People For the American Way

Trade Associations Funnel Secret Corporate Campaign Cash

An article in The Nation provides ominous details about one of the less well-known results of Citizens United v. FEC: trade associations can now spend an unlimited amount of money without disclosure to affect U.S. elections on behalf of their trade association’s members, including foreign companies. The resulting massive infusion of secret corporate money to distort our elections is not as well known to the general public as Super PACs, but its impact is enormous.

The real tsunami in corporate spending has come from nonprofits, in particular trade associations, which are classified as 501(c)(6) organizations under the tax code and are virtually fully funded by corporate cash. In 2010, 501(c)(6) trade associations and 501(c)(4) issue-advocacy groups outspent Super PACs $141 million to $65 million, according to the Center for Public Integrity and the Center for Responsive Politics.

The Nation article highlights how trade associations bundle corporate money without public disclosure and use it to target or support particular candidates who, if elected, would help determine the laws that would affect their industries. Pharmaceutical Research Manufacturers of America (PhRMA), American Petroleum Institute (API), and the U.S. Chamber of Commerce are trade associations that have each massively increased their federal campaign spending while supported by their foreign corporation members.

Take the Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry’s trade association. In 2008, PhRMA spent less than $200,000 on federal elections, using only money bundled from transparent individual contributions, mostly from drug company executives. The following election cycle, after Citizens United, PhRMA spent $10.36 million on federal elections, 98 percent of it from undisclosed corporate sources.

Although direct participation of foreign corporations in U.S. elections is illegal, Citizens United permits unlimited spending in elections by U.S. trade associations, whose financial contributors and members can be national, multinational, and even foreign corporations. Trade associations are not required to disclose the individual companies who financed their political activities and campaign efforts. Thus, when funding occurs through trade associations, companies can take an active but secret role in elections, and foreign corporate spending in U.S. elections can be hidden.

Trade associations could be separating foreign and domestic funds for purposes of U.S. election efforts, as the U.S. Chamber of Commerce claims to do, but this practice is optional and is not required to be reported. The Nation gives the example of API, a trade association with major funding from an American subsidiary of the government-owned Saudi oil company Aramco. API took an active role in financing the 2010 ads that helped elect so many Republicans pledged to oppose climate regulation.

Citizens United has allowed trade associations unlimited, undisclosed funding in support of their corporate members’ preferred political candidates. Once elected, these corporate-backed politicians vote for policies that support trade association interests. The Nation quotes Cleta Mitchell, a prominent Republican election attorney who advises corporations: “[trade] associations are the big winners.”

And the people of America are the big losers.


American Petroleum Institute, campaign finance, campaign finance reform, Citizens United v. FEC, corporate court, corporations, disclosure, money in politics, PhRMA, secret money, Supreme Court, U.S. Chamber of Commerce