Katie Porter, Adam Schiff and Barbara Lee Swore Off Corporate PAC Money. What Does That Mean?

It is a promise shared by all three top Democrats, who hold largely similar voting records in Congress on a wide range of issues and who are trying to finish in the top two in the March 5 primary.

But it’s also a point of distinction: Rep. Katie Porter — who, of the three, has the shortest tenure in Congress — notes that her campaign has never received corporate PAC money, while Reps. Adam Schiff and Barbara Lee only began to reject corporate PAC money this election. The issue could come up again tonight, when the three Democrats and Republican Steve Garvey face off in the second televised U.S. Senate debate, hosted by KTLA, KRON and other Nexstar Media Group stations. [In San Diego, the debate will be carried by KSWB-TV, Fox 5 from 7 p.m. to 8 p.m.]

The Democrats’ rejection of corporate PAC contribution reflects similar pledges made by a growing number of members of Congress in recent years. The goal? To signal to voters a willingness to stand up to corporate interests and root out that influence in their decision making.

“It is something that helps members of Congress build trust with their voters and it ultimately makes sure that no corporation can walk into a member’s office and say, ‘Hey, I gave you this check. You owe me something here,’” said Jonas Edwards-Jenks, spokesperson for liberal advocacy group End Citizens United, which spearheaded the pledge.

The anti-corporate message may strike a chord with a wide audience: 80% of Americans polled last year said they believe donors have too much influence on members of Congress, and 73% believed lobbyists and special interest groups are too influential, according to the Pew Research Center.

What many voters care about is ensuring that “the government does not favor the interests of the rich and well-connected over ordinary people,” said Casey Dominguez, a political science professor at the University of San Diego.

But what does the pledge really mean?

“Corporation PACs” — as designated by the Federal Election Commission and more commonly referred to as corporate PACs — are political action committees operated by a single corporation that collect contributions from its executives, managers, stockholders and their families.

Sometimes, rejecting corporate PAC donations can mean leaving a significant amount of money on the table. During the 2022 election cycle, corporation-operated PACs (including non-stock companies) gave $150 million to federal candidates, accounting for 35% of all PAC contributions that election.

But the promise does not necessarily mean that the candidate has completely cut themselves off from corporate influence, or even corporate-linked money.

While Lee, Porter and Schiff are relying heavily on individual donors this election and have abided by the letter of their pledge, their campaigns have a history of accepting — and continue to accept — money from corporate executives and PACs operated by trade associations and professional organizations that represent the interests of a specific industry or group of businesses, according to a CalMatters analysis of campaign finance data compiled by OpenSecrets.

Also, corporations do not need to go through corporate PACs to exert influence. They can spend directly on lobbying activities, or contribute an unlimited amount of money to super PACs — political committees that can spend on independent expenditures to boost or oppose candidates — and to 501(c)(4) groups, tax-exempt politically-active entities often dubbed as “dark money groups” because they are not required to disclose their donors.

The rejection is therefore largely symbolic, allowing candidates to appeal to voters while raising enough money from elsewhere to run a statewide campaign, some watchdog groups and political science experts argue.

“Refusing corporate PAC money is not going to close off all avenues by which a corporate interest might try to influence a lawmaker,” said Brendan Fischer, deputy executive director of the investigative news outlet Documented and former director of federal reform at the watchdog group Campaign Legal Center.

Champions of the “No Corporate PAC money” pledge, while acknowledging that it’s incremental, argue the promise is a step toward systemic reform.

“Rejecting corporate PAC money is a small step that some politicians choose to take to signal to voters that they want to work to fix a broken campaign finance system that too frequently gives special access to wealthy special interests,” said Michael Beckel, research director at Issue One, a nonprofit advocating for campaign finance reform.

But the National Association of Business Political Action Committees, a trade group representing roughly 300 corporations and trade associations, deems the rejection a “dishonest attempt to silence employees.”

Micaela Isler, executive director of the association, said corporate PACs are a more regulated and transparent avenue of political contributions compared to super PACs and 501(c)(4) groups.

“If you get rid of us in our most regulated form of giving, I think … it would further exacerbate some of the concerns that (advocacy groups) have,” Isler said. “We are not the problem.”

Fundamentally, Fischer said, rooting out corruption would require an overhaul of the campaign finance system. “Pledges like this are important … but not sufficient,” he said. “A patchwork of voluntary pledges is not going to really limit corruption in the political system, writ large.”

Lee, Porter and Schiff have all touted their campaign finance reform efforts beyond the pledge, and all support public financing of political campaigns.

Porter, in her “Shake up the Senate” plan, calls for banning contributions from corporate PACs and federally registered lobbyists, although similar legislation has gone nowhere. Schiff has repeatedly introduced a constitutional amendment to overturn Citizens United, the landmark U.S. Supreme Court decision in 2010 that prohibited government restrictions on corporate, nonprofit and labor unions’ political campaign spending. Lee has also co-sponsored the amendment and wants to “eradicate dark money and get to public financing of political campaigns,” according to her campaign.

What counts as corporate PAC money?

Companies themselves cannot give money to federal candidates. So sometimes, they set up corporate PACs to advocate for their interests.

But those PACs are not funded by companies themselves. Rather, corporate PACs collect donations from certain donors, who do not often include low-level employees.

Not all contributing employees get to decide where the money goes. Instead, a board of directors governing the PAC makes that decision “in the best interest of the organization,” Isler said, noting that some companies have diversified their boards to “ensure they have more voices at the table.”

Corporate PACs often spread out their political contributions to maximize their access to members of Congress, said Robert Mcguire, research director of Citizens for Responsibility and Ethics in Washington, a watchdog group.

“Their aim is to get in the room with these members, to talk to them and be in their ear, whether or not they actually get the bills and policies that they are seeking,” he said.

As of June 2023, there were more than 1,600 federal corporate PACs — the largest group of any kind, according to the Federal Election Commission. But corporate PACs can only raise a maximum $5,000 per election from each donor. And, like most other PACs, corporate PACs can only give a maximum $5,000 per election to any candidate.

Both Schiff and Porter’s campaigns follow the FEC designation of corporate PACs. Lee’s campaign has a narrower definition, excluding PACs formed by a limited liability company or partnership.

Before they swore off corporate PAC money, Schiff and Lee both received contributions from corporate PACs to their congressional campaigns. Porter, first elected to Congress in 2018, has never taken direct campaign contributions from corporate PACs.

Historically, more corporate PACs reported giving to Schiff’s campaign: A total of 186 reported contributing $2 million to Schiff between 1999 and 2022, the data analysis shows. Schiff’s campaign received contributions from PACs, lobbyists and executives connected to for-profit companies for which he delivered millions of dollars in federal funding early in his career, Politico reported.

For Lee, who was first elected to Congress in 1998, 163 corporate PACs reported giving her campaign $860,000 by the end of 2022.

Corporate PACs have continued to contribute to Schiff and Lee’s campaign accounts this cycle, despite their pledge, campaign finance data shows.

Paramount Global PAC, affiliated with the entertainment giant, reported giving Schiff’s congressional campaign $5,000 in January. That check was never cashed by the campaign, Schiff’s spokesperson Marisol Samayoa told CalMatters in an email.

Five corporate PACs reported giving a total $18,350 to Lee’s congressional or Senate campaign accounts, including $10,000 from Akerman LLP PAC, $5,000 from FedEx Corporation PAC, $2,500 from Comcast Corporation PAC, $500 from Maxim Healthcare Services’ PAC and $350 from Meta Platforms Inc’s PAC.

Lee’s campaign said it accepted the check from Akerman because it does not count the law firm as a corporation, despite FEC’s designation for its PAC. A Lee spokesperson also said the Comcast PAC donation was received in early February — two weeks before Lee launched her campaign — and therefore does not violate the pledge. The rest of the checks were either voided or never received, the campaign said.

But other than contributing directly to candidates’ campaigns, corporate PACs have multiple avenues to benefit the candidates they support.

One way is to give to candidates’ leadership PACs — accounts created by members of Congress primarily to support other candidates.

While donations to leadership PACs may not directly go into the candidates’ own campaigns, the money still helps them build relationships. Some watchdog groups have also argued that leadership PAC money can be used as “slush funds” to pay for luxurious travels, hotel stays and more.

Lee, Porter and Schiff’s campaigns all told CalMatters their pledge also applies to their leadership PACs, and none of those accounts took corporate PAC money this election cycle. But corporate PACs have sent checks to all three in the past.

Frontline USA — Schiff’s leadership PAC — received $187,000 throughout his career, data shows. In comparison, Lee’s One Voice PAC received $14,500 in corporate PAC contributions.

While healthcare technology company Masimo Corp.’s PAC wrote a $5,000 check to Porter’s Truth to Power in 2021, the check was eventually voided, according to a copy provided by Porter’s campaign.

What corporate PAC money isn’t

Corporate PACs do not include trade association PACs or professional organization PACs, although trade groups often represent a wider array of industry interests.

“Trade associations can take positions or make statements or, in this case, make donations that individual corporations … may not want to be associated with or accountable for,” Fischer said. “Ultimately, the PAC money is used to advance corporate interests.”

They are included in the definition of “business PACs” used by OpenSecrets, a nonpartisan, nonprofit organization that tracks money in politics. It counts corporate PACs as well as “cooperative and trade association PACs that receive dues from businesses with a stake in these influential industries.”

A total of 519 business PACs tracked by OpenSecrets have contributed to the three Democrats’ campaigns at some point in their congressional careers. Only 297 of them count as corporation PACs under the federal definition.

Business PACs have reported giving the campaign accounts for Lee, Porter and Schiff $5.5 million during their time in Congress, the data shows. Roughly half of that — $2.9 million — came from corporation PACs.

Other business PACs reported giving $1.5 million to Schiff, $935,000 to Lee and $170,000 to Porter’s campaign over the years.

The political arm of National Association of Realtors — the largest trade group representing the real estate industry, with 1.5 million members — is the top non-corporate business PAC contributing to the three Democrats, reported giving a collective $240,000 to the campaigns. It’s Lee’s biggest trade association PAC contributor historically and ranks near the top among business PACs giving to Schiff and Porter, although it has only written a check to Schiff’s campaign this year for $2,000.

The Realtors’ PAC has consistently ranked among the top PACs contributing to candidates over the years, federal data shows. It was both the top spending business PAC and the top spender on lobbying in the 2022 election cycle and scored “advocacy wins” such as removing a dozen tax increase provisions in the Inflation Reduction Act and securing a GOP sponsor for providing grants to under-utilized shopping centers, OpenSecrets reported.

Corporate executives continue to give

Through the “No corporate PAC money” pledge, candidates “are trying to look as if they are not accepting money from wealthy people,” said Ann Ravel, former commissioner of the Federal Election Commission and former chairperson of California’s Fair Political Practices Commission.

“That is not exactly true,” she said.

All three Democrats have also received contributions from individual executives this election cycle — another way corporate leaders can influence policymaking in Washington, experts say.

Donors who self-identify as CEOs or holding other executive positions have given Schiff’s campaign at least $648,000, according to a CalMatters analysis of self-reported occupation data from the Federal Election Commission.

Donors identifying themselves as executives have given Lee’s campaign at least $204,000 and Porter’s at least $197,000, the data shows.

The analysis is likely not comprehensive due to inconsistent reporting, since some executive donors can report themselves as self-employed or even unemployed.

Porter is the only one of the three Democrats to reject contributions from federally registered lobbyists and Wall Street executives, although her campaign has accepted money from several donors who meet the criteria, The Daily Beast reported.

She’s also the only one to reject money from executives from three specific industries — banking, pharmaceuticals and oil and gas, according to her ActBlue page. Porter told CalMatters in November that she rejects contributions from executives of those industries because they “are three of the most powerful, if not the three most powerful lobbyists in Washington.”

“A cynical person would say these are just industries that Americans generally have a negative view of and therefore … it is an effective messaging strategy to single them out,” Mcguire said, arguing other sectors — such as renewable energy and real estate — are just as powerful.

Porter’s campaign has accepted contributions from health care, tech and TV executives, as have Schiff and Lee.

Individual executives and their family members have also contributed to super PACs that boost Lee, Schiff and Porter, although these PACs are not allowed to coordinate with the candidates.

Patty Quillin, Netflix executive chairman Reed Hastings’ wife, in June gave $500,000 to She Speaks for Me, a pro-Lee super PAC, accounting for a third of that PAC’s fundraising last year.

OVRSITE PAC, a pro-Porter super PAC, reported raising $25,000 last year from a single donor — Mark Rees, CEO of Celmol Inc., a Christmas decor wholesale company in Santa Ana. The PAC has launched a $500,000 TV ad blitz to try to ensure Porter’s spot in the top two, Politico reported.

Backed mainly by labor unions and Democratic leadership dollars, the pro-Schiff super PAC Standing Strong reported raising $2.7 million for the election cycle and entered the year with $2 million in the bank. It reported receiving almost $350,000 from corporate executives, including $125,000 from James Abrams, chief operating officer of healthcare company Medline Industries, and $100,000 from Bill Harris Jr., founder of Personal Capital and former CEO of PayPal and Intuit.