Managing the Risks of Corporate Political Donations: A Utilitarian Perspective Shane Leong • James Hazelton • Cynthia Townley Received: 25 March 2012 / Accepted: 4 December 2012 / Published online: 20 December 2012 Ó Springer Science+Business Media Dordrecht 2012 Abstract This paper applies a utilitarian analysis to corporate political donations. Unlike the more common rights-based analyses, it is argued that the optimal policy is the one that best satisfies society’s rational preferences concerning donor influence, adequate financing, donor pressure and the cost of maintaining and enforcing the democratic system. This analysis suggests that a ban is best if it would be generally observed and sufficient financing from other sources is available, otherwise a donation cap is a better option. Further, lobbyists should be banned from donating small gifts and drafting bills for candidates. The impact of disclosure and other risk management mecha- nisms are also considered. Keywords Utilitarianism Á Goodin Á Corporate political donations Á Political finance Á Lobbying Introduction Determining the optimal policy in relation to corporate political donations (that is, financial or non-financial con- tributions by corporations to political parties) is a challenge for all democracies. Former US Senator Bill Bradley, quoting Barney Franks, observed that ‘being a politician or Congress person or a Senator is the only profession in America where you are required to take money from strangers and pretend that you don’t owe them anything’ (Fora.tv 2007, p. 5). Australian Federal Attorney-General Nicola Roxon stated ‘I think people are very uncomfortable at what big wealthy companies can afford to do in our political system’ (Colvin and Metherell 2012). Johnson (2005) observes that policy options in relation to corporate political donations include: disclosure, con- tribution limits and prohibitions, laissez faire approaches, blind trusts, tax incentives, public subsidies, public funding and free media. A variety of justifications are presented in support of particular options. 1 For example, Hourigan (2006) counsels that corporations should be allowed to donate, in order to better represent the interests of their shareholders and employees. Young & Tham (2006) argue that corporations should not donate because they are non- democratic, non-citizen entities. Dworkin (2000) holds that the principle of citizen equality requires corporations to be prohibited from making donations out of their general treasuries—although they may donate money collected from willing individuals specifically for political activity. Fogg et al. (2003) observes that for many countries, it is more feasible to limit corporate donations than prohibit them completely. All regimes face compliance issues. Unfortunately, the issue of corporate political donations defies an easy solution. Whilst it may be possible to pro- hibit corporations making traditional monetary donations, S. Leong (&) Á J. Hazelton Department of Accounting and Corporate Governance, Macquarie University, Sydney, NSW, Australia e-mail: sleongrydeis@hotmail.com J. Hazelton e-mail: james.hazelton@mq.edu.au C. Townley Department of Philosophy, Macquarie University, Sydney, NSW, Australia e-mail: cynthia.townley@mq.edu.au 1 All organisational donations are controversial, but corporate donations are the most controversial and widely discussed. It is beyond the scope of this paper to determine whether all organisations, including unions and non-profit entities, should be treated the same as corporations. One direction future research might take is to ascertain whether non-corporate organisations merit different treatment. 123 J Bus Ethics (2013) 118:429–445 DOI 10.1007/s10551-012-1592-z