Q&A on Corporate and Union Donations

Why should corporate and union donations be banned?

Reason 1: Corporate donations create an unfair system.

Furthermore, because private companies do not need to publicly disclose their corporate ownership and organization, it is difficult to enforce maximum donation rules. Private companies could be (and probably are) making multiple donations over the limit through different corporate officers and subsidiary companies, but these abuses are very difficult to detect and track.

Reason 2: There are excessive levels of corporate donations, which create excessive spending in elections.

While they are not allowed to spend more than their ward expense limits on campaigning, candidates are currently allowed unlimited expenses for fundraising expenses and thank-you parties. This has led to the proliferation of lavish fundraisers and thank-you parties. Prohibiting corporate and union donations would remove some of the expensive excesses that characterize many campaigns who have much more money than they are allowed to spend on campaigning. It would also encourage candidates to reach out more to their communities and constituents for individual donations, rather than focusing on the business community, thereby increasing contact with the people that they would represent.

Reason 3: Prohibiting corporate and union donations will save taxpayers’ money.

Reason 4: Corporate donors tend to have vested interests at City Hall.

For more detail on the ‘Big Money at City Hall’, see VoteToronto’s Top Donors page for the 2000 election.

Reason 5: Corporate donations can affect vote outcomes.

Based on votes closely tied to business interests and lobbyists, there appears to be a tendency for councillors who receive more business donations to support business interests in their votes. For example, MFP, the company at the centre of the MFP Inquiry into the ballooning costs of computer leasing deals, was the subject of a February 2002 vote. The motion proposed to adopt the minutes of settlement with MFP, releasing the company from any further claim with the city. Based on campaign finance records, the councillors who voted FOR settling with MFP received a median of $28,519 from businesses, compared to $16,188 for those who voted against the settlement – a 76% difference. In this case, the councillors who voted for the business interests received disproportionately more business dollars than those who voted against the motion.

Another key vote associated with lobbyists and business interests is the Island Airport bridge. A June 2003 omnibus motion during the Lastman mayoralty proposed to provide the Toronto Port Authority with $48.6 million in cash and land as a lawsuit settlement, and provide approval for the fixed link and airport expansion. Councillors who voted FOR the fixed link and settlement with the TPA received a median of $28,463 from business donors, compared to $15,325 for those who voted against it – an 86% difference.

Will candidates still be able to raise enough money if they can’t get corporate and union donations?

Raising money from individuals require candidates to reach out to people in their communities, by meeting with community and ratepayer groups, talking to people while canvassing, and trying to get their support. Rather than large corporate fundraisers, candidates should organize smaller events with different communities, and reach out to the diverse groups in this city. Yes, they will probably raise less money than if business and union donors were permitted, but this will also reduce the number of lavish fundraisers and parties. We think that these moves will make for a stronger democracy, and bring municipal politics closer to its base, namely, people in the community.

Won’t banning corporate and union contributions just drive these donations ‘underground’?

Some worry that new rules will lead businesses to start giving money to their employees to donate on their behalf. However, one of the reforms that will be voted upon would institute more stringent reporting practices, including mandatory electronic filing and the use of more detailed reporting forms. Greater transparency and enforcement of the Municipal Elections Act will serve as a deterrent for abuses of the system.

VoteToronto has also recommended that another way to prevent these types of abuses would be to require donors to provide more detailed information, such as their address, place of employment, and occupation. This is an established practice in the United States, used by the Federal Election Commission and the New York City electoral system, in order to deter companies from using their employees as channels for donations. For more detail about VoteToronto's recommendations, see a report prepared by Professor Robert MacDermid of York University.

Have any other jurisdictions instituted restrictions on corporate and union donations?

Q&A; on Campaign Surpluses
Q&A; on Limiting Fundraising Expenses