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Making in-kind contributions to candidates

In addition to contributing money, a nonconnected committee may donate goods or services to candidates and their committees. Gifts of goods or services are called in-kind contributions. For example, a committee makes an in-kind contribution when it:

  • Pays for consulting, polling or printing services provided to a candidate committee;
  • Donates office supplies or mailing lists to a campaign;
  • Sponsors a fundraising event benefiting a candidate; or
  • Pays for a campaign advertisement on behalf of a candidate (if the advertisement does not qualify as an independent expenditure). 

Value

The dollar value of an in-kind contribution is subject to limits and must be reported. The value of a particular in-kind gift is determined as follows:

  • Goods (such as equipment, supplies, facilities and mailing lists) are valued at their normal purchase or rental price.
  • Services (such as advertising, printing or consulting) are valued at the prevailing commercial rate at the time the services are rendered (i.e., the amount that was paid or would have been paid for the services).
  • Discounts are valued at the amount discounted (i.e., the difference between the usual and normal charge and the amount paid by the committee).

Opinion polls

Special FEC regulations pertain to the allocation of contributions of opinion poll results. 

Allocation among candidates

If a nonconnected committee supports more than one federal candidate through an in-kind contribution, the contribution must be allocated among the candidates so that a portion of it counts toward the committee’s limit for each candidate. The value attributed to each candidate must be in proportion to the relative benefit each candidate is expected to receive.

Example: Allocation among candidates

A committee sponsors a fundraising dance on behalf of several candidates. The portion of the costs attributed as a contribution to each candidate must be based on the ratio of funds received for each candidate to the total funds received for all the candidates.

Allocating shared costs of fundraising for federal and nonfederal candidates

A “direct candidate support” activity is an in-kind contribution that supports specific candidates. In-kind contributions that must be allocated include payments for fundraising activities conducted on behalf of both federal and nonfederal candidates. Allocation is not required, however, if shared expenses are paid entirely by the federal account.

Failure to allocate expenses when required could result in a contribution by the nonfederal account to the federal account—a violation of the Federal Election Campaign Act.

Payment of allocable candidate fundraising expenses

Committees with separate federal and nonfederal accounts must use one of the following two methods to pay allocable activity 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.

Allocation ratios

Funds received ratio

Used for: Direct fundraising costs of events that support both specific federal and specific nonfederal candidates.

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.

Committees with separate federal and nonfederal accounts must use the following allocation ratios to determine the federal and nonfederal share of allocable activity expenses.

Reporting allocating costs of fundraising for candidates

This section explains how to allocate the costs of a direct candidate support activity that raises money for both federal and nonfederal candidates. The explanation is based on the following scenario:

Example: Reporting allocating costs of fundraising for federal and nonfederal candidats

Each election year Civil Republic PAC, a nonconnected committee with separate federal and nonfederal accounts, sponsors a fundraising dinner-dance to benefit federal and nonfederal candidates in a particular state.

This election year, the committee plans to use the event to raise money for five candidates—a Senate candidate, a House candidate and three candidates for the state legislature. In past election years the committee has raised about $5,000 for all participating candidates, and the committee has customarily divided the proceeds evenly between the federal and the nonfederal candidates. In this election year, Civil Republic PAC expects the two federal candidates to split half the proceeds, while the three state candidates will evenly divide the other half.

The total costs of the event are expected to be $1,000, which are in-kind contributions to the candidates.

Required forms

  • Schedule B: Itemized Disbursements
  • Schedule H2: Allocation Ratios
  • Schedule H3: Transfers from Nonfederal to Federal Account
  • Schedule H4: Disbursements for Allocated Activity

Unique identifier

Every allocable direct candidate support activity must be assigned a unique identifying name or code. On Schedule H2, Civil Republic PAC uses “Dinner-Dance” as the event’s unique identifier. When referring to the dinner-dance in subsequent schedules and reports, the committee must continue to use “Dinner-Dance.”

Allocation ratio

Because the dinner-dance is a fundraising event for candidates, the committee allocates the $1,000 expected total costs according to the “funds received ratio” (i.e., funds received by federal candidates compared with funds received by all candidates).

Since Civil Republic PAC expects that half the proceeds will go to federal candidates and half to nonfederal candidates, the funds received ratio is 1/2. Expressing this ratio in percentages, Civil Republic PAC enters 50 percent federal and 50 percent nonfederal in the appropriate spaces on Schedule H2.

To indicate the purpose of the event, the committee checks the “Direct Candidate Support” box.

Payments

Civil Republic PAC pays the bills for the event from its federal account (or separate allocation account) and reports the payments on Schedule H4. Because the payments are in-kind contributions, the federal share of the costs is cross-referenced to a Schedule B for Line 23 and included in the total figure for Line 23 (Total Contributions to Federal Candidates) on the Detailed Summary Page.

On each page, the committee uses “Dinner-Dance” (the unique identifier) as the name of the event. The “event year-to-date” figure represents the aggregate amount spent on the dinner-dance (to all payees) as of the date of payment.

Transfer of funds

To cover the nonfederal share of the costs of the dinner-dance, Civil Republic PAC transfers $500.00 from the nonfederal account to the federal account (or separate allocation account). The amount transferred is one half of the $1,000.00 total payments for the ballroom. The transfer is made within the 70-day window.

Civil Republic PAC reports the receipt of the transfer on Schedule H3. The amount is also included on Line 18(a) of the Detailed Summary Page.

Adjustments

At a later date, Civil Republic PAC may have to adjust the allocation ratio for the event if the federal candidates receive a different proportion of the actual funds raised than was originally reported on Schedule H2. The adjusted allocation ratio must be reported on a new Schedule H2 filed with the next report.

As a result of adjusting the allocation ratio, the nonfederal account may have paid more than its allocable share. In that case, the federal account must reimburse the nonfederal account for its excessive payments and report the reimbursement on Schedule H4. The reimbursement must also be included in the Line 23 total on the Detailed Summary Page and itemized on Schedule B.

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.