By Doug Pinkham
Public Affairs Council President
May 8, 2012

For voters, the 2012 elections are supposed to be about the economy. In a recent Gallup poll, more than 90 percent of Americans said candidates’ positions on the economy will be “very” or “extremely” important when they cast their ballots.

For businesspeople, 2012 is supposed to be about economic recovery. An annual CEO survey from PwC said most senior executives plan to concentrate this year on developing talent, meeting with customers and improving efficiency.

Nevertheless, it seems like Americans spend a lot of time arguing over social, not economic, issues — and companies are increasingly getting dragged into the discussion.

Recently, the American Legislative Exchange Council (ALEC), a champion of free markets and limited government, found itself in a political maelstrom for backing gun rights and tougher voter ID rules. ALEC’s practice of drafting business-friendly legislation for state legislators has upset critics on the left for years, but it didn’t enrage the general public. It took the shooting of Trayvon Martin and the debate over the Stand Your Ground law to place ALEC and its corporate members at the center of controversy.

As ALEC’s role came to light, groups such as the Center for Media and Democracy and Color of Change organized protests against ALEC funders. Commentators like The New York Times’ Paul Krugman suggested it’s time for corporations that fund ALEC to be “publicly associated with the hard-right agenda.” Coca-Cola, McDonald’s, Kraft Foods, Johnson & Johnson and other companies with popular brands faced organized protests calling for them to drop their membership. Some have already done so.

Responding to pressure, ALEC announced in April it was eliminating its Public Safety and Elections task force, the committee that addressed gun rights and voter ID laws. It vowed to concentrate “on initiatives that spur competitiveness and innovation and put more Americans back to work.”

Even in a down economy, it has become common for social issues to attract headlines and cause anti-corporate protests. What’s going on here?

For starters, social issues are personal; they are about rights and liberties. Reasonable people can have conversations about trade policy or banking regulations, but when an issue is about personal rights, the nation’s collective blood pressure rises. It doesn’t take long before the shouting begins.

Second, most civically active people organize around social issues. They care about the economy, but their passion and commitment go to groups representing their religious beliefs (Family Research Council), their concern for the environment (Sierra Club), their sense of identity (Human Rights Campaign), their dislike of government (Tea Party Patriots) or some other personal cause. Aside from business and trade associations, we don’t hear much about advocacy groups focusing on economic growth.

Like it or not, companies are being defined by their memberships and indirect ties to controversial causes and politicians. It’s a case of “guilt by association.”

To make matters worse, when companies are connected to social issues, one protest or boycott sometimes leads to another, Bradley A. Smith of the Center for Competitive Politics writes in The Wall Street Journal.  He notes, for example, that many ALEC donors also support the Congressional Black Caucus, which is opposed to voter ID laws. “If secondary boycotts become the norm, supporters of voter ID — who, if we are to believe the polls, vastly outnumber critics — could decide to boycott those companies.”

That happened back in 2005, when the American Family Association (AFA), a conservative Christian organization, demanded that Ford Motor Co. stop supporting gay-oriented publications, groups and events. When Ford agreed to pare back its ads to certain publications, leaders of 17 gay rights groups organized a protest. In an attempt to assuage these activists, Ford announced a compromise that reinstated some of the advertising. This, of course, caused the AFA to resume its boycott.

Why are companies increasingly getting caught in the middle?

  • Many corporations have made commitments to sustainability, human rights and other principles, which place them under scrutiny if their actions don’t seem to match their words.
  • In recent years, social conservatives have become more influential in the Republican Party, which has increased the likelihood of pro-business conservative groups putting social issues out front. The ALEC episode is likely to be one of many.
  • Thanks to the power of the Internet and social media, activists have better tools to attack corporate brands.

So what’s a company to do? When corporate funders of groups facing controversy try to explain that they don’t care about an organization’s position on social issues, or when they are dismissive of criticisms, they sound defensive.

The ideal approach is to understand and accept a group’s entire mission before agreeing to fund it. But this isn’t going to happen all the time. Donors should still be clear about what activities and issues they will and won’t support. Many nonprofits expect this and create segregated funds for new initiatives.

If the group is so large that a donor can’t possibly agree with all of its priorities, a company needs to consider its reputational risk and decide if the tradeoffs are worth it. Analyzing risk will also prepare a firm for future controversy — whether the controversy is real or manufactured by political opponents.

That’s what many companies did when they continued to support the U.S. Chamber of Commerce in 2009 after activists attempted a boycott to protest the Chamber’s views on climate change. While several firms did drop their memberships, there was no mass exodus. I suspect the Chamber’s success was partly a result of its size and scope of services and partly because, in the middle of an economic downturn, activists had a hard time framing the climate change issue as a threat to individual liberties.

If a company decides it wants to engage directly in a social issue — whether it’s gay rights, environmentalism or fair trade — it needs to know the expectations of employees, customers and investors ahead of time. And it also should make sure its affiliations with outside groups look and feel consistent with its stated commitments.

As the economy improves, we’ll see more cases in which activists try to influence the behavior of an organization by exerting pressure on customers or donors. Social issues, not economic ones, will be the fuel for these campaigns.

Comments? Email me.