This page explains rules on allocating expenses that apply when a committee chooses to support both federal and nonfederal candidates using separate federal and nonfederal accounts. These rules do not apply to committees that conduct only activities related to federal elections or that use only a federal account to support both federal and nonfederal candidates. Under EMILY's List v. FEC, 581 F3d 1 (D.C. Cir. 2009), SSFs need not allocate administrative expenses, costs of generic voter drives and generic public communications. Nor do they need to report these allocations to the FEC. This page is intended for the SSFs that choose to allocate.
Payment of allocated expenditures
Administrative costs, voter drives and generic public communications
Administrative expenses include, for example, rent, utilities, office supplies and salaries not attributable to a candidate. The SSF’s connected organization may pay for these expenses.
A generic voter drive includes any voter identification, voter registration and get-out-the-vote drives or any other activity that urges the general public to register, vote or support candidates of a particular party or associated with a particular issue, without mentioning a specific candidate.
Generic public communications are public communications that refer to a political party but do not refer to any clearly identified federal or nonfederal candidate.
Under EMILY's List v. FEC, 581 F3d 1 (D.C. Cir. 2009), SSFs need not allocate administrative expenses, costs of generic voter drives and generic public communications. Nor do they need to report these allocations to the FEC.
Costs associated with an event or program for soliciting contributions to the SSF are allocated only if the committee maintains two accounts, raises money for both accounts and pays for its own fundraising costs from both accounts. (Again, the connected organization may pay fundraising costs for the SSF.)
Fundraising expenses should be allocated using the “Funds Received” method.
No matter what method is used to allocate expenses, committees with separate federal and nonfederal accounts should use one of the following two procedures to pay allocable expenses. Failure to properly allocate expenses could result in a contribution by the nonfederal account to the federal account—a violation of federal law.
- Payment from federal account: The committee pays 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 SSF should 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. (A transfer from the federal account to the allocation account is permissible at any time and is not reported, because the allocation account is seen as part of the federal account for reporting purposes.
Funds received ratio
Used for: Direct fundraising costs for both the SSF’s federal and nonfederal accounts (if not paid by the connected organization).
Allocating committee fundraising expenses
If an SSF’s connected organization does not pay its solicitation costs and the SSF raises money for both its federal and nonfederal accounts, the costs of the fundraising event or activity must be allocated between those accounts. As noted previously, the federal account could pay 100 percent of the costs without reimbursement and avoid allocation.
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.
Schedule B—Itemized Disbursements
Schedule H2—Allocation Ratios
Schedule H3—Transfers from Nonfederal to Federal Account
Schedule H4—Disbursements for Allocated Activity
If the SSF 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. As previously described, this is the ratio of funds received for federal activities to total funds raised through the program or event. The SSF must estimate the ratio prior to beginning the solicitation and report the ratio on Schedule H2.
The committee must also give each fundraising program or event a unique name or code. This unique identifier must be used on all FEC schedules referring to the activity.
The SSF must pay for allocated fundraising expenses from its federal account (or separate allocation account). The nonfederal account may transfer its allocable share to the federal account as described below. 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 itemizes the receipt of transfers from the nonfederal account to the federal account for allocable fundraising expenses on Schedule H3. The amount of the transfer is also reported on the Detailed Summary Page, Line 18(a). The transfer must be made within the 70-day window.
Adjustments to ratio
After a particular fundraising program or event, the SSF 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 SSF must determine whether such an adjustment is necessary within 60 days after the date of the fundraising event. The revised ratio must be noted on a Schedule H2 filed with the SSF’s next report.
If an adjustment indicates that the nonfederal account paid more than its allocable share of expenses for the event, the SSF 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 SSF 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.