“Direct candidate support” activities by SSFs include both in-kind contributions and independent expenditures. Direct candidate support also includes public communications or voter drives that refer to one or more federal and nonfederal candidates, regardless of any reference to a political party. Such communications may not count as contributions or independent expenditures but are nonetheless reportable as "other federal operating expenditures."
Disclaimer notices for communications authorized by multiple candidates
If an advertisement lists several candidates, the disclaimer may state that the advertisement was authorized by the candidates identified in the ad or, if only some candidates have authorized it, by those candidates identified with an asterisk.
“Paid for by the XYZ Corporation PAC and authorized by the candidates marked with an asterisk."
Both federal and nonfederal candidates referenced
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. An independent expenditure may be allocated if it advocates the election or defeat of both federal and nonfederal candidates. The rules for allocating communications between candidates would apply.
Allocating costs of public communications and voter drives referring to both federal and nonfederal candidates
Generally, communications and voter drives that refer to a federal candidate(s) and do not reference any nonfederal candidates must be financed exclusively with federal funds, even if the communication includes a generic reference to the party.
Similarly, communications and voter drives that refer to a nonfederal candidate(s) and do not reference any federal candidate(s) may be financed solely with nonfederal funds, regardless of whether the communication refers to a party.
Payments for coordinated communications that support both federal and nonfederal candidates are allocable in-kind contributions. An independent expenditure may be allocated if it advocates the election or defeat of both federal and nonfederal candidates.
Payment of allocated expenditures
Committees with separate federal and nonfederal accounts should use one of the following two procedures to pay allocable direct candidate support expenses. Failure to properly allocate expenses could result in a contribution by the nonfederal account to the federal account—a violation of federal law.
1. 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.
2. 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.
This section’s explanation of the rules for allocating these costs is based on the following scenario:
The American Society of Associated Corporations PAC, an SSF, maintains a separate nonfederal account for use in state and local elections. In late 2018, the PAC plans to purchase several advertisements in local newspapers to urge voters to support four candidates: a candidate for governor, a candidate for state treasurer, a candidate for secretary of state and a candidate for the U.S. Senate running in a special election that year. Equal space in the advertisements will be devoted to each candidate. The total cost for running the advertisements is $4,250.
Schedule B—Itemized Disbursements (if communications are in-kind contributions)
Schedule E—Itemized Independent Expenditures (if communications contain express advocacy and are not coordinated with a candidate or political party)
Schedule H2—Allocation Ratios
Schedule H3—Transfers from Nonfederal to Federal Account
Schedule H4—Disbursements for Allocated Activity
Every direct candidate support activity must be assigned a unique identifying name or code. On Schedule H2, The American Society of Associated Corporations PAC lists “VA Newspaper Campaign” as the unique identifier for the activity. The committee will use “VA Newspaper Campaign” to refer to the advertisements in all future reports.
Costs are allocated according to the ratio of space or time devoted to federal candidates compared with the total space or time devoted to all candidates, federal and nonfederal. In the case of a phone bank, the ratio is determined by the number of questions or statements devoted to federal candidates compared with the total number of questions or statements for all candidates.
Because “VA Newspaper Campaign” is a public communication that refers to both a clearly identified federal and a nonfederal candidate, the committee uses the “time and space ratio” to allocate the $4,250 total expected cost on Schedule H2. In this case, the ratio of space devoted to federal candidates to space used for all candidates is 1/4. (The committee would base its allocation on time if the advertisements were broadcast.)
Expressing the allocation ratio in percentages, the American Society of Associated Corporations PAC enters 25 percent federal and 75 percent nonfederal in the appropriate spaces on Schedule H2.
In the example, the PAC makes all allocable payments from its federal account (or separate allocation account) and itemizes them on Schedule H4. If the payments are in-kind contributions, the federal share is itemized on Schedule B and included in the total figure for Line 23 (Contributions Made) of the Detailed Summary Page. If the payments are independent expenditures, the federal share is itemized on Schedule E and included in the total figure for Line 24 (Independent Expenditures) of the Detailed Summary Page.
The “event year-to-date” figure represents the aggregate amount paid to all payees for “VA Newspaper Campaign” as of the date of payment.
Transfer of funds
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.)
In the example, the nonfederal share is 3/4 of the $4,250 total cost. The committee transfers $3,187.50 from the nonfederal account to the federal account. The transfer is made during the permissible 70-day window.
The American Society of Associated Corporations PAC reports the receipt of the transfer on Schedule H3. The amount is also included on Line 18(a) of the Detailed Summary Page.