Where the lobbying power lies
Published: 29 Mar 2006 18:05 BST
When Jack Valenti was at the helm of the Motion Picture Association of America, his $1.5m annual salary easily topped that of Microsoft chief executive Steve Ballmer.
Ed Black, the president of the Computer and Communications Industry Association, boasted a $980,000 salary in 2004. That's more than Cisco's chief executive John Chambers or Dell chief executive Kevin Rollins made last year, if bonuses aren't counted.
As technology companies and their political rivals vie for more influence in Washington, non-profit groups and trade associations are benefiting handsomely from the expanding war chests. A ZDNet UK sister site CNET News.com analysis of 47 organisations active in technology policy and legislation shows that, in total, they have assets of about $1.1bn, annual revenue of $573m and an average executive director salary of $332,665.
At the high end, Cary Sherman, president of the Recording Industry Association of America, took home a pay cheque of $1m in 2003. Douglas Lowenstein, head of the Entertainment Software Association, claimed $620,250, and Robert Holleyman, president of the Business Software Alliance, received $452,670.
"They try to get a seat at a lot of tables to have a dialogue, and they do spend money," Jerry Berman, president of the Centre for Democracy and Technology, said about tech company spending.
It's well-known that after landmark events like the Microsoft antitrust trial — and, to a lesser extent, the Communications Decency Act, Y2K liability caps and encryption export limits — technology companies sought to change their relationship with Washington agencies and bureaucrats. (Another analysis published on Monday shows that spending on lobbyists by large tech firms has more than doubled between 1998 and 2004.) But what's harder to track is the increase in money that flows to trade associations and non-profit organisations.
Under US federal law, non-profit groups that receive corporate contributions are not legally required to disclose the identities of those funding them. Not only do the corporations receive tax breaks for these donations, but the recipients also routinely use the money to pay lawyers to testify before Congress, draft legislation and meet privately with government officials — activities that might be viewed as lobbying if done directly by a company.
A non-profit group "should have policies not to take money from corporate interests that could overly serve to influence their stance on the issues," said Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog organisation. "Just as health groups tend to not want to take money from the cigarette companies — though of course some do."
Nobody expects trade associations organised under section 501c6 of the tax code to do anything other than represent the interests of their member companies. But 501c3 groups are supposed to represent the public interest, and donations to them are completely tax-deductible for that reason. (Trade association dues are tax-deductible if not used for lobbying.)
"Can they try to buy you?"
The complex nature of non-profit groups is illustrated by the work of the Centre for Democracy and Technology, which describes itself a non-profit organisation that "works to promote democratic values" such as privacy online.
A review of the Washington group's finances shows that it is bankrolled by tech companies, many of which have faced legal action over their own privacy practices. Corporations such as Microsoft, DoubleClick, Acxiom and LexisNexis accounted for...
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