Hidden in Plain Sight: The Role of Corporate Board of Directors in Public Charity Lobbying

Abstract

We show that public charities with corporate directors on their boards are more likely to lobby on behalf of connected corporate interests. We document this result using granular fixed effects and alternative measures, excluding donor firms, focusing on specific legislation bills, and shocks to board connections. The effects of connections are stronger when firms face more competition, have better corporate governance, and are more exposed to political risks. Through connected charity lobbying, firms enjoy political benefits in the form of governmental procurement contracts. Policies aimed at improving the transparency of nonprofits help discipline charities who would otherwise seek funding benefits through pro-corporate lobbying activities. Our results highlight directors' charitable engagement as a complementary avenue for corporate political activities.

Keywords: Corporate Political Activities, Corporate Social Responsibility, Board of Directors, Political Connections, Lobbying, Public Charities, Nonprofit Organizations

JEL Classification: D72, G34, G38, P16