When a nonconnected committee raises money for both its federal and nonfederal accounts, the costs of the fundraising event or activity must be allocated between those accounts. However, the federal account could pay 100 percent of the costs without reimbursement and avoid the need to allocate.
Note that expenses incurred in connection with activities directly supporting candidates (such as fundraising for candidates) are not considered the committee’s own fundraising expenses, and the committee must report them as in-kind contributions to the candidates.
Payment of allocable fundraising expenses
Committees with separate federal and nonfederal accounts must use one of the following two methods to pay allocable fundraising expenses:
Payment from federal account
The committee may pay the entire amount from its federal account, transferring funds from the nonfederal account to the federal account only to cover the nonfederal share of allocable expenses.
Payment from allocation account
The committee may establish a separate allocation account for the sole purpose of paying joint federal and nonfederal expenses.
Under the second option, the committee transfers funds from both the federal and nonfederal accounts to the separate allocation account in amounts equal, respectively, to the federal and nonfederal shares of each allocable expense. The allocation account is considered a federal account, and the committee must include the account’s receipts and disbursements in its FEC reports.
Timing of internal transfers
The committee must transfer funds from the nonfederal account to the federal account (or to the allocation account) within a 70-day “window”— not more than 10 days before or 60 days after the original payment to the vendor. The committee must report each such transfer and itemize the activities the transferred funds are intended to pay. (A transfer from the federal account to the allocation account is permissible at any time and is not reported separately.)
Time limits also apply to adjustments of the allocation ratio and corresponding transfers, which may be required after an activity where federal and nonfederal funds are raised.
Committees with separate federal and nonfederal accounts must use the following allocation ratio to determine the federal and nonfederal share of allocable activity expenses.
Funds received ratio
Used for: Direct fundraising costs for both the PAC’s federal and nonfederal accounts
Calculation: Costs are allocated according to the ratio of funds received for the federal account (or candidates) to the total funds received through the fundraising event.
Reporting allocated fundraising expenses
- Schedule B—Itemized Disbursements
- Schedule H2—Allocation Ratios
- Schedule H3—Transfers from Nonfederal to Federal Account
- Schedule H4—Disbursements for Allocated Activity
The committee must give each fundraising program a unique name or code. When referring to a fundraising program in subsequent schedules and reports, the committee must continue to use that program’s unique name or code.
If the committee raises money for both its federal and nonfederal accounts through the same fundraising program or event, the costs directly associated with the program or event are allocated using the “funds received” ratio, i.e., the ratio of funds received for federal activities to total funds raised through the program or event. The committee must estimate the ratio prior to beginning the solicitations and report the ratio on Schedule H2.
The committee pays for fundraising expenses from its federal account (or separate allocation account). The federal and nonfederal shares of the payments are reported on Schedule H4 and included in the total for Line 21(a) (Allocated Federal/Nonfederal Activity) of the Detailed Summary Page.
The “year-to-date” figure entered for each fundraising payment represents the total spent on that particular committee fundraising event as of the date of payment.
The committee may transfer the nonfederal share of fundraising expenses to the federal account (or separate allocation account) within the 70-day window. The committee reports transfers from the nonfederal account to the federal account for shared fundraising expenses on Schedule H3.
Adjustments to ratio
After a particular fundraising program or event, the committee may need to adjust the allocation ratio reported for the event on Schedule H2 to reflect the federal and nonfederal shares of the actual receipts. The committee must determine whether such an adjustment is necessary within 60 days after the date of the fundraising event. For direct mail fundraising the event date is the day on which the final solicitations are mailed. The adjusted ratio should be noted on a Schedule H2 filed with the committee’s next report.
If an adjustment indicates that the nonfederal account paid more than its allocable share of expenses for the event, the committee must transfer funds from its federal account to its nonfederal account to avoid an excessive payment by the nonfederal account. Any transfers from the federal account to the nonfederal account made as a result of the revision must be reported on Schedule H4 and included in the total for Line 21(a)(i) on the Detailed Summary Page in the committee’s next regular report. Further adjustments and transfers from the federal account may be necessary if additional federal receipts come in.
If an adjustment indicates that the federal account paid more than its share of allocable expenses, the committee may transfer funds from the nonfederal account to make up for the excessive nonfederal payment.
Such transfers, however, may only be made within 60 days after the event. Transfers from the nonfederal account are itemized on a Schedule H3 and included in the total for Line 18(a) on the Detailed Summary Page.