Question for an election year: Do corporate political contributions pay off with business gains for the company?

A 2009 research paper by three University of Minnesota business professors suggests that the answer is no. Their conclusions after a statistical analysis of the performance of more than 13,000 publicly traded U.S. companies?

• The 14 percent that made political donations between 1991 and 2004 were characterized by “poor corporate governance”—attributes including outsized CEO compensation and CEOs who are also board chairs—“and poor shareholder returns.” 

• For every $10,000 in political gifts, the company’s excess returns were trimmed by 9.6 basis points (100 basis points equals one percentage point). 

• There was no evidence of an offsetting ROI in the form of political capital for the company. 

Felix Meschke, one of the study’s authors who’s now with the University of Kansas, says,“We find that firms that make political donations do so more to serve managers’ private interest than shareholders’ interest.” Ouch.

New York’s YouGov BrandIndex takes another kind of measure, but it also puts up red flags for corporate donors. YouGov interviews 5,000 people each weekday and publishes perception surveys with a margin of error of plus or minus 2 percent.

In the past 12 months, Target’s “buzz score” (Question: “If you’ve heard anything about the brand in the last two weeks, was it positive or negative?”) has fallen steeply. That’s due in part, it appears, to news last July that Target gave $150,000 to Minnesota Forward, a group supporting the gubernatorial run of GOP candidate Tom Emmer, whose anti–gay marriage stance human rights groups have denounced as discriminatory. Target has noted that Emmer’s gay marriage position was not the reason for contributing, and that its corporate philanthropy has supported culturally diverse groups and activities, including the Twin Cities Gay Pride Festival.

Target’s buzz score in September 2009 was 43.1, a figure YouGov’s Drew Kerr describes as “considerably above most, if not all, retailers.” (Scores range from 100 to –100, calculated by subtracting negative feedback from positive; a zero means equal negative and positive response.) By late March this year, Target’s score had drifted down to 36.4. In August and September, it took another hit, dropping as low as 25.5 on September 13, “still at the top part of the sector, but far lower than what they used to be,” Kerr says. “They are basically perceived in the same regard now as Kohl’s and J. C. Penney.”

The company’s reputation score (“Would you be proud or embarrassed to work for this brand?”) also slipped. Target fell five spots in the 90 days prior to late September, to ninth for reputation out of 25 retailers. Ahead of it: Macy’s, Kohl’s, J. C. Penney, Nordstrom, Costco, Neiman Marcus, Bloomingdales, and Sears.