Many treasurers do not break out paycheck deductions in their campaign finance reports, so experts say much more money is probably donated to PACs through this type of transaction than the FEC data show.
“It’s the way that virtually all corporate PACs collect their money,” said Jan Baran, who heads the election law and government ethics group at Wiley Rein. “I bet you almost all union money is also collected through payroll deductions, but it just would not be visible because of the nature of how it’s reported.”
One of the top recipients of listed PAC payroll deductions is Lockheed Martin, which raised more than $2 million through these types of transactions this election cycle. Others raising more than $1 million directly from employee wages include the National Air Traffic Controllers Association with nearly $1.9 million and Federal Express and Union Pacific with close to $1.5 million each.
How Legal Is the Pitch?
The practice itself is legal, but what about the pitch? Some companies are very aggressive in asking for PAC donations, campaign finance watchdog say, sending letters and e-mails to employees and holding meetings to pass around payroll deduction forms.
Solicitations may even be placed in the envelopes that contain employees’ paychecks.
While employers can’t reimburse employee donations, company or union funds often are used for events and creative incentives for PAC donations. For instance, Halliburton uses its corporate treasury to match PAC donations dollar-for-dollar with donations to charities selected by employees. So an employee can give up to $5,000 per year to HalPAC, and the company will cut a matching check in their name to the employee’s favorite church, school or other 501(c)(3) charity.
In 2008, Halliburton wrote $5,000 checks to charities in the names CEO David Lesar, Chief Financial Officer Mark McCollum and Executive Vice President Albert Cornelison Jr., according to documents filed with the Securities and Exchange Commission. Such practices are legal under campaign finance rules, and the FEC has upheld this practice in advisory opinions.
The solicitation for corporate PAC donations often happens in person. For instance, Burger King’s PAC treasurer Craig Prusher said he occasionally stands up at the firm’s regular management meetings and asks employees to enroll in the company’s payroll deduction program.
All Burger King officers and managers are expected to attend the meeting — even by phone or via webcast. Following the meeting, the CEO follows up with a letter to each officer or director “making the case of why PAC contributions are important.”
“The pledge card” that authorizes the payroll deduction “is connected to the letter,” Prusher said. “But we make very clear in [the letter] that for PAC contributions to be legal that they must be voluntary. There are no ramifications to you, your job or your position if you decide not to give to the PAC.”
Who Donates
Burger King’s payroll deduction has been essential to the PAC this cycle, providing 96 percent of its individual receipts, according to FEC documents.
“It’s just a little bit more convenient from just a cash flow perspective when you are doing your family budgeting,” said Prusher, who participates in the restaurant chain’s payroll deduction program in addition to running its PAC. While Prusher said he could solicit all the way down to the restaurant management level, he instead chooses to solicit a smaller number of executives and directors at the corporate level.
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