A complaint filed with the Federal Election Commission on Monday accuses Walmart of flouting campaign finance law with a program that encourages employee contributions to its political action committee by making matching donations — for double the amount — to a charity set up to help Walmart workers in financial distress.
The Federal Election Campaign Act, enacted in 1972, prohibits corporations from directly donating to federal candidates, political parties or PACs, although employees and stakeholders are free to do so. The law also forbids reimbursements to employees for PAC donations.
Nevertheless, in the late 1980s, the FEC declared it legal for companies to make matching contributions to charities in exchange for employee PAC contributions, providing an incentive for workers to financially support corporations’ political agendas and elect company-favored candidates. Still, the three groups filing the complaint — campaign finance watchdog organizations Common Cause and Public Citizen and Our Walmart, an employee advocacy group — say Walmart has gone beyond the parameters of the programs approved in the past.
Walmart’s matching program, started in 2004, is unique in that it uses a 2-to-1 ratio when making matching donations to the Walmart Associates in Critical Need Fund, launched in 2001 to “provide monetary support to associates or their dependents when they experience extreme economic hardship due to situations outside of their control, including natural disasters.”
Moreover, whereas other corporations that have adopted the practice allow employees some choice in which charity receives the in-kind contribution, Walmart has designated a nonprofit that benefits its own associates and is completely under the company’s purview.
“The program undercuts the voluntary nature of [political] contributions,” said Stephen Spaulding, policy counsel for Common Cause. “It’s meant to induce contributions to the Walmart PAC because It goes to benefit Walmart employees who are facing hard times.”
Such schemes have come under closer scrutiny in recent years, with Bloomberg News reporting that the FEC’s six members have deadlocked over the issue at least seven times from 1994 to 2009. In 2009, when IntercontinentalExchange Group, a company that operates financial marketplaces, was contemplating setting up a double match program, it asked the FEC for an advisory opinion. The commissioners could not reach consensus and ultimately issued no opinion, with some members arguing that such a program would “smack of buying off the contributor.”
It’s an assessment with which Craig Holman, a government affairs lobbyist for Public Citizen, agrees. “Walmart has taken it to a whole new level leaving the parameters that the FEC has approved,” he said. “It’s almost essentially bribing a campaign contribution.”
He said he has reservations in general about such matching programs, which Coca-Cola and Hewlett-Packard have also used. “It is indirectly allowing corporations to do what is otherwise illegal — use corporate funds to finance their political action committees,” Holman said.
According to the complaint, revenues for the Walmart Associates in Critical Need Fund totaled about $16 million for the fiscal year ending Jan. 31, 2013. In the 2014 election cycle, Walmart PAC has disbursed approximately $2.9 million to campaigns and candidates, split about evenly between Democrats and Republicans, according to the Center for Responsive Politics.
Brooke Buchanan, a Walmart spokeswoman, emphasized that the program is completely voluntarily and that no employee is compelled to participate.
“We’re confident that our matching program is lawful and that the FEC will find this complaint by groups not affiliated with Walmart lacks merit,” she said.