Any prohibitions that apply to political party committees also apply to any agent or officer acting on behalf of the party committee or any entity that is directly or indirectly established, financed, maintained or controlled by a party committee.
Agents of a committee
An agent is any person who has actual authority, either expressed or implied, to engage in certain activities on behalf of the committee.
State, district and local party committees
In the case of state, district and local party committees, these activities are:
- Expending or disbursing any funds for Federal Election Activity;
- Transferring or accepting transfers of funds for Federal Election Activity;
- Engaging in joint fundraising activity if any part of the funds are to be used for Federal Election Activity; or
- Soliciting any funds for, or making or directing any donations to, any tax-exempt 501(c) organization or 527 organization that is not also a political committee, a party committee or a campaign committee.
National party committees
In the case of the national party committees, these activities are:
- Soliciting, directing or receiving a contribution, donation or transfer of funds; or
- Soliciting any funds for, or making or directing contributions to, any tax-exempt 501(c) organization or 527 organization that is not also a political committee, a party committee or a campaign committee.
Definition of "solicit"
To solicit means to ask, request or recommend, either explicitly or implicitly, orally or in writing, that another person contribute, donate or transfer funds or otherwise provide anything of value. A solicitation may be made directly or indirectly. In order to qualify as a solicitation, a communication must be reasonably understood in the context in which it is made to contain a clear message asking, requesting or recommending that another person make a contribution, donation or transfer of funds or otherwise provide something of value. Context includes the conduct of those involved in the communication. Solicitation does not include mere statements of support or guidance as to the applicability of a particular law or regulation.
Definition of "direct"
To direct means to guide, either directly or indirectly, a person who has expressed an intent to make a contribution, donation, transfer of funds or otherwise provide anything of value, by identifying a candidate, political committee or organization for the receipt of such funds or things of value. The contribution, donation, transfer or thing of value may be made directly or through a conduit or intermediary. Direction does not include merely providing information or guidance as to the applicability of a particular law or regulation.
Entities of a committee
To determine whether or not an organization is an entity of a party committee (meaning that it is established, financed, maintained or controlled by a party committee), a number of factors may be taken into account. Each is examined within the context of the overall relationship between the sponsor and the entity. These factors include whether the sponsor:
- Directly or indirectly owns a controlling interest in the voting stock or securities of the entity;
- Directly or indirectly has the authority or ability to direct or participate in governing the entity. This authority may come from bylaws, constitutions, contracts or other rules, or through formal or informal practices;
- Directly or indirectly has the authority or ability to hire, fire or otherwise control the decision-making members of the entity;
- Has overlapping membership with the entity which indicates a formal or ongoing relationship between them;
- Has overlapping officers or employees with the entity that indicates a formal or ongoing relationship between them;
- Has any members, officers or employees who were members, officers or employees of the entity that indicates a formal or ongoing relationship between them;
- Directly or indirectly provides funds or goods in a significant amount or on an ongoing basis to the entity. This does not include transfers of an allocated share of joint fundraising activity;
- Directly or indirectly causes or arranges for funds in a significant amount or on an ongoing basis to be provided for the entity. Again, this does not include transfers of an allocated share of joint fundraising activity;
- Directly or indirectly had an active or significant role in the formation of the entity; and
- Has similar patterns of receipts or disbursements with the entity that indicate a formal or ongoing relationship between them.
Allocation of fundraising between candidates
When one program or event is held for the purpose of raising funds for multiple federal and nonfederal candidates, the sponsoring committee may allocate the direct costs of the activity, including planning, administrative and solicitation costs.
Such expenses must be allocated pursuant to the “funds received” method.
Calculation of funds received ratio
Costs are allocated according to the ratio of federal funds received to total receipts for the program or event.
To determine the portion of the costs attributable as an in-kind contribution—or coordinated party expenditure, if applicable—on behalf of a particular federal candidate, divide the amount received for the federal candidate by total receipts for all candidates.
The allocation ratio is estimated before making payments for the program or event, based on a reasonable prediction of receipts. The committee has up to 60 days after the ending date of the program or event to:
- Adjust the ratio based on the actual funds received; and
- Transfer funds from the nonfederal account to the federal (or allocation) account based on the adjusted allocation percentage.
Should additional federal receipts come in after the 60-day period, further ratio adjustments and reimbursements from the federal account to the nonfederal account will be necessary. The committee must note the initial ratio and adjustments in its reports. (Federal law permits the federal account to pay more than its share of an allocable expense. However, overpayments by the nonfederal account are illegal.)
For purposes of the 60-day time period, the last day of an event is either the final day of a telemarketing campaign or the day on which final direct mail solicitations are mailed.
Assigning a unique identifier
Because the allocation ratios will vary with each fundraising activity, 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.
Payment from federal or allocation account
There are two ways to make payments for allocated expenses:
- A party committee may pay the entire amount of the expense from the federal account. It may then transfer funds from the nonfederal account to the federal account solely to cover the nonfederal share of each allocable expense; or
- A party committee may establish a separate federal account—called an allocation account—solely for the purpose of paying allocable expenses. The committee transfers funds from its federal and nonfederal accounts to the allocation account in amounts equal to the federal and nonfederal shares of each allocable expense.
Transfers from nonfederal account
Transfers from the nonfederal account to pay the nonfederal portion of an allocable expense must be made within a 70-day window: no more than 10 days before or 60 days after the day the federal account (or allocation account) makes the payment. Transfers of nonfederal funds to the federal account must be reported on Schedule H3 of Form 3X. Transfers of Levin funds to the federal account must be reported on Schedule H5.
Exception: If the nonfederal account transfers additional funds to the federal or allocation account due to an adjusted allocation ratio for a fundraising event, the transfer must be made within 60 days after the date of a fundraising program or event.
Note that transfers from a nonfederal account to pay its allocated share of expenses are an exception to the overall ban on nonfederal transfers to a federal or allocation account.
Transfers from federal account
If an adjusted ratio for a fundraising event results in an increased federal portion, the federal account must transfer to the nonfederal account, as necessary, the increased share of federal fundraising payments. This is required because a nonfederal overpayment of an allocated expense, if left uncorrected, is a violation of the Federal Election Campaign Act.