Some 34 of the nation's top corporations have agreed to disclose their political spending.
Campaign spending for all offices could top $5 billion this year. How much of that comes from corporations?
Freed: I think a significant amount is coming from businesses. It's difficult, though, to come up with a precise figure because of the absence of disclosure.
It seems like a tangled web.
Money that's given through company political action committees is easy to track because that's reported to the Federal Election Commission. Money that would be given at the state level, that could include corporate money, that can be tracked easily if a state has good disclosure requirements. The problem is that disclosure at the state level is spotty. And when companies give corporate funds – that would be soft money given to 527s and those types of groups – that's reported only by the recipient, not by the contributor. But then you have companies giving a great deal of money through trade associations and through other tax-exempt organizations. Those would be 501(c)(4)s. There's no disclosure of that.
What are 501(c)(4)s?
[They] are known as social-welfare organizations. But they're a nonprofit. There are certain restrictions on what they can spend money on. But the fact is they can be used to engage in political activity up to a certain line. And ... they can engage in significant political activity.
Can investors check the political spending of the companies they own?
It's very difficult.... In those cases where a company has agreed to [disclose political spending] and is reporting, an investor can find out. But that's just 34 companies of ... the S&P 200. So it's a limited number of companies.