Hall of Mirrors: Corporate Philanthropy and Strategic Advocacy

57 Pages Posted: 11 Dec 2018

See all articles by Marianne Bertrand

Marianne Bertrand

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Matilde Bombardini

University of British Columbia (UBC)

Raymond J. Fisman

National Bureau of Economic Research (NBER); Boston University

Bradley Hackinen

University of Western Ontario - Richard Ivey School of Business

Francesco Trebbi

Vancouver School of Economics; National Bureau of Economic Research (NBER)

Date Written: December 2018

Abstract

Politicians and regulators rely on feedback from the public when setting policies. For-profit corporations and non-pro t entities are active in this process and are arguably expected to provide independent viewpoints. Policymakers (and the public at large), however, may be unaware of the financial ties between some firms and non-profits - ties that are legal and tax-exempt, but difficult to trace. We identify these ties using IRS forms submitted by the charitable arms of large U.S. corporations, which list all grants awarded to non-pro fits. We document three patterns in a comprehensive sample of public commentary made by firms and non-profits within U.S. federal rulemaking between 2003 and 2015. First, we show that, shortly after a firm donates to a non-profit, the grantee is more likely to comment on rules for which the firm has also provided a comment. Second, when a firm comments on a rule, the comments by non-profits that recently received grants from the firm's foundation are systematically closer in content similarity to the firm's own comments than to those submitted by other non-profits commenting on that rule. This content similarity does not result from similarly-worded comments that express divergent sentiment. Third, when a firm comments on a new rule, the discussion of the final rule is more similar to the firm's comments when the firm's recent grantees also comment on that rule. These patterns, taken together, suggest that corporations strategically deploy charitable grants to induce non-pro fit grantees to make comments that favor their benefactors, and that this translates into regulatory discussion that is closer to the firm's own comments.

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Suggested Citation

Bertrand, Marianne and Bombardini, Matilde and Fisman, Raymond and Hackinen, Bradley and Trebbi, Francesco, Hall of Mirrors: Corporate Philanthropy and Strategic Advocacy (December 2018). NBER Working Paper No. w25329. Available at SSRN: https://ssrn.com/abstract=3298708

Marianne Bertrand (Contact Author)

University of Chicago - Booth School of Business ( email )

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HOME PAGE: http://gsbwww.uchicago.edu/fac/marianne.bertrand/vita/cv_0604.pdf

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR)

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Matilde Bombardini

University of British Columbia (UBC) ( email )

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Canada

Raymond Fisman

National Bureau of Economic Research (NBER)

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Boston University ( email )

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Bradley Hackinen

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Francesco Trebbi

Vancouver School of Economics ( email )

University of British Columbia
6000 Iona Dr.
Vancouver Canada, BC V6T 1L4
Canada

HOME PAGE: http://faculty.arts.ubc.ca/ftrebbi/

National Bureau of Economic Research (NBER) ( email )

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