A very smart activism campaign by MoveOn and several gay rights groups against Target has culminated in their shareholders pressuring them for their campaign spending.

After weeks of public protest over its financial support of an organization that backed a GOP gubernatorial candidate opposed to gay rights, Target Corp. now faces a new form of pressure: demands from institutional shareholders that it revamp its donation process to avoid the chance of additional backfires [...]

“Imprudent donations can potentially have a major negative impact on company reputations and business if they don’t carefully and fully assess a candidate’s positions,” said Tim Smith, a senior vice president at Walden Asset Management, one of three asset management firms that this week filed a resolution asking the retail giant to overhaul its campaign donation policies. He cautioned that funding ballot initiatives, as many corporations have done, “can similarly backfire.”

The three management firms sponsoring the resolution — Calvert Asset Management, Trillium Asset Management and Walden — together hold $57.5 million of Target stock. Other institutional investors, including the giant New York state pension fund and union investment managers, are considering co-signing the resolution, which calls on Target’s independent directors to review the criteria and risks in making donations to organizations active in political campaigns.

We like to talk a lot about the power of money in politics, and how decisions like Citizens United will end up crushing what’s left of representative democracy. But that sells short the power that citizens have through collective action. Indeed, the shareholder movement is one of the more exciting developments I’ve seen in some time. Public pension and union funds play a role, but so can institutional investors and even individuals. What’s more, by putting on the public pressure, grassroots groups can spook investors so they tell their corporate parents to keep their heads down and stay out of the business of spending on elections. This can work as a deterrent.

This is a solution to the Citizens United problem that doesn’t have to come from the government. Having full disclosure on all spending would make these kinds of campaigns more effective, however, and that’s where government actions like the DISCLOSE Act come in.