My name is Ronald McDonald and I approve this candidate

Corporations allowed to ‘invest’ in political candidates in an exercise of free speech

By A.J. Wagner

The soul purpose of a corporation is to make money for their shareholders. Corporations have no morality other than to make money. That is their heart and soul.

Corporations do not donate to charity. They will exchange money for advertising and for good will but, by law, they are not permitted giveaways. You put some coins into the Ronald McDonald House collection box so McDonald’s can support their favorite charity, but that’s your money, it’s theirs. McDonald’s contributes their money for some charitable events, but that is in exchange for some amount of advertising and good will .

Corporations can invest in things that make money such as owning stock in other corporations, buying bonds or launching new products. They could own a racehorse as an investment, but they cannot invest in a horse at the betting window. Games of chance would not be legal because corporate investments must have a reasonable expectation of net benefit to the corporation and its stockholders.

Corporate officers are not permitted to act in their personal interest. All corporate activity must be in the interest of the shareholders to whom the money, profits and corporate assets belong.

The Supreme Court in the case of Citizens United v. Federal Elections Commission (Citizens United), last year, surprised many by declaring that corporations have a right to free speech, thus giving them the ability to contribute to political campaigns. Well, I would argue, this is seemingly giving them the ability to contribute to political campaigns. I write “seemingly” because of the above noted principals of corporate law.

It seems to me that giving money to a campaign is often no more than a gamble. If a candidate loses, it is a total loss for the shareholders. If the candidate wins, what reasonable expectation in benefit can the donor company have if proper government rules of competitive bidding are followed? Legislation requires votes from more than a single legislator candidate making results speculative rather than reasonably expected.

If the candidate becomes an executive, such as governor or president able to act on their own, they must always act in the best interest of the public, not a private corporation. They are also subject to the checks and balances of a legislature and a judiciary making any action subject to being overturned. This makes company investment in a candidate highly speculative.

The decision in Citizens United leaves the issue of corporate contributions open to question by shareholders. In fact, the court seemed to challenge shareholders to file suit when they said, “There is, furthermore, little evidence of abuse that cannot be corrected by shareholders ‘through the procedures of corporate democracy.’”

What are those procedures? Take a look at the case of First National Bank of Boston v. Bellotti which was cited in Citizens United: “Acting through their power to elect the board of directors or to insist upon protective provisions in the corporation’s charter, shareholders normally are presumed competent to protect their own interests. In addition to intracorporate remedies, minority shareholders generally have access to the judicial remedy of a derivative suit to challenge corporate disbursements alleged to have been made for improper corporate purposes or merely to further the personal interests of management.”

So, if a shareholder of a corporation wants to stop corporate contributions, they can 1) propose changes to the corporate governing documents forbidding such expenditures, 2) elect a new board of directors, or 3) bring a shareholder lawsuit. As noted, minority shareholders can bring this suit even if they are the only shareholders who disagree with the expenditure. So long as you can prove the expenditures are illegal you may be able to prevent corporate contributions despite what Citizens United says.

Remember, even if corporations have the right to free speech, their only purpose is to make money. Not to elect public officials. The shareholders’ rights trump free speech.

It would be interesting to see a lawsuit in which a corporation, in order to defend itself, tries to prove there is a reasonable expectation of net benefit because the political game is rigged in their favor.

It would be even more interesting to see which politicians will take the stand to back them up. Then we will see what’s in their heart and soul.


Disclaimer: The content herein is for entertainment and information only. Do not use this as a legal consultation. Every situation has different nuances that can affect the outcome and laws change without notice. If you’re in a situation that calls for legal advice, get a lawyer. You represent yourself at your own risk. The author, the Dayton City Paper and its affiliates shall have no
liability stemming from your use of the information contained herein.

A.J. Wagner is an attorney with the law firm of Flanagan, Lieberman, Hoffman and Swaim at 15 W. Fourth Street in Dayton. A.J. and his firm would be glad to help you with all of your legal needs. You can reach A.J. at (937) 223-5200 or at

A.J. Wagner is an attorney with the law firm of Flanagan, Lieberman, Hoffman and Swaim at 15 W. Fourth Street in Dayton. A.J. and his firm would be glad to help you with all of your legal needs. You can reach A.J. at (937) 223-5200 or at

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