Charles Schwab will shut down its political action committee, perhaps the most significant move among companies rethinking their political donations after last week’s violence in the Capitol.
Schwab, one of the country’s biggest brokerage firms with around 30 million customer accounts holding more than $6 trillion in assets, said it found the current “hyperpartisan” environment too complex to navigate without risk of distraction. “We believe a clear and apolitical position is in the best interest of our clients, employees, stockholders and the communities in which we operate,” the company said on Wednesday.
The company’s PAC will no longer take contributions from employees or make financial contributions to lawmakers. It will donate the leftover funds to Boys & Girls Clubs of America and to historically Black colleges and universities, organizations that Schwab has supported in the past.
In the latest election cycle, Schwab’s PAC gave $460,000 to federal candidates, roughly evenly split between Republicans and Democrats. Among the recipients was the House minority leader, Representative Kevin McCarthy of California, who was among the Republicans who voted against certifying President-elect Joseph R. Biden Jr.’s victory.
The Lincoln Project, a group of anti-Trump conservatives, had featured Charles Schwab in a recent campaign highlighting companies that donated to President Trump or the election objectors in Congress.
“It is a sad byproduct of the current political climate that some now resort to using questionable tactics and misleading claims to attack companies like ours,” Schwab’s statement said, an apparent reference to the Lincoln Project’s campaign. “It is unfair to knowingly blur the lines between the actions of a publicly held corporation and those of individuals who work or have worked for the company.”
Corporate PACs do not spend company money on donations, but collect voluntary contributions from employees and direct them to chosen candidates and causes. (The company pays for the administration of running a PAC.)
Schwab’s billionaire chairman, Charles R. Schwab, has personally given millions to pro-Trump and Republican groups, far more than the company’s PAC. “Every individual in our firm has a right to their own, individual political beliefs and we respect that right,” the company said in its statement. The issue of corporate leaders’ political donations and other personal entanglements is raising questions at other companies, reports the DealBook newsletter.
After the riot at the Capitol, a number of companies, including Goldman Sachs and JPMorgan Chase, paused all corporate giving. Others, such as Walmart and Marriott, have said they will halt donations only to the 147 Republicans in Congress who objected to certifying the presidential election result.
Schwab’s announcement goes further than most other companies appear willing to do. In a survey of 40 chief executives from major corporations at a meeting on Wednesday held by Yale’s Jeffrey Sonnenfeld, nearly 60 percent said that companies should not stop all political donations.
Schwab said in its statement that it was confident its “voice will still be heard in Washington” even without a PAC, noting that it is a “major employer in a dozen metropolitan centers.” Other companies that do not have a PAC, like IBM, have said they do not think a lack of one puts them at a political disadvantage.