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Events and programs for candidates or party committees

An SSF may sponsor an event for a candidate to which the general public is invited and pay for the costs of the event as an in-kind contribution to that candidate, subject to limitations and restrictions. If the SSF collects contributions raised at the event (as opposed to having the campaign collect the contributions), then the rules for earmarked contributions apply. Moreover, if the event originates from an organization’s communication to its restricted class, contributions raised by its SSF will count as contributions to both the SSF and the campaign and will also count against the SSF’s limit to the candidate.

Connected organization involvement

To avoid illegal facilitation of contributions by the connected organization, the SSF must pay the full cost of any resources from its connected organization that it uses, such as staff time, catering arrangements, printing costs, email or mailing list use and the cost of the meeting room. All such costs must be paid in advance.

General prohibition

A corporation or labor organization is prohibited from collecting funds or otherwise facilitating contributions in connection with federal elections (other than for the organization’s own SSF). It may, however, conduct certain activities that are permitted in FEC regulations.

Restricted class events and programs

Under the exemptions permitting candidate and party representative appearances before the restricted class, the corporation or labor organization may allow a candidate or party representative to solicit its restricted class at an event without the related costs for the event counting as a contribution. The candidate or party representative may also collect funds at the appearance. However, corporate or labor organization staff are prohibited from collecting funds for the campaign or party committee, with a limited exception. Candidate fundraising events held solely for the restricted class must be reported as described on Corporation and labor organization communications to the restricted class.

Exception: Collection of funds

An exception to the general prohibition on corporate or labor organization staff’s collection of funds at a candidate’s or party committee’s fundraising event, or other fundraising program, exists in cases where the fundraiser is limited to the restricted class and the funds collected are treated not only as contributions to the candidate or party, but also as contributions both to and from the SSF of the corporation/labor organization. In this case, the event may not raise funds in excess of the SSF’s candidate contribution limit ($5,000 for a multicandidate PAC). Alternatively, the campaign may collect the funds.

Events beyond the restricted class

General prohibition

A corporation or labor organization may not sponsor a fundraising event for a campaign or political committee if individuals who are beyond the restricted class will be present, nor may corporate or labor organization staff collect funds for a candidate or political committee. The rules described regarding candidate fundraisers apply to fundraising activities for parties and other political committees as well.

Exception: Event sponsored by corporate/labor SSF

A corporation or labor organization may, however, make its facilities and resources available to its SSF for the SSF to sponsor fundraising events, subject to the advance payment rules discussed on this page. Because the organization’s SSF may make communications to the general public using the funds it has raised, it may sponsor fundraising events for candidates and invite outside individuals and political committees. All related costs paid for by the SSF, including staff time, mailing, room rental and catering charges, count as an in-kind contribution to the candidate. As with other uses of corporate/labor facilities and resources, the SSF must pay in advance for any use of corporate/labor staff, rooms, equipment, food service or mailing lists. If the SSF collects and forwards the contributions, it must treat and report those contributions as earmarked contributions.

Use of corporate/labor staff, mailing lists and food services for events beyond the restricted class

A corporation or labor organization may allow its food services and mailing lists to be used for candidate fundraisers only if it receives payment in advance at the fair market value for the goods or services. Likewise, a corporation or labor organization may direct its personnel to work on these fundraisers only if the corporation or labor organization receives advance payment for the fair market value of these services, and only so long as employees are not coerced into providing on-the-job fundraising services. In all cases, however, advance payment by a source that may legally make a contribution or expenditure (such as the benefiting political committee or the organization’s SSF) is required in order to avoid a prohibited contribution by the organization.

FEC regulations specifically require advance payments for:

  • The services of corporate or labor personnel directed to carry out candidate fundraising activities as part of their job;
  • The use of the organization’s list of clients, customers, vendors or other persons outside the restricted class for purposes of soliciting contributions or distributing invitations; and
  • The use of catering or other food services arranged for or provided by the corporation or labor organization.

If a corporation is providing the services (such as catering or personnel) in its ordinary course of business as a commercial vendor, payment does not have to be made in advance as long as: (1) the payment is at the usual and normal charge; and (2) the payment schedule conforms to normal business practice. Otherwise, a prohibited contribution results.

Collection of funds

As with restricted-class only events, corporate or labor organization staff may not collect contributions at the event, unless the funds collected are treated not only as contributions to the candidate, but also as contributions both to and from the SSF of the corporation/labor organization. Alternatively, the campaign may collect the funds.

Please note that the guidelines regarding collection of funds apply not only to funds collected at candidate events, but also to funds for federal candidates collected at other times and to funds collected for other types of political committees for whom corporate and labor organization staff collect funds.

Permissible sources

Any person who is not otherwise prohibited from making a contribution in connection with a federal election (e.g., an individual, PAC or campaign) may make the advance payment. (“In advance” means before the services or resources are provided.) For example, the candidate, the organization’s SSF, the party or an individual may make the advance payment.

Effect on contribution limits and reporting

Payments by any other person (other than the benefiting committee) will be considered in-kind contributions to the benefiting committee, subject to limits and reporting requirements. Thus, if the advance payment is made by any other source, such as the corporation or labor organization’s SSF or an individual, the benefiting committee must report it as an in-kind contribution received. An SSF must report an in-kind contribution made. See “Reporting by SSF” on this page.

Use of corporate/labor name or trademark

A corporation or a labor organization may not use the corporation or labor organization’s names, trademarks or service marks to facilitate the making of contributions to a federal political committee, and a federal political committee may not knowingly accept or receive such facilitated contributions. For example, impermissible corporate facilitation would occur if a campaign were to recognize the corporate (or labor) employers of individual contributors in connection with a fundraising event. These restrictions do not apply to the use of a name as part of the name of a political committee.

Disclaimer

The requirements for disclaimers on printed communications authorized by candidates apply. Communications authorized by a candidate or candidate’s campaign, but paid for by the SSF, must identify the SSF that paid for the communication and that it was authorized by that candidate’s committee.

Example

“Paid for by the Lumber Workers’ Union PAC and authorized by the John Doe for Congress Committee.”

Printed communications must contain a printed box that is set apart from the contents of the communication. The print size of the disclaimer in this box must be of sufficient type size to be clearly readable by the recipient of the communication, and the print must have a reasonable degree of color contrast between the background and the printed statement.

The regulations contain a safe harbor that establishes a fixed, 12-point type size as a sufficient size for disclaimer text in newspapers, magazines, flyers, signs and other printed communications that are no larger than the common poster size of 24 x 36 inches. Disclaimers for larger communications will be judged on a case-by-case basis.

Additionally, the regulations provide two safe harbor examples that would comply with the color-contrast requirement:

  • The disclaimer is printed in black text on a white background; or
  • The degree of contrast between the background color and the disclaimer text color is at least as great as the degree of contrast between the background color and the color of the largest text in the communication.

Reporting by SSF

When making an in-kind contribution, an SSF must report the date the good or service is provided as the date of the contribution. It does so by itemizing the contribution on Schedule B for Line 23. However, payments for such goods or services are usually made on a different date than the date the contribution is provided to the campaign. In this case, the SSF must also report each payment made as an operating expenditure on the date the payment is actually made to the recipient.

Reporting payment made in advance

For example, if an SSF pays its connected organization in advance for the use of an email list (as required by the FEC’s anti-facilitation regulations), it would itemize the payment as an “Other Federal Operating Expenditure” on Line 21b. Then, when the email list is actually used on behalf of a campaign, it must itemize the payment again on Schedule B for Line 23 using the date of the use of the list as the date the contribution is made. To reconcile its totals, it must also itemize the payment again, but as a negative entry, on Schedule B for Line 21b.

Reporting payment made after the contribution provided

In other cases, the SSF may pay for an in-kind contribution after the good or service is actually provided. In this case, it must report both the date the in-kind contribution is provided and the date of the payment.

For example, if an SSF contracts to rent a hotel ballroom for a fundraising event for a candidate, with payment to the hotel due 30 days after the event, it must itemize the date of the event and the actual contribution on Schedule B for Line 23. To report the date the hotel was actually paid, it must itemize the payment as a memo entry on Schedule B, Line 21b.

Reporting by campaign

The SSF should inform the campaign of all costs so that the campaign may properly report the in-kind contribution received.

Events that raise funds for both federal and nonfederal candidates; Allocation of costs

Payments for fundraising activities conducted on behalf of both federal and nonfederal candidates and payments for coordinated communications that support both federal and nonfederal candidates are allocable in-kind contributions. The rules for allocating communications between candidates would apply. (Note that the rules in this particular section only apply when a federal SSF and an affiliated nonfederal PAC want to share the expenses for fundraising for both federal and nonfederal candidates through a single event or program.)

Payment of allocated expenditures

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.)

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.

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

The American Society of Associated Corporations PAC, an SSF with separate federal and nonfederal accounts, sponsors a fundraising dinner-dance each nonelection year to benefit federal and nonfederal candidates in a particular state.

In 2017, the PAC plans to use the event to raise money for five candidates—a Senate candidate, a House candidate and three candidates for the state legislature. At past events 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. The PAC expects the two federal candidates to split half the proceeds, while the three state candidates will evenly divide the other half. The total cost of the event is expected to be $5,000. The costs 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, the PAC uses “Dinner Dance 2017” 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 2017."

Allocation ratio

Because the dinner and dance is a fundraising event for candidates, the committee allocates the $5,000 expected total costs according to the “funds received ratio” (i.e., funds received by federal candidates compared with funds received by all candidates). Since the PAC expects that half the proceeds will go to federal candidates and half to nonfederal candidates, the funds received ratio is 50/50. Expressing this ratio in percentages, the 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

The American Society of Associated Corporations 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 an entry on 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 2017” (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, the PAC transfers $2,500.00 from the nonfederal account to the federal account. The amount transferred is one-half of the $5,000.00 total payments for the ballroom. The transfer is made within the 70-day window.

The 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, the 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 share of the payments for the event may be less than the nonfederal account originally paid. 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.

On each page, the committee uses “Dinner Dance 2017” (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.