PAC head navigates shifting ground

The following is one of CEO Update's regular series of conversations with association leaders.

December 11, 2009

In a full-tilt political environment that grows more complicated by the day, Doug Pinkham sees modern public affairs as a sophisticated cocktail of grassroots and direct advocacy mixed with corporate social responsibility and crisis communications.

When Pinkham joined the American Gas Association in 1982, he aspired to be an energy writer. Several promotions—and 14 years—later, Pinkham was hooked by what he calls “the potential for unlikely alliances.”
That spirit serves him well as president of the Public Affairs Council, where the membership roster includes disparate corporate giants like Target, Chevron and World Wrestling Entertainment as well as the Mayo Clinic and Habitat for Humanity. In his decade leading PAC, Pinkham says his members have only become more diverse, as organizations across the spectrum face a legislative environment that was once dominated by a handful of large corporations. 

At PAC, Pinkham heads a learning lab of sorts, where he says he’s paid to “figure out where the good ideas are and spread those notions to other industries.” At the same time, he’s struggling with the “sinister” public perception of lobbying fueled by the still-sharp memory of Jack Abramoff in an era of heightened accountability and high member expectations. 

From his office on K Street, Pinkham spoke with CEO Update about the cascade of lobbying restrictions issued by the Obama administration, the future of advocacy and what smart associations must do to survive.

CEO Update: A year into Obama’s term, how would you assess the public affairs and lobbying environment since the administration took over?

Doug Pinkham: During the campaign, both Obama and McCain talked quite a bit about trying to change the whole way politics worked in Washington, weakening lobbyists and special interests and strengthening the ability of the average person to have a say in what happens in public policy. That’s not unusual. What’s unusual is that both major candidates were saying that and Obama was very specific about what he would do regarding the revolving door in and out of political service and his policy not to hire any registered lobbyists to work in the administration. People who were initially complaining obviously hadn’t checked out his web site during the campaign because he said it right there.

After that first stage came a series of White House orders and rules to restrict federally registered lobbyists. Then there was the effort to restrict federal lobbyists from talking to executive branch officials about Recovery Act funding and the latest rule to restrict federal lobbyists from serving on federal advisory panels. I think these issues are more about politics than they are about policy. They are symbolic attempts to show that the president is cleaning up Washington and is punishing the special interests and the lobbyists rather than an honest attempt to actually change the way government works. This is one of those classic inside-the-Beltway issues that I don’t think the rest of the country, frankly, cares much about.

CU: How would you compare the related issue of transparency with the last few administrations?

DP: I think the president’s made great strides in trying to improve political transparency.
They’ve launched a White House blog and they agreed to release the White House visitor logs. They launched the recovery.gov web site to show where all the stimulus money is going so people can scrutinize whether money was well spent. It’s laudable when you become that transparent about where federal money is being spent, but you open yourself up to a tremendous amount of criticism. I thought that was an act of courage, but that’s also why I think these restrictions on lobbyist involvement seem small of the president because that doesn’t improve transparency. 

You’re already starting to see people from nonprofits, associations and corporations looking really hard at where they’re spending their time, and if [they’re not required to register], they’re not going to. I think that works against transparency. Given the fact that this administration deserves credit for becoming probably the most transparent administration in our history, I find it ironic that they’re working against themselves in that other area. But Obama deserves a lot of credit for opening up the policy development process, as messy as it can be.

CU: This administration has been talking directly to corporate CEOs and there’s been a lot of recent coverage about big associations being sidestepped. What do you make of this?

DP: They’re sizing up their likely opponents. This is one of those issues the mainstream media doesn’t always pick up. Your opponent on one issue may be your ally on another. 

It’s not a black-and-white issue, but clearly they sized up the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Federation of Independent Business and some of the other large business associations as potentially very powerful political opponents on some key legislation. In those cases, they’ve tried to reach out directly to CEOs rather than work through the business associations. The CEO can very ably represent his or her company and they can decide what resources are going to be committed to opposing or supporting legislation. If they can pick off enough of these CEOs, they can put pressure on these associations or they might not even need to work through the association if they can work directly with the CEOs. That’s the theory. They’ve used strategies in health care reform where they’ve worked with trade associations to try to cut deals ahead of time, like with PhRMA. 

This administration has done more than any administration in memory to try to work directly with CEOs on matters of public policy and to try to bypass some of the associations. The last time I remember anyone doing it to this degree was briefly in Clinton’s first term when the country was trying to cut the deficit and we were looking toward having a BTU tax. At that time, Clinton went directly to a lot of CEOs and tried to work around the big trade associations that he knew weren’t going to like this idea. 

It worked for about a month and a half, but [Clinton] wasn’t able to coalesce these CEOs and their companies around a common cause that could gain enough traction to carry the day. In the meantime, the more the associations studied the proposal, the more they were able to poke holes in it. That’s the last time I remember a president really ardently trying to separate the CEOs from their associations, and it didn’t work terribly well.

CU: Do you see the potential for something like that in this political environment?

DP: I think the strategy has a greater chance of being successful now than it did 16 years ago, because companies are used to working with coalitions and other ad hoc groups. They’re not as loyal to their associations as they once were, so they’re more comfortable working outside their normal group of colleagues. The issues are huge, and as companies have grown and become more diverse, they have less in common with companies that used to be more like them. You have a lot of companies with an economic interest in climate change in particular to be on one side of the fence or the other. 

As more and more companies come forward saying exactly where they stand on that issue, the White House may have a greater opportunity on climate change legislation to pick off CEOs and continue to build some of the coalitions that currently exist to support the administration’s policies.

CU: We’re seeing companies face pressure because of their trade group’s stance on a specific issue. Do you anticipate more of this happening in the future?

DP: Oh yeah. Companies are increasingly being defined by the associations they belong to, and that’s a big deal. 

There used to be a greater understanding in this town that you might belong to several trade associations, because different groups specialize in different issues. Now, because it is a more transparent world, a group that has different political beliefs than your company, or your CEO, or your board, can pretty easily say, “Okay, if you’re in favor of the president’s position on health care, why do you belong to the U.S. Chamber?” 

MoveOn.org has done a campaign pointing out specific companies that are members of the U.S. Chamber that seem to be espousing points of view that are different than the Chamber on key issues, like climate change and health care. They’re encouraging supporters to write letters to put pressure on them to drop their Chamber membership or to come out against the Chamber. That kind of bank-shot activism has been happening in the shareholder world for a number of years, and now you’re seeing it [with] associations.

CU: Associations in general are challenged by the tendency of companies to build coalitions outside of the trade group. Is there an opportunity for associations to leverage this? 

DP: The opportunity is to do what the U.S. Chamber has been doing for a number of years. It houses maybe a couple dozen coalitions, so when there are members that want to put funds and effort into a very specific issue, they form a coalition around it. They’re able to keep the work in-house rather than having the groups go out and do it on their own. 

It’s not nearly as expensive as it used to be to form a coalition and then if you win or lose you can dissolve it. You don’t have a big staff; you don’t have a building. Smart associations, despite the diverse interests of their members, are able to craft meaningful positions. If you can do that successfully, then members might be tempted on occasion to go out and form some coalitions and divert dues money away, but if they feel that you’re still competent, even if you don’t agree with them 100 percent, they’re likely to stick with you. I think the real danger is for associations that are lazy about how they form public policy. There’s a real rush to value. There’s a level of accountability that exists now that was not there 10 or 20 years ago.

CU: How has the perception of lobbying changed since you first took this job? 

DP: Public perception of lobbying has been very low for a very long time, and there are degrees of low. It’s particularly low now, but it was low 10 years ago. What I think is illustrative is to look at public perception of corporations, because during good economic times public perception of corporate America is reasonably high. Starting around 1999, we started to see public distrust of big companies starting to decline, and it was declining even among Republican and high-income households. So it wasn’t just Democrats, or the middle class or lower-income people who were distrustful of big companies. 

I saw that as a warning sign, because it means if people don’t trust you during good times, when times go bad, you can become a scapegoat, whether you deserve it or not.

For a while we had a situation where people put up with political Washington and lobbying and they didn’t like it much, but their attitude toward business was not so overwhelmingly negative. Well, now we’re in a situation where public attitude against government, against business and against lobbying is bad.

CU: What can change this?

DP: One thing is the sheer absence of scandals. I would say that for Congress too, by the way.
The second is greater transparency. It’s hard to build trust, but if you’re viewed as an organization that is being secretive, the public will equate that with being conspiratorial. 

The third is a willingness to do advocacy for the public good. This does not necessarily mean a company that produces clean energy bragging about the fact they’re producing clean energy. It’s a company like Target, which put in a tremendous amount of effort helping the Minnesota prison system reduce the rate of prisoners who get out of jail then are lost in the system and get arrested for other crimes. 

You could argue that Target cared about things like crime because people shoplift from the stores, but that was a side benefit. What they helped the Minnesota prison system realize is that they had an inventory control problem. Target loaned a couple of IT staff to the Minnesota prison system and they developed a software management system that made it easier to track people when they were released from jail and ensure that they check in with their probation officer. 

That’s just one small example. That’s an area where you’re going to see more companies trying to participate, but it takes a sophisticated level of public affairs management to do it well. I’m not confident that the reputation of lobbying is going to get better any time soon. My wife thinks they should change the name—a rebranding.

I know so many people in this business who are honorable and the profession’s reputation really eats away at them. But no amount of money in a PR campaign or advertising campaign could improve the reputation of lobbyists. You can’t convince people to unlearn something that is so ingrained.

CU: How does this affect the Public Affairs Council? 

DP: We’ve grown since I’ve been here, and we’ve become much more diverse because many companies in a wide-ranging group of industries that didn’t think they needed public affairs have discovered that they do. It used to be the major public affairs players in corporate America were the big manufacturing companies and the name brands. Now, you’re seeing a growing appreciation that public affairs matters in pretty much every industry. There’s a lot of good ideas that are invented in the association world that are transferable to the corporate world, and [vice versa]. We merge both and have representatives from every sector. 

We took a hit earlier this year with the recession. We don’t have as many car company members and we certainly don’t have as many financial services company members. In the first six months of this year, not a lot of people were interested in joining, but in the last three or four months there’s been an upswing.

CU: How has what your members are seeking from this organization changed in the last five years?

DP: They’re looking for more sophisticated best practices on grassroots, on direct advocacy, and how to integrate these functions with other external functions like corporate social responsibility and crisis communications. We do a lot of programming that helps companies and associations figure out a broader strategy for engaging their world. 

We’re really the one group that tries to bring all of those together and doesn’t view them as separate professions, so there’s a greater interest in that.
We also have become much more of a global association. We now hold an annual conference in Hong Kong each September on public affairs in Asia. 

The interesting thing is the questions I get from the audience are pretty much exactly the same as the ones I get in this country. How do I get my CEO to be more involved? How do I work with NGOs, activist groups, and how do I know whether to oppose them or form alliances with them? 

It’s the same questions, which is amazing, because you’re talking about different political systems and very different cultural environments, but a lot of the best practices of how to go about doing public affairs are amazingly transferable. 

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