Target Donation Dispute Fades, But New Controversy Over Corporate Contributions Certain in 2012 Elections

April 29, 2011
Jay Weiner
Was Target punished -- fairly or unfairly -- for its donation to a legal campaign group that backed seven candidates?
Was Target punished -- fairly or unfairly -- for its donation to a legal campaign group that backed seven candidates?

Ten months ago, as the 2010 governor's race began to heat up with the Minnesota summer, Target Corp. contributed $150,000 in company funds to MN Forward, a business-backed independent expenditure group.

To CEO Gregg Steinhafel, who seems to have made the decision to donate the cash, it must have seemed harmless enough.

Within weeks, though, that quiet donation generated plenty of blown-back noise because of the non-business political views of Republican candidate Tom Emmer. In some quarters, the echoes still linger.

But how loudly?

Was Target punished — fairly or unfairly — for its donation to a legal campaign group that happened to back seven candidates, four Republicans and three DFLers?

Should Target have been punished at all for doing what the U.S. Supreme Court allowed?

And what does the Target experience of 2010 mean for the 2012 elections, the first full election cycle in which corporate donations will be made?

Supreme Court opens donation door
Last July, soon after the Target donation, MN Forward aired a TV ad supporting Emmer, who was quickly linked by opponents to his anti-gay marriage stance. Target wasn't alone among Minnesota businesses giving to MN Forward, but it landed in the bull's-eye of gay and lesbian rights groups. Twitter accounts, Facebook pages and viral petitions were born demanding a boycott of Target stores, which previously had good relations with the GLBT community. There was talk of attempting to halt Target's major business plan to open a series of urban stores, including one in San Francisco, the center of the nation's gay and lesbian universe.

The Target incident was the first major fallout from the U.S. Supreme Court's controversial 2010 "Citizens United" ruling. In that "Citizens United v. FCC" decision, the court said that corporations could contribute shareholders' money to so-called "independent expenditure" groups during political campaigns. The January ruling said that corporations have "personhood" and that money is a form of free speech even for corporations.

In most states, donations to such independent groups weren't required to be disclosed. But in May, the Minnesota Legislature — including then-Rep. Emmer — responded to the Citizens United decision, voting unanimously to require disclosure of donors. Gov. Tim Pawlenty signed the bill into law.

Thus, Target and other local mega-companies, such as Best Buy, Hubbard Broadcasting, Pentair and Polaris, had to disclose their contributions.

But, like so many controversies, it all has seemingly faded away.

As for performance, Target certainly hasn't gone out of business. When the donation story broke, Target's stock price was hovering around $49. Today, while there's been a big run-up in the stock market since then, its price stands at about $50.

That stagnation, analysts say, probably has little to do with politics and more to do with some unattained expectations on how its fresh-food sales initiative would enhance sales of other store products.

For that fourth quarter of 2010, when the controversy would have been most fresh in consumers' minds, Target's profit rose 11 percent over the same quarter of 2009.

Today, that urban Target store in San Francisco that seemed to be the focus of protesters and some gay city politicians, is now on track to open.

Target did change its company policies, ostensibly taking the issue out of the hands of CEO Steinhafel, who, with his wife, has personally contributed thousands of dollars to conservative candidates over the years.

Gregg Steinhafel
Gregg Steinhafel

Steinhafel wasn't exactly penalized for putting Target's reputation at risk, either. He got a $1.2 million bonus for 2010. Steinhafel's base salary increased 11.1 percent from 2009. Total compensation for 2010: $25.2 milion, according to the Star Tribune.

Move to Amend group wants change
With the expected onslaught of corporate contributions during the 2012 election cycle, some see the need to change the notion that a corporation possesses "personhood."

David Cobb is one of those advocates. He's promoting the idea of an amendment to the U.S. Constitution that might read something like this:

"This amendment affirms that constitutional rights extend only to human persons. Corporations, partnerships, and other organizational entities are not human persons and, therefore, are not entitled to constitutional protections."
Or this:

"For the purposes of the Constitution, corporations are public, not private. The rights enumerated in the Bill of Rights are the rights of human beings, not corporations. "

Cobb, a lawyer and former Green Party vice presidential candidate, was in the Twin Cities recently promoting his effort and his organization called Move to Amend.

Some local jurisdictions, such as Madison, Wis., have passed resolutions supporting the notion that corporations shouldn't have "personhood."

For Cobb, whose politics clearly lean progressive, it's not only about corporations. He wants all "big money" out of political campaigns.

David Cobb
David Cobb

"A corporation is not a person — it is a concentration of capital," said Cobb. "When the Supreme Court, in an act of judicial activism says that a corporation is a legal person — with environmental laws, with worker protection laws, with campaign finance laws — it perverts the whole framework of a democratic republic."

In his view, when the Supreme Court is wrong, citizens have three options: amend the U.S. Constitution, wait for a change in the makeup of the court, or "have a revolution and rewrite the whole thing."

He is traveling the country pushing the first option: "I sincerely believe that we are going to build a grass-roots movement that unites progressives and conservatives, people across the political spectrum, saying we might have fights over issues, but a legal doctrine that allows concentrated capital to claim the same inherent rights of a human being will not stand."

Even though his website clearly leans left, he said in an interview his effort is not just about corporations but also unions' big money. His is an attempt to get "private money" out of the process. He prefers public financing for campaigns.

As of Friday morning, Cobb has garnered more than 109,952 signatures on Move to Amend's website.

Leveling the playing field
For Brian McClung, MN Forward's role was about leveling a political playing field that he sees tilted toward the power of unions.

McClung, now a Republican public affairs consultant, was Gov. Tim Pawlenty's longtime spokesman and then served as director of MN Forward.

At one point, it was reported that MN Forward had hoped to raise as much as $10 million. Those goals were scaled back. Iin the end, according to state records, MN Forward raised $1.7 million, which included money from 16 companies that gave between $10,000 and $150,000 each.

Meanwhile, the progressive Alliance for a Better Minnesota, which constantly hammered at Emmer for his political transgressions, raised $5.6 million, (PDF) with $1.7 million coming from another campaign group called the 2010 Fund, largely funded by unions. Another fund, Win Minnesota, raised $3.6 million (PDF), also with lots of union funding.

Union leaders say there's a difference between their donations and corporations' political influence; in many cases, union members get a voice in which candidates' are supported. In some cases, union members can opt out of using their dues to back political candidates.

Still, the power of unions in the campaign process in a nation that is increasingly non-unionized is real.

While a few Target shareholders complained and sought changes to political contribution policy, there were no major shareholder revolts against other companies that gave to certain candidates, McClung said.

His explanation: "In the end, citizens and consumers recognized there are all kinds of organizations that are involved in the political discussion. Just like AFSCME or the AFL-CIO speaks out and spends money, organizations like the Minnesota Chamber of Commerce or the Minnesota Business Partnership or those individual companies that make up those kinds of groups are also going to be involved."

Brian McClung
Brian McClung

Of course, the reason that Minnesota became "ground zero" on the Citizens United backlash was because of the state's disclosure law.

McClung said MN Forward was "transparent about who was involved in our effort. As a result, the left made what I think was a ridiculous kind of argument by trying to wrap social issues into the discussion when Minnesota Forward was focused only on jobs and economic issues."

Besides Emmer, MN Forward backed three DFL state legislators and three Republican state legislators.

But there clearly was some "Target fallout" for other corporations. You just need look at the chronology.

The story of Target's donation broke July 14. The first TV ad in support of Emmer was reported July 19. The angry gay-rights community wrote an open letter to Target on July 22.

Only two new companies who hadn't contributed before the controversy came on board at the $100,000 level after the firestorm. One was 3M; the other, Rosen's Diversified, the Fairmont, Minn., food company.

Still, in McClung's view, in past gubernatorial elections, the business community was largely outspent by union groups. In 2010, that was still the case, he said, "but we were able to close the gap. Part of what we were trying to do was level out the difference."

MN Forward still exists, and McClung now does consulting work for the group. He said there are discussions now about its plans for 2012, when all state legislators are up for election. MN Forward might change its name, but whatever it's called, it will back "pro-jobs" candidates, he said.

Hiding the money
Looking ahead to 2012, Mike Dean sees trouble. He's the executive director of Common Cause Minnesota.

Because of the Target experience, he believes corporations will "think twice" about giving money that can be disclosed. "The money is going to get funneled through multiple organizations," he predicted.

The state's most activist watchdog on campaign contributions, Dean has been adamant in pointing to that potential shell game, in which a company could give money to, say, the U.S. Chamber of Commerce or the Republican Governors Association. The umbrella groups then could contribute to local independent expenditure groups, so that the original source of the money would not be known publicly.

"That's something we're going to have to work on," said Dean. "They're going to get much more sophisticated and find ways and cracks to hide that money. Our challenge is to try and stay ahead of that."

Among initiatives nationally are efforts to require shareholder approval of corporate gifts. A state bill could be forthcoming.

Gay community's stand
When all is said and done, maybe the fading concern about Target's donation and its relationship to the gay community has a lot to do with a collective short attention span of Americans.

On the one hand, the company did take a few hits, the biggest perhaps being the decision by musical star Lady Gaga to halt a deal she had with Target.

"That will definitely have a material impact on their bottom line," said San Francisco-based gay activist Aaron Baldwin.

And, more recently, in what seemed to be a related action, the company sought to restrict pro-gay marriage activists from canvassing at a San Diego-area Target store.

On the other hand, Puerto Rican pop star Ricky Martin, who is gay, has continued his affiliation with Target.

Baldwin said that, in general, he thought Target and Steinhafel received "a slap on the wrist" for their MN Forward/Emmer link. And he said that might be because the GLBT community simply isn't as organized as it should be.

"I know quite a few people who won't shop at Target ever again," Baldwin said by phone this week. "But I think to some degree, gay people are not as loyal as they used to be … You know, it's whatever's convenient, that Target's more convenient than Walmart, or the store is laid out better … They're just not principled, and that's what politicians have been taking advantage of for God knows how long? "

A Facebook page to boycott Target still exists and gets some comments.

Looking ahead
So, what will the next 19 months look like leading up to Election Day 2012?

In terms of campaign financing, it's going to be very corporate — and very organized labor.

Some observers, though, hope there will be lessons learned by corporate chieftains from the Target episode.

Said Rep. Ryan Winkler, DFL-Golden Valley, who sponsored the campaign disclosure law in 2010: "I think Target Corp. was punished and their brand strength was diminished in a certain part of this community. They became known for something more than Michael Graves toasters."

Winkler thinks CEOs will ask if they are better off "spending a dollar on research and development than a dollar on a political campaign that may or may not have any influence on your company? Why would you give money to something so speculative?"

Twin Cities crisis communications expert Jon Austin said he thinks corporate decision-makers will be better prepared for 2012.

"This was unexplored territory in 2010," said Austin.

"Everyone watched how the pioneers got the arrows in their backs. Now they will ask, 'How are we going to avoid what Target got in its back?'Companies are not always the fastest-learning organizations, but generally they do learn."

Perhaps, as Dean of Common Cause fears, that learning will drive more subterfuge.

An indication came earlier this week in a New York Times story. It looks like the U.S. Chamber of Commerce wants its campaign contributions to remain hush-hush even as the Obama Administration is seeking more transparency.

But for now, it seems, Target's donation will likely be what it was in the Times article and in a similar Reuters story — the last buried paragraph of a longer story, much of it still to be written.