Secrets of Corporate Giving

By DOUGLAS WALLER

Merck prides itself on being socially enlightened. The drugmaker gives its employees diversity training and extends health insurance to same-sex partners. But a report to be released this week by the Washington-based Center for Political Accountability (C.P.A.) shows that in the 2004 elections, Merck was one of 18 companies that gave money to judicial candidates whose conservative views clashed with the corporations' liberal policies. Merck, the report says, donated $1,000 to Samac Richardson, a business-friendly candidate for the Mississippi Supreme Court who ran on an anti-gay-marriage platform and in a TV ad boasted to a white audience of his status as "one of us."

The watchdog group's goal is to boost shareholder efforts to make firms reveal their political contributions. In the past 18 months, 10 companies, including McDonald's and Morgan Stanley, have begun disclosing donations on their websites and given their boards oversight of the contributions. (Merck, which declined comment, began disclosing contributions last year, but its board doesn't supervise its giving.) Many companies fear alienating groups with competing political interests. Of 40 firms facing shareholder-sponsored disclosure resolutions, only one, the biotech firm Amgen, recommended a yes vote. Its measure passed last week.

Activists see disclosure as a matter of accountability. "Shareholders need to know where this money is going," says C.P.A. co-director Bruce Freed. But that isn't easy. Campaign-finance records are scattered among federal, state and local agencies. And companies also funneled more than $100 million to political causes through trade associations in 2004, according to the report.

The campaign-finance scandals in Washington have made investors skittish about corporations becoming tainted by their donations. "It's easy for politicians and companies to get a little bit out of control," says Andrew Shalit, director of shareholder advocacy at Green Century, a mutual-fund manager that has proposed disclosure resolutions. "A lot of harm can come from that." One thing's for sure. When the harm hits headlines--and bottom lines--attention will be paid.