It's an election year, and that means it's time for corporations to break out the checkbooks and donate to their favorite candidates and issues. For politically sensitive industries, elections can mean the difference between booming business or bankruptcy, something no company wants to leave to chance.
Political contributions are smart business, especially if the federal government provides most of your revenues. The defense industry is a prime example. While government and the industry deny political donations play any role in contract selection, evidence points to the contrary.
Oil company Haliburton
On the flip side, failing to play the game can have negative ramifications, something Microsoft
New laws have limited donors' options by outlawing soft-money contributions, which were supposedly for "party building," but were used to promote candidates. Ever resourceful, political organizations have developed fresh new ways to grab money, the most important of which is the increasing use of 527 organizations, which allow "non-partisan" groups to raise unlimited funds in support of ideas and issues, but not candidates. Not surprisingly, many previous soft-money donors have shied away from 527s for fear of association with hot political issues. Some are trying new tactics, such as running "unbiased" political ads comparing candidates, something Altria
It's been said that if you want to know the motives behind actions, you have to follow the money. There's no better advice when it comes to evaluating political decisions, the politicians who make them, and the donors who benefit.
Fool contributor Chris Mallon is rarely tempted to make political donations, and owns shares of Microsoft and Altria through his private investment partnership.
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