a rejection of the common
sense of the American people,
who have recognized a need to
prevent corporations from
undermining self government.”

19. Pro and Con
■ Senator Mitch McConnell: Citizens United
“an important step in the direction of
restoring the First Amendment rights.”
■ President Barack Obama: Citizens United
“gives the special interests and their
lobbyists even more power in
Washington.”

20. Aftermath
■ McCutcheon v. Federal Election
Commission, 572 U.S. 185 (2014), held
that limits on contributions an individual
can make to national party and federal
candidate committees is unconstitutional.
■ 5-4 vote invalidated aggregate
contribution limits
■ Decision was highly contentioius

21. Where Are We Now?
■Corporations have
unprecedented freedom to
donate to political campaigns
■Has this changed campaign
finance?

23. Anthony J. Corrado, Jr., Professor
of Government, Colby College
■ “There was the expectation that we would see
this flood of corporate money into our elections.
What has been surprising is the relatively small
amount that business has actually spent in
direct response to Citizens United.”
■ “Over the course of the past four elections,
what we find is that corporations have not really
capitalized on this opportunity.”

24. Social Response

25. 2020 Democratic
Presidential
Candidates Pledge
Not to Take
Corporate Money
Although the First
Amendment may require
the Court to allow political
campaign contributions,
doing so may prove
unpopular with voters, so
candidates are pledges to
refuse corporate funding.

26. Conclusions
■ Corporations have
greater abilities to
make campaign
finance contributions,
but the debate over
whether corporations
have an outsized
influence on politics
rages on