In Citizens United v. Federal Election Commission, the Supreme Court invalidated the longstanding ban on the expenditure of corporate funds in federal election campaigns. In so doing, the Court dismissed outright an argument that had long been the foundation for the restriction of corporate money in election campaigns – that, due to the “substantial aggregations of wealth amassed by the special advantages of the corporate form,” corporate money poses a distinct threat to the integrity of democracy. Instead, viewing corporations as essentially “associations of citizens,” Citizens United determined that “the First Amendment does not permit Congress to make . . . categorical distinctions based on the corporate identity of the speaker.” Citizens United’s emphatic language would appear to have doomed all special restrictions on the use of corporate money in elections – contributions as well as expenditures.

Yet, Citizens United notwithstanding, the 117-year-old federal ban on corporate campaign contributions and similar prohibitions in twenty-one states remain on the books and continue to apply. In the fourteen years since Citizens United, at least ten decisions by federal courts of appeals (from six different circuits) or state supreme courts have upheld these bans, and the Supreme Court had declined to grant certiorari in at least six corporate contribution cases since 2010.

The survival of the corporate contribution ban is an anomaly. The ban grows out of an older, pre-Buckley v. Valeo vision of campaign finance that focused on the threat that corporate wealth and power to the integrity of democratic elections, coupled with a concern for the interests of dissenting shareholders. In Federal Election Commission v. Beaumont, in 2003, the Supreme Court sustained the ban by combining continuing concerns about corporate wealth and dissenting shareholders with Buckley’s relatively deferential review of contribution – as opposed to expenditure – restrictions. Beaumont specifically endorsed the corporate ban as an appropriate means of preventing donors from circumventing constitutionally permissible limits on individual contributions by using corporations as conduits for contributions above the individual limits..

Decided seven years after Beaumont, Citizens United dismissed the idea that corporate campaign spending presents a special threat to democratic elections and rejected shareholder protection as a justification for banning corporate spending. Citizens United, however, was a spending case that did not involve contributions. The continued survival of the corporate contribution ban relies on the distinction Buckley drew between contributions and expenditures, and, especially, Beaumont’s anti-circumvention justification. Yet, in recent cases not involving corporations, the Court has sharply questioned the anti-circumvention rationale as a basis for campaign finance limits, has ratcheted up its review of contribution restrictions, and has dropped hints that it may be reconsidering the very idea that contribution limits should receive more deferential review than expenditure limits. As a result, the future of the corporate contribution ban is increasingly uncertain

The Surprising Survival – So Far – of the Corporate Contribution Ban examines the history of the regulation of corporate campaign contributions, the ban’s current legal status, and its potential future. It traces the ban’s statutory development from the first state restrictions in the 1890s, through enactment of the federal Tillman Act in 1907 and the mid-twentieth century extension of the ban to unions and to expenditures, to its ultimate integration into the modern campaign finance regime in the Federal Election Campaign Act of 1971 and the Bipartisan Campaign Reform Act of 2002. It analyzes the changing judicial treatment of corporate campaign restrictions, from the early, easy acceptance of limits on corporate money as a means of addressing the threat posed by the concentration of corporate wealth to Citizens United’s validation of corporations as First Amendment-protected campaign participants. It examines why lower federal and state supreme courts have continued to sustain the prohibitions on corporate contributions even after Citizens United, as well the more recent post-Citizens United decisions that indicate the Supreme Court’s increasing skepticism about campaign finance regulation.

Finally, it turns to three possible legislative actions should the corporate contribution ban fall – pay-to-play restrictions, limits on foreign corporations, and disclosure. Fifteen states and multiple local governments either prohibit or tightly limit campaign contributions by, or impose enhanced disclosure requirements on, entities that hold or bid for government contracts and individuals closely associated with them. Federal law also forbids government contractors from contributing in federal elections. Courts have generally sustained such pay-to-play restrictions, albeit with some disagreement over whether restrictions can apply not just to contractors but also to regulated industries and how much evidence is needed to show that donations from a particular industry present such a distinct risk of corruption that those donations can be barred. Pay-to-play would be far from a complete replacement for a corporate contribution ban as most corporations are not government contractors or in highly regulated industries. But it is a conceptually appealing means of targeting those entities whose contributions pose a greater danger of the kinds of quid pro quo corruption that the Supreme Court has so far held justify contribution limits.

The Supreme Court has held that Congress can ban foreign financial participation in American elections. That would support a ban on contributions by foreign corporations. But it is unclear whether and to what extent that would apply to domestic corporations with an appreciable foreign ownership interest. The Federal Election Commission has so far failed to take on this issue. A handful of states and localities have enacted laws restricting such “foreign-influenced corporations,” but so far they have set very low thresholds for determining when a foreign stake in a company triggers a campaign finance restriction and those laws have been struck down. This is likely to be an area of continuing legislative and judicial concern.

Citizens United placed great weight on disclosure as the appropriate means of regulating corporate campaign participation. Effective disclosure could play an important role in educating both voters and shareholders about the role corporations play in elections. Some corporations now voluntarily report their political activities to their shareholders but the scope of voluntary corporate disclosure varies considerably and many corporations do not make any disclosures at all. Due at least in part to congressional opposition, the Securities and Exchange Commission has so far been unwilling to require corporations to disclose their political activities to their shareholders. As a result, in the near term disclosure is more a theoretical than a practical alternative to the contribution ban should that ban be invalidated.