Allocated fundraising expenses
When a party committee holds one program or event for the purpose of collecting both federal funds (i.e., funds to be used in federal elections) and nonfederal funds (i.e., funds to be used in nonfederal elections), the sponsoring committee may allocate the direct costs of the activity, including planning, administrative and solicitation costs. The direct costs may be paid by a combination of federal and nonfederal funds. Committees are required to assign a unique title or code to each program or event and to use that identifier consistently when reporting the activity. This is required because the allocation ratios will vary with each fundraising activity.
The Freedom Party State Committee raises money for its federal and nonfederal accounts at a banquet called “Memorial Day Gala” (the unique identifier). People buying tickets must designate their checks as either federal contributions (subject to the limits and prohibitions of the Act) or nonfederal contributions (subject to applicable state law). People wishing to contribute to both accounts must write separate checks to each account. The Freedom Party State Committee spends $50,000 on “Memorial Day Gala.”
Estimated fundraising ratio (Schedule H2)
A committee raising money for both its federal and nonfederal accounts through the same fundraising activity allocates the costs directly associated with the program or event according to the “funds received” method (ratio of federal funds received to total funds received.)
In the first reporting period in which money is spent on “Memorial Day Gala,” the Freedom Party State Committee estimates the ratio on Schedule H2. The committee must continue to file Schedule H2 with each report disclosing a disbursement for “Memorial Day Gala.”
Payments (Schedule H4)
The committee must itemize each allocated disbursement made from the federal account or separate allocation account, between its federal and nonfederal accounts as made from its federal account or separate allocation account on Schedule H4.
The committee discloses the federal and nonfederal shares of “Memorial Day Gala” payments on Schedule H4, again using the unique identifier.
(The federal and nonfederal payment totals that appear on Schedule H4 are entered on Lines 21(a)(i) and (ii) of the Detailed Summary Page.)
Nonfederal transfer (Schedule H3)
The committee may transfer funds from its nonfederal account to its federal account, solely for the purpose of paying the nonfederal share of allocable expenses. All such transfers must occur not more than 10 days before or 60 days after the payments for which they are intended are made, and must be itemized on Schedule H3.
Using Schedule H3, the Freedom Party State Committee reports the transfer received from the nonfederal account to pay the nonfederal portion of “Memorial Day Gala” ($35,000). The unique identifier is again noted.
(The total amount of transfers itemized on Schedule H3 is entered on Line 18(a) of the Detailed Summary Page.)
Adjusted ratio (Schedule H2)
Within 60 days after the last day of the program or event, the committee needs to adjust the allocation ratio to reflect the actual ratio of federal receipts to total receipts.
The committee reports the adjusted ratio on Schedule H2. Note that the committee must disclose the date of a fundraising program or event when reporting an adjustment to the ratio.
(Further ratio adjustments will be necessary if additional receipts come in.)
Corrective transfer (Schedule H4)
If the adjusted ratio results in a higher federal percentage than originally estimated, the federal (or allocation) account must make a transfer to the nonfederal account for the nonfederal overpayment. This is required because a nonfederal overpayment of an allocated expense, if left uncorrected, is a violation of the Federal Election Campaign Act (the Act).
The date of the program or event must be noted when reporting a transfer based on an adjusted ratio.
Adjusted ratio (Schedule H2)
If the adjusted ratio results in a higher federal percentage than originally estimated, the nonfederal account may transfer the additional amount to the federal account if it does so within 60 days after the date of the event. Nonfederal transfers are itemized on Schedule H3. The date of the program or event must be noted when reporting a ratio adjustment or a nonfederal transfer.
The committee must report the date of the program or event when reporting a ratio adjustment on Schedule H2.
Nonfederal transfer (Schedule H3)
The committee must report the date of the program or event when reporting a nonfederal transfer on Schedule H3.
Reporting with FECFile
Allocation ratio (Schedule H2)
To create a Schedule H2 go to the Summary Page tab, right click on “H2 Allocation ratio for joint activity" and select ”new.” Type in the name of the event, and choose "Fundraising" as the type of activity and specify the "Federal share percentage" of the event. If and adjustment must be made to the Federal Share, follow the same steps above and choose "revised" and modify the Federal Share.
Disbursements (Schedule H4)
To create an allocable disbursement on Schedule H4 go to the Summary Page tab, right click on “Line 21(a) Allocable expenditures" and select "new." Enter the payee, date, total amount and selected the event from the list of events. Click the "calc" button to automatically calculate the federal share of the disbursement based on the ratio defined on Schedule H2.
Transfers from nonfederal accounts (Schedule H3)
To create a transfer from the nonfederal account to the federal account on Schedule H3 go to the Summary Page tab, right click on "Line 18(a) Transfers from Nonfederal account (H3)" and select "new." Choose the account name, enter the date, and amount of the transfer. For fundraising expenses, click "Breakdown" and choose "Add new." Find the event in the list and enter the amount of the transfer.
