Tech industry split in its political donations

The IT industry has two horses in the U.S. presidential race this year.

In a down year for tech industry contributions to political groups, political action committees (PACs) and employees from computer and Internet companies have contributed just over $1.6 million to President George Bush as of Wednesday, and just under that amount to Democratic challenger John Kerry.

As of July 5, employees and PACs from computer and Internet companies had donated $14.8 million to political parties and candidates for U.S. federal offices during the 2004 election cycle, with the industry ranking 14th on the Opensecrets.org top industries list. Republicans received 51 percent of the money. U.S. law prohibits corporations from directly contributing to political campaigns, but many tech companies give money through PACs, and IT employees are active contributors.

Perhaps not surprisingly, tech industry donations have slipped from the $39.6 million given during the 2000 U.S. elections, and the $26.7 million in 2002.

While some of the drop in donations may be due to the end of the dot-com boom, Rick White sees another cause for the decline. In 2002, the U.S. Congress passed the McCain-Feingold campaign finance reform law, banning most forms of so-called unregulated “soft money” donations, and that ban has had a bigger effect on donations than the dot-com bust, said White, the president and chief executive officer of the TechNet coalition.

Soft money was unregulated money given for “party building” activities with no legal limits. A U.S. Federal Elections Commission rule in 1987 opened the door for this type of donation, often employed by corporations or unions, which are normally prohibited from donating directly to candidates.

In the 2000 election cycle, $20.4 million of the computer and Internet industry’s donations came in the form of soft money. “It was easy for the tech community … to write some big soft-money checks,” White said.

It’s worth noting, however, that computer and Internet companies are still ahead of the pace for political donations for any cycle before 2000. During presidential year 1996, the industry contributed just $9.4 million to candidates and political groups, ranking just 31st on Opensecrets’ top industries list.

The tech industry’s involvement in politics since 2000 comes from a sense of “civic responsibility,” said White, a Republican congressman from Washington state during the late ’90s. “It’s your job (to get involved) when you get to the point where you’re contributing a lot of wealth to the economy.”

Many tech companies with PACs or employees contributing to political candidates have little to say about their reasons for doing so, or what they expect for their contributions. Representatives of Electronic Data Systems Corp., EMC Corp., Siebel Systems Inc., and Hewlett-Packard Co., all among the top 10 contributors among computer and Internet companies listed on Opensecrets.org, either declined to comment or failed to return phone calls or e-mail seeking comment on their reasons for donating.

Companies often don’t want to trumpet the effects of their PAC contributions, said Steven Weiss, communications director for the Center for Responsive Politics, which operates Opensecrets.org. Simply put, contributions buy access to candidates and parties, Weiss said.

“Donors and candidates alike don’t like to acknowledge the impact campaign contributions have,” Weiss said. “It sounds a bit seedy because it is.”

But White disagreed, saying that contributions simply help the tech industry get its voice heard. Without political activitism, the industry “lets someone else set the agenda,” he added.

In the late ’90s, the tech industry exhibited a “bit of arrogance” about politics, White said. Many tech companies seemed to feel they didn’t need an ongoing relationship with people in Washington, D.C.

“When I was in Congress, the tech industry didn’t really know anything about this process,” he said. “The attitude was, ‘If there’s a problem, we can just waltz in and fix it.'”

Among computer and Internet companies, Microsoft Corp., through its PAC and employees, is the largest contributor during the 2004 election cycle. The software giant’s employees and PAC have donated nearly $1.9 million to federal candidates or political groups. Microsoft’s donations more than triple those of any other tech company, according to Opensecrets.org.

Microsoft’s PAC and employees combine to be the 19th largest single donator to the Bush campaign during the 2004 election cycle, contributing nearly $185,000 as of early July. Microsoft also shows up as Kerry’s 13th largest donor, giving $136,000 to the Democratic senator from Massachusetts. Opensecrets lists Bush’s top donor during the 2004 cycle as Morgan Stanley, with $561,000; and Kerry’s top contributor as the University of California with $405,000.

Of the nearly $1.9 million Microsoft’s PAC and employees have donated to political groups during the 2004 election cycle, about half comes from individual employees. Sixty-one percent of that total has gone to Democrats, although only 47 percent of Microsoft’s $857,000 in PAC contributions to federal candidates has gone to Democrats.

“These are all personal decisions,” Microsoft spokeswoman Ginny Terzano, said of employee donations. “They’re entirely voluntary.”

It’s against Microsoft policy to comment on the PAC’s reasons for contributing to candidates, Terzano said. “The PAC contributes to candidates that positively impact the tech industry,” she said. A list of Microsoft PAC recipients for the 2004 cycle is available at: http://www.opensecrets.org/pacs/pacgot.asp?strID=C00227546&Cycle=2004.

According to Opensecrets.org, here are the top contributors among computer and Internet PACs and employees during the 2004 election cycle:

1. Microsoft, based in Redmond, Washington: $1.9 million, with 61 percent to Democrats.

2. Cisco Systems Inc., based in San Jose, California: $489,000, with 53 percent to Democrats. About two-thirds of the Cisco donations come from individual employees, and a third from Cisco’s PAC.

3. Intel Corp., based in Santa Clara, California: $337,000: 50 percent to Democrats. Just over half of the Cisco contributions come from employees.

4. IBM Corp., based in Armonk, New York: $331,000, 65 percent to Democrats. IBM does not have a PAC — all donations come from individual employees.

5. EDS, based in Plano, Texas: $299,000: 74 percent to Republicans. About two-thirds of those contributions come from the EDS PAC.

6. Siebel Systems, based in San Mateo, California: $276,000, 63 percent to Republicans. Nearly all of the money came from Siebel’s PAC.

7. EMC, based in Hopkinton, Massachusetts: $228,000, 88 percent to Republicans. About three-quarters of the money comes from individual employees.

8. Dell Inc., based in Round Rock, Texas: $217,000, 74 percent to Republicans. About three-quarters of the money comes from individual employees.

9. eBay Inc., based in San Jose, California: $194,000, 54 percent to Democrats. More than half of the money comes from eBay’s PAC.

10. HP, based in Palo Alto, California: $193,000, 57 percent to Democrats. More than half comes from individual employees.

IBM has a corporate policy against PAC contributions, although employees are free to contribute, noted spokesman Clint Roswell. The Opensecrets.org numbers from July 5 don’t reflect about $2 million in technology and services contributions from IBM to both parties’ political conventions this year. The technology portion of those contributions, including computers, will then be donated to schools and nonprofit groups when the conventions are finished, Roswell said.

The Federal Elections Commission (FEC) does not require individuals contributing to campaigns, parties or other political groups to list their employers, so some contributors may not be listed on FEC reports.

TechNet’s White noted that technology policy issues don’t often break down along party lines, so it’s not surprising that both Bush and Kerry have received significant donations from the industry.

The group, made up of tech executives, stays away from candidate endorsements, but pushes issues such as improving the U.S. education system and improving the economy.

“The Democrats see the technology industry as one of the few business (groups) where the have a fighting chance,” White said. “And we have to tell Republican not to take us for granted.”