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Target's turnaround

Its new policy on campaign contributions suggests that when political spending is made public, shareholders, customers and activists can force a company to alter its priorities.

February 22, 2011

Target has adopted new guidelines for donations to trade associations that prohibit the use of the company's contributions in political campaigns. The decision is a victory for gay rights activists, who objected to the retailer's donation to a group that supported a candidate opposed to same-sex marriage. But Target's turnaround has a wider importance. It shows that consumers and activists can hold corporations accountable for their political participation.

Target's offense in the eyes of gay rights and liberal groups was a $150,000 donation to the nonprofit MN Forward, which backed a gubernatorial candidate in Minnesota who opposed same-sex marriage. Those who defended Target's right to contribute if not necessarily its choice to do so — including this page — noted the company's marginal role in the political campaign and the fact that it donated funds to MN Forward because of its pro-business views, not because of the candidate's views on gay marriage. Also, Target had a history of supporting equal rights for gays in the workplace and sponsoring gay pride events.

Nevertheless, the company was subjected to threats of a boycott and a heavy-handed demand that it contribute $150,000 to pro-gay rights candidates.

Fair or not, the offensive against Target has resulted in a policy that satisfies its critics (though some campaign reformers claim the company still is not disclosing the amounts it contributes to trade associations). Beyond Target, however, the new policy suggests that when political spending is made public, shareholders, customers and activists can force a company to alter its priorities in political expenditures.

It's easy to exaggerate the effect of such pressure. It is no substitute for disclosure rules or limits on corporate contributions to campaigns. But it holds corporations accountable for their decisions to spend company funds on political campaigns.

That can be a positive development, though it raises the possibility of backlash. Also, those who celebrate the lobbying that caused Target to change its policy should remember that turnabout is fair play: Similar public pressure might be brought to bear on corporations that support pro-gay rights candidates. The boycott is a weapon that can be wielded by all sides of a political controversy.

Nevertheless, the Target case shows that when companies decide to enter the marketplace of ideas by using their money to amplify their message, they invite a reply from those who disagree. Other companies that decide to play politics should be prepared for similar reaction.

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