Tech companies like Amazon, Microsoft and Facebook are pausing their political contributions after the violent riots took place at U.S. Capitol last week. Bruce Freed, Center for Political Accountability President & Co-Founder joins Yahoo Finance Live to discuss.

Video Transcript

JULIE HYMAN: We want to turn back to politics now and the intersection of politics and business because, as we know, an increasing number of corporations are coming out and saying either they are stopping all political contributions or they are stopping them to Republicans who have disputed the legitimate election results. We're joined now by Bruce Freed. He's at the Center for Political Accountability. He's the president and co-founder.

Bruce, you were quoted this morning in a story in The New York Times that highlighted one company that has never given any political contributions as a matter of policy. That's IBM. Should every company do this? Should all corporations just stop giving to political campaigns?

BRUCE FREED: I think companies have to take a long and hard look at whether to engage in spending. We've always been agnostic on whether companies should stop their spending. But I think that, with the risks that they face today, this is something that they really need to look at because they really face very serious threats today from what they're associated with, how it hurts their bottom line, how it hurts their reputation. There really has to be, at a minimum, a real fundamental change in political behavior and how they see themselves relating to the whole political process.

MYLES UDLAND: So Bruce, I guess, what would restart that process? I mean, we're seeing companies say, we will pause donations for six months. In your view, is that just one step of delaying the inevitable, we will no longer give money? I mean, what do companies, what could they say, I guess, that might say, you know what, our involvement in politics is actually good, even though now I think there's a come to Jesus moment perhaps with some of these big businesses?

BRUCE FREED: I spent years on the Hill working on Capitol Hill on both the Senate side and the House side. And frankly, I think that a great deal of political spending is overrated. I've worked in personal offices, committee staffs. Big companies are going to get access anyway. You have members of Congress. You'll have folks in administrations wanting to know what their input is. They're going to have clout anyway because of the number of employees that they have, where they're located.

I think that the pause at this point is a way for them to take a deep breath. But there has to be a fundamental change in how they relate. We at the Center for Political Accountability and the Wharton School, Zicklin Center for Business Ethics research released an updated model code of conduct for corporate political spending last October. Companies really need to take a look at that because they need to take a look at what are their responsibilities and obligations as members of society, what are their responsibilities as participants in the Democratic process.

Because you've seen in this election, with this crisis, and it's not just the corporate PAC contributions that have gone to members in Congress and senators, but it's the contributions that they've made to attorneys general, the contributions they made at the state level that are unlimited because this is corporate money which has no limits on it and what the impact has been in terms of electing attorneys general who then filed suit to overturn the election, who were involved through their various committees, groups associated with, say, the Republican attorneys general Association in inciting the protests that we had last Wednesday. So this is really a moment of truth for them.

BRIAN SOZZI: Bruce, perhaps let me take a step back here. What is this suspending all political donations? What does it actually mean? And then secondarily, who does this punish more, the folks down in D.C. or big companies?

BRUCE FREED: Well, we're taking a look at corporate PAC contributions. Those are limited. They include 5,000 or a little more per election to a candidate. But when you're taking a look at the corporate contributions to these 527 committees-- the Governors Association, state legislative campaign committees, and attorneys general associations-- the sky is the limit. You're taking a look at, not only five figures, but six figures and seven figures.

And it's their big trade associations, like the US Chamber of Commerce and pharma, Pharmaceutical Research and Manufacturers Association, that are making these contributions. And we can see the impact in terms of what has happened with creating the conditions over time that led to the explosion that we have.

Now, in terms of who it helps, the question is, what role do companies have in terms of their contributions? That's why we have the model code because they need to take a very hard look at what the impact is, what their role and responsibilities are, and how they should handle these.

JULIE HYMAN: Bruce, we're not talking about a lot of money in the grand scheme of things on either the power of the corporations or that are particularly significant to the campaign because of caps on giving.

BRUCE FREED: Well, no. No. No, you're wrong because, with the corporate PAC contributions, there are limits there. But you take a look at the contributions that go to the 527 committees, the payments to trade associations, part of which are used for election related spending, or the contributions that they make to the secretive tax exempt organizations. There you're looking at hundreds of thousands of dollars and millions of dollars. You're not looking at a capped $5,000 contribution.

JULIE HYMAN: Gotcha. So in that case, it does sound more significant.

BRUCE FREED: Oh, yeah.

JULIE HYMAN: But at the same time, when these companies say, we're suspending all contributions rather than just suspending them to one side or the other, what message does that send? Is it a false equivalency that they're drawing?

BRUCE FREED: No, I think that they really do have to take a look at what their involvement should be and whether they should be giving and, if they're giving, what type of policies do they have. What's the board's role in terms of setting the policies governing their spending, evaluating the impact of their spending? But I think very importantly, taking a look at the risk that their spending poses because, over the years-- I mean, political spending has been recognized as a risk management issue. And when you're talking to the corporations-- and we've talked with many of them, the hundreds of corporations-- we've been working with them for 18 years. And companies today recognize that this is risk management and that today they really have to look at it even more closely as a heightened risk management issue.

JULIE HYMAN: Bruce, thank you so much. This has been very educational I think for all of us. Bruce Freed of the Center for Political Accountability, he's the president and co-founder there. Appreciate--