Civic Activity

Public Policy

Target believes that engaging in legislative and public policy activities is an important and necessary element of operating a diversified, multi-national retail business. We work with elected officials of all political parties to help shape constructive public policy solutions that benefit our business, team, guests and the communities we serve.

The Corporate Responsibility Committee of our Board of Directors has developed a clear and transparent framework for Target’s public policy engagement that was approved by our Board and is outlined below. Importantly, this framework has reaffirmed Target’s commitment to:

• Align our public policy activities and business interests;
• Employ a decision-making process to support ongoing compliance with our alignment objective; and
• Maintain transparency to our guests, team members, shareholders and other stakeholders.

Issue Advocacy

As a retailer, importer, credit card issuer, health care provider, and employer of over 350,000 team members, Target believes we play an important role in informing policy makers about a number of legislative issues. Target advocates at all levels of government, with think tanks, nongovernmental organizations and trade associations, aiming to ensure that the impact legislative and regulatory issues have on our business, our industry, our communities and our team members is well understood.

When directly advocating on positions important to our business, we rely on leaders throughout the company who have expertise to lend to policy discussions. We also provide opportunities for our team members to learn about issues affecting Target and how to communicate with their elected representatives through in-person programs and by publishing informative material.

Recently, Target has shared expertise and engaged in lobbying activities on a number of issues important to our company and the retail industry. Although the specific issues vary with legislative activity and schedules, they include organized retail crime, community safety, taxes, trade, product safety, data security, health care reform, and employment and labor issues.

In 2011, our direct advocacy focused primarily on debit-card swipe fee reform and the collection of online sales taxes. We viewed these two issues as priorities because of their effect on the retail industry and more specifically their direct and significant impact to our business.

Accordingly, these issues were our primary focus in 2011 in terms of the time and effort spent by our Government Affairs team and, when appropriate, our internal business partners who serve as subject matter experts. We also identified these issues as priorities when working with our trade associations and retail peer companies because we determined that legislative activity on the issues was a possibility and that telling the Target story would provide a valuable perspective to policymakers.

Debit-Card Swipe Fees

Interchange fees, or “debit-card swipe fees,” are what retailers must pay to issuing banks every time a customer uses a debit or credit card. These fees are one of Target’s largest expenses – representing hundreds of millions of dollars every year – and have continued to increase dramatically as a result of the broken interchange market that leaves retailers with little or no ability to negotiate lower rates.

Swipe fee reform was included in the Dodd-Frank Wall Street Reform Act in 2010. In early 2011, opponents attempted to delay and ultimately repeal these reforms through legislation in Congress. Target joined a broad advocacy coalition of large and small retailers to support and defend the reforms, which promote swipe fee rates that are reasonable and proportional to their costs.

Our advocacy on this issue took several forms. Our business leaders directly explained to members of Congress the impact these fees have on our business. We also worked collaboratively with our retail peers, trade associations, and a larger coalition of businesses impacted by swipe fees, and encouraged our team members to contact their members of Congress in support of swipe fee reform.

E-fairness Online Sales Taxes

In 2011, Target also focused its federal and state advocacy efforts on “e-fairness” legislation. As a result of a decades-old tax loophole, many online-only companies receive as much as a 10 percent perceived price advantage over brick-and-mortar retailers because they are not required to collect and remit state sales taxes, even though the tax is already due by the consumer.

These laws are antiquated and create an unlevel playing field that unfairly benefits certain companies at the expense of others. For example, this loophole creates an unfair competitive disadvantage for companies like Target that collect state and local sales taxes for both in-store and online purchases.

In 2011, Target advocated at both the federal and state levels for legislation that would require online-only retailers to collect and remit sales taxes, just like brick-and-mortar retailers are required to do. Retail is a very competitive industry, and Target’s view is that a sale is a sale, whether it takes place online or in a store. Target will continue to advocate for e-fairness legislation in both the state legislatures and in Congress to ensure a fair and level playing field for all retailers.

Target publicly reports its advocacy activities every three months as required by law with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives, and our recent reports are available here.

• Q1 2011 Lobbying Report
• Q2 2011 Lobbying Report
• Q3 2011 Lobbying Report
• Q4 2011 Lobbying Report

We also indirectly engage in advocacy through our memberships in trade associations and other policy-based organizations, which support their member companies by offering educational forums, public policy advocacy, and advancement of issues of common concern. Given the diversity of interests, viewpoints, and broad membership represented by these organizations, the positions they take do not always reflect Target’s views.

Our financial support of trade associations and other policy-based organizations is limited to educational, lobbying and association management activities. We expressly require that our financial contributions to these organizations not be used for making campaign contributions to candidates or to influence the outcome of specific elections or ballot initiatives.

We report the identity of the trade associations and other policy-based organizations that we support, together with the aggregate amount of our financial support. In addition, because membership dues used for lobbying activities are not deductible for U.S. tax purposes, we also show the portion of our total dues that are not tax deductible.

Information on our support of trade associations and other policy-based organizations is updated twice per year and is available at the links below:

• 2011 Trade Association and Policy-Based Organization Support
• 2010 Trade Association and Policy-Based Organization Support

Political Contributions

Target utilizes a Policy Committee as the primary body to guide the decision-making process regarding financial support of political activities. To ensure a variety of perspectives, the Policy Committee consists of our most senior executives in areas most affected by public policy decisions. The Policy Committee, in conjunction with the Chief Executive Officer, is responsible for balancing our business interests with any other considerations that may be important to our team members, guests or other stakeholders. The Policy Committee reports to the Corporate Responsibility Committee of the Board of Directors at least twice per year.

Target may provide financial support to political candidates, political parties or ballot initiatives through two separate channels:

• TargetCitizens PAC, which is funded through the voluntary contributions of our eligible team members; and
• The use of general corporate funds where permitted by law.

Regardless of which channel for political contributions is used, our financial support is provided in a nonpartisan manner based strictly on issues that directly affect our business priorities.

PAC Contributions

TargetCitizens PAC, which is funded through the voluntary contributions of eligible team members, makes contributions in a bipartisan manner to federal candidates and organizations. Target’s Policy Committee determines the factors to be considered when making contribution decisions. These factors include:

• General alignment with our business objectives
• Extent of our presence in a candidate’s state or congressional district
• Relevant legislative committee assignments
• Leadership positions
• Political balance
• The interests of our guests, team members, shareholders and other stakeholders

Information on TargetCitizens PAC contributions can be found on the Federal Election Commission’s website.

Corporate Contributions

The use of general corporate funds for political contributions is permitted if the Policy Committee determines that it is an appropriate means of advancing issues that are important to our business. The Policy Committee reviews and approves any use of general corporate funds for electioneering activities or for ballot initiatives. This approval process applies whether the contribution is made directly to a candidate or party, or indirectly through an organization operating under Section 527 or 501(c)(4) of the U.S. Internal Revenue Code.

Before any contribution is made, the Policy Committee: (i) determines that the contribution supports our business interests; (ii) gives consideration to the interests of our guests, team members, shareholders and other stakeholders; and (iii) concludes that under the circumstances, the contribution is an appropriate means of advancing our public policy position.

One way Target and other retail companies engage at the state level is to support state retail association political action committees (PACs) where allowed by law. By pooling resources with other retailers, we are able to support candidates who understand and support issues important to the retail industry, such as tax and labor policy, environmental issues and organized retail crime.

A list of individual corporate contributions of $5,000 or more, updated twice per year, is available at the links below:

• 2011 Corporate Political Contributions
• 2010 Corporate Political Contributions

Board Oversight

Our public policy activities are reviewed semi-annually by the Corporate Responsibility Committee of our Board of Directors. In addition, the Policy Committee consults with the Chair of the Corporate Responsibility Committee on particularly significant or sensitive decisions relating to contributions or public policy positioning.