Massive new study traces how corporations use charitable donations to tilt regulations in their favor

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: January 23, 2019 at 12:37:48 AM GMT+9
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Massive new study traces how corporations use charitable donations to tilt regulations in 
> their favor
> Reply-To: dewayne-net () warpspeed com
>
> Massive new study traces how corporations use charitable donations to tilt regulations in their favor
> How corporate contributions turn nonprofit groups into lobbyists for big business.
> By Christopher Ingraham
> Jan 17 2019
> <https://www.washingtonpost.com/business/2019/01/17/massive-new-study-traces-how-corporations-use-charitable-donations-tilt-regulations-their-favor/>
>
> Back in 2011, when AT&T and T-Mobile were attempting to gain approval from the Federal Communications Commission for 
> an ultimately doomed $39 billion merger deal, an unusual coalition of interest groups submitted comment to the agency 
> in support of the merger: the NAACP. The Gay & Lesbian Alliance Against Defamation (GLAAD). A homeless shelter in 
> Louisiana. The Asian Pacific Islander American Scholarship Fund.
>
> The groups were united by two common threads. The first was their lack of any apparent stake in telecommunications 
> policy. The second was the fact that they had all recently received donations from AT&T, in some cases totaling six 
> figures or more.
>
> Although AT&T denied any quid pro quo over its contributions to nonprofit groups, the donations raised eyebrows on 
> Capitol Hill and elsewhere. The president of GLAAD resigned over the contributions, as did a number of board members. 
> Ultimately, the merger fell through.
>
> While it’s tempting to write off the incident as a one-time blunder — heavy-handed corporate lobbying gone amok — new 
> research from Marianne Bertrand at the University of Chicago and others finds that’s not the case. Merging 
> charitable-giving data of Fortune 500 companies with a complete record of public comments submitted to the federal 
> government on proposed regulations between 2003 and 2015, Bertrand and her colleagues are able to trace how 
> individual corporations influence the rulemaking process via nonprofit donations.
>
> The data set compiled by the researchers demonstrates three crucial findings: First, after a firm donates to a 
> nonprofit organization, that group becomes more likely to comment on rules that the firm has also commented on. 
> Second, the organization’s comments in those cases have more similarities with the firm’s comments than with comments 
> from other nonprofit organizations not receiving money from the firm. And finally, when a firm and its grantees 
> comment on a rule together, regulators' final remarks on the rule are more likely to be in line with the firm’s 
> comments on the rule.
>
> The research “unearth[s] a channel of influence going from corporations to policymaking that was not measured 
> before,” co-author Matilde Bombardini said in an email, “both in terms of monetary magnitude and impact on the 
> agency’s views on the various regulations.”
>
> The paper exclusively considers federal rulemaking, which is the process by which agencies deliberate on how laws and 
> policies are interpreted and carried out in the real world. When an agency proposes a rule (for instance, a telecom 
> merger approval, the addition of a new drug to a list of controlled substances or the applicability of mandatory rest 
> requirements for different types of workers) it typically allows public comment on the proposal for a period of 30 to 
> 60 days. Individuals and other interested parties — including lawmakers, businesses and nonprofit organizations — are 
> allowed to weigh in on the proposal.
>
> At the end of the period, the agency issues a final rule. The rule may be unchanged from its initial iteration, or it 
> may be altered or even withdrawn completely based on the public input received. A conceptual diagram of the process 
> would look something like this:
>
> But Bertrand and her colleagues found evidence that, in many cases, the process is not that simple. Comments received 
> from businesses and ostensibly independent entities may be linked by money that flows well outside the process. When 
> that happens, the final rule is more likely to reflect the donating corporation’s views.
>
> “Naturally firms favor profits — i.e., private benefit — over the social good,” study co-author Raymond Fisman said 
> in an email. “So Coke wants to sell more soft drinks even if [there are] increases in obesity. Supposedly independent 
> nonprofits are meant to provide input that acts as a counterweight. If they’re co-opted, they won’t.”
>
> To draw these conclusions, Bertrand and her colleagues first identified 629 charitable foundations operated by 474 
> firms appearing on the Fortune 500 or Standard & Poor’s 500 composite index lists at any point from 1995 to 2016. 
> Using IRS data, they then identified all 225,180 nonprofit entities receiving gifts of greater than $5,000 from these 
> charitable foundations from 1998 to 2015.
>
> Next they pulled the complete set of public comments on proposed rules submitted to regulations.gov between 2003 and 
> 2016. They were then able to identify not only when individual corporations commented on a proposed rule, but also 
> when nonprofit organizations that firm had donated to commented on the same rule.
>
> They found that when a firm donates to a nonprofit group, it’s associated with a two- to four-fold increase in the 
> likelihood that the nonprofit group will comment on the same proposed rule as the firm. “The magnitude of this effect 
> is large,” the researchers wrote, with some degree of understatement.
>
> [snip]
>
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