ROI of Government Relations

by Tim Storey

Most large companies have a government relations unit to coordinate lobbying efforts with state and federal government.  Those government relations staff often have to fight internally for limited corporate resources.  They now have some new information to bolster their argument with CEOs and CFOs--investing in lobbying boosts the bottom line.  A new study by three academics from business schools at the University of Colorado, Vanderbilt University and the University of Miami finds that companies that invest in lobbying have an average annual rate of return that is 8 percent higher than comparable companies that do not lobby significantly.  This research confirms numerous other studies as well as boundless anecdotal evidence.  Like most studies in this vein, the researchers used data for federal activity, but the principles apply to state lobbying as well.  That might explain why the numbers of lobbyists in state capitols have grown dramatically in the past decade or two. 

People who work in legislatures know that lobbyists represent a broad set of opinions and interests ranging from the far right to the far left ideologically.  They are a critical part of a well functioning democracy and legislature.  This study underscores the value of having "boots on the ground" at the capitol to make your case whether you are advocating for corporate tax incentives, funding for environmental protection or any other issue where legislatures set policy.