State, district or local party committees - or party organizations that do not meet the definition of “political committees” - that have established a nonfederal account may allocate certain expenses between their federal and nonfederal accounts. An allocation formula determines the federal and nonfederal portions of an expense. The federal portion must be paid from funds subject to the limits and prohibitions of the Federal Election Campaign Act (the Act). National party committees may not allocate any expenses because all disbursements by national party committees must be paid entirely with federal funds.
Note that Type 2 and Type 3 Federal Election Activity (FEA) expenses are not allocable between federal and nonfederal accounts; they must be paid for either entirely with federal funds or with a mixture of federal and Levin funds. If the FEA refers to a clearly identified federal candidate,or if the funds used pay for any part of the costs of a broadcast, cable or satellite communication (and the communication does not refer solely to a clearly identified state or local candidate), only federal funds may be used to pay for the FEA.
Also note that the following expenses are not allocable between the federal and nonfederal accounts and must be paid with all federal funds:
- Public communications that promote, attack, support or oppose a clearly identified federal candidate, regardless of whether or not they mention a state candidate (Type 3 FEA).
- Disbursements for activities that refer only to one or more candidates for federal office.
Candidate support expenses
Expenses for activities that are conducted on behalf of (or in opposition to) specific federal and nonfederal candidates would be allocated or paid for with 100 percent federal funds.
Depending on the circumstances of the candidate support expenses, the amount attributed to a federal candidate is considered:
- An in-kind contribution;
- A coordinated party expenditure;
- An independent expenditure; or
- A disbursement for an exempt party activity.
If a state, district or local party committee’s payment on behalf of both a federal candidate and a nonfederal candidate is for FEA, the committee must pay the cost with all federal funds.
Reporting candidate support activities as in-kind contributions
This section discusses how to report direct candidate support that is an in-kind contribution. However, direct candidate support may instead be a coordinated party expenditure, independent expenditure or exempt party activity. Each type should be reported accordingly.
Example of in-kind contribution from party committee to multiple candidates
Over the course of several weeks, the Freedom Party State Committee, two federal candidates (a U.S. House candidate and a U.S. Senate candidate) and three nonfederal candidates, meet to discuss plans for a mailer urging support for the candidates. The Freedom Party State Committee pays $1,000 to design and mail the 300 letters.
Note: Because the mailing is less than 500 letters in 30 days, it does not qualify as a public communication. Had the communication qualified as a mass mailing and supported a federal candidate, then it would have been considered FEA and its cost would be paid for entirely with federal funds.
- Schedule H2—Allocation Ratios
- Schedule H3—Transfers from Nonfederal Account
- Schedule H4—Payments for Allocable Expenses
- Schedule B for Line 23—Contributions to Federal Candidates
Allocation ratio (H2)
The committee uses Schedule H2 to disclose the allocation ratio for “June Mailing” (the unique identifier).The federal allocation percentage is calculated using the time/space method (ratio of time/ space devoted to federal candidates to total time/space devoted to all candidates). In this case, 40 percent of the total space is devoted to federal candidates, so the ratio is 40 percent federal and 60 percent nonfederal.
Nonfederal transfer (H3)
The committee discloses the transfer from the nonfederal account to pay the allocated nonfederal portion of “June Mailing” costs. As previously noted, a transfer must be made no more than 10 days before or 60 days after payment is made.
The total amount of transfers itemized on Schedule H3 is entered on Line 18(a) of the Detailed Summary Page.
Payments (H4 and B)
The committee uses Schedule H4 to itemize the two payments (the federal payment and the nonfederal payment) for “June Mailing.” Because the allocated federal shares result in contributions in-kind, they are itemized as memo entries with cross references to Schedule B for Line 23, where the in-kind contributions are itemized.
The entries in Schedule B include the amounts allocable to each federal candidate, also based on the time/space method. In this case, the committee allocates 50 percent of the federal payment to each candidate.
Nonfederal payments disclosed on Schedule H4 are entered on Line 21a(ii) of the Form 3X Detailed Summary Page. The Schedule B total is entered on Line 23.