Latest Cato Annual Report Shows Waning Corporate Donations; Will Jones Act Lobbying Follow?
As we approach the sixth anniversary of Cato Institute’s continuous lobbying campaign against the Jones Act, the donations that I believe have always fueled that effort are finally decreasing. As my previous articles on this topic have noted, those efforts are carried out by Colin Grabow, Research Fellow at the Herbert A. Stiefel Center for Trade Policy Studies at Cato. My January 2024 article highlighted that neither his title nor the name of the center is a particularly accurate description.
In the recently available annual report of Cato for the fiscal year 2024 ending 3/31/24, corporate contributions were $1,270,000, a 25% decrease from the year earlier amount of $1,688,000. Prior to that reduction, the corporate contributions to Cato were consistently increasing from the $491,000 in fiscal year 2018 that coincided with the beginning of Cato’s campaign against the Jones Act. Below is a chart showing the actual corporate contributions in each of the last eight fiscal years.
As the chart clearly shows, there has been a pronounced increase in corporate contributions during the period Cato was relentlessly attacking the Jones Act. For the last six fiscal years, Cato’s annual donations from corporations have averaged $1.171,000 or $705,000 more than and 2.51 times the $466,000 for the prior two years. The variance is more than sufficient to fund the direct cost of the anti-Jones Act efforts while leaving a net benefit for Cato itself.
The same actual contribution data is shown in the chart below based on corporate contributions as a percent of total contributions over the last eight fiscal years.
The relative reduction in corporate donations was even more pronounced as the 1.59% of total donations for the latest year is 46% below the 2.96% for the prior year. Those corporate contributions over the last six years have averaged 2.52% of total contributions, 2.05 times the 1.23% average for the prior two years. While a small part of Cato’s overall funding, I believe that both the increases and the recent decrease are all a direct function of activity by corporations with a direct economic interest related to the Jones Act.
There is no natural reason for a corporation to give to a think tank. Looked at another way, when a corporation contributes to a think tank, it does so because it fits with their own agenda. My assessment from analyzing the level and trend of the actual data is that certain corporations that are consumers of LNG would benefit from a change in the Jones Act have been directly funding Cato’s efforts.
My October 2021 article went into an example of how Forbes was co-opted while also identifying two corporations that I believe are actively supporting Cato. If any corporations contributing to Cato specifically because of its Jones Act lobbying are foreign controlled, such an approach has further benefits. That is because of laws that preclude foreign entities from lobbying in the U.S.
My view is that Cato’s anti-Jones Act efforts have been directly funded by foreign controlled corporations seeking changes that I believe would still have them sourcing LNG from Trinidad but at a lower price. There is a certain cleverness in pursuing such efforts, but the recent reduction in corporate donations wasn’t particularly surprising and was even expected. This approach was given years to work, but as profit making entities at some point they had to recognize that nothing had been accomplished and that there was little likelihood of success. I believe that fulcrum has now been reached. I’m looking forward to further absolute and relative reductions in corporate contributions and to Cato winding down its lobbying division.
John D. McCown is a shipping expert with over four decades of operating and investing experience, primarily in the container shipping sector. That experience includes CEO of a U.S. flag container shipping company he co-founded and managing worldwide transport investments at a $20 billion hedge fund. He currently advises lectures and writes about maritime issues that interest him. Mr. McCown worked on a daily basis for more than twenty years with Malcom McLean, the inventor of container shipping, and holds an MBA from Harvard Business School as well as two maritime related patents.
