AO 2007-16: Affiliation of membership organizations

The American Kennel Club (AKC) and its voting clubs and accredited clubs are membership organizations under the Federal Election Campaign Act (the Act) and Commission regulations, and both the voting clubs and the accredited clubs are affiliated with the AKC. Therefore, any SSF the AKC establishes may solicit contributions from the individual members of its affiliated voting clubs and accredited clubs.

Background

The AKC is composed of about 600 voting clubs and 4,000 accredited clubs. Voting clubs have the right to designate a delegate to vote on the club's behalf at AKC meetings and are required to pay modest annual dues. Accredited clubs do not have voting representation and are not obligated to pay dues.

The AKC is governed by a board of 13 directors elected by the delegates at large. Only delegates are eligible to serve as directors on the board, and the board appoints two of its members to serve as its principal officers—the Chairperson and the Vice Chairperson. The board oversees the AKC's property and assets, reviews proposed amendments to its Charter and has final authority on issues related to dog shows. The board can adjudicate charges that any club or person has violated AKC rules and can impose penalties.

Clubs applying for membership must enclose a copy of their constitutions, bylaws and membership lists for AKC review. If the board approves the applicant club for membership, then the question is submitted to the delegates at large for voting. The AKC acknowledges its acceptance of membership by sending the new voting club a letter and publishing its name in the AKC's publication. Voting clubs have a continuing duty to submit proposed changes to their governing documents to the AKC's board for approval and to apprise the AKC's Executive Secretary of any changes in their officers. The AKC Charter also prescribes criteria for determining eligibility for the position of delegate, and its board has the authority to approve or disapprove a voting club's designation of a delegate. If the board disapproves the designation, the delegates at large vote on the issue.

The delegates of the voting clubs make and modify the rules for AKC-approved dog shows, which provide for comprehensive supervision of every aspect of a show. Both voting and accredited clubs must apply to the AKC for permission to hold a dog show and must adhere to the dog show rules.

Both voting and accredited clubs have their own constitutions and bylaws. The bylaws of the various clubs display similar structure and content because the clubs substantially follow sample bylaws provided by the AKC in designing their own. Each voting club's bylaws provide that its delegate to the AKC is also a member of its own board of directors and an officer of the club. Both kinds of bylaws have provisions for the types of memberships and the governance of the club, announce that a purpose is to conduct AKC-sanctioned dog shows, define dues for most levels of membership and provide that any member whose AKC privileges are suspended are equally suspended from the privileges of the voting or accredited club. The AKC board must approve any amendments to a voting club's constitution or bylaws. Although not technically required, virtually all accredited clubs submit their constitutional amendments for prior AKC approval.

Membership organizations

A corporation without capital stock qualifies as a membership organization if it meets six requirements detailed in FEC regulations and is composed of persons who qualify as members under the regulations. 11 CFR 114.1(e)(1) and (2). See also 11 CFR 100.134(e) and (f).

The AKC and the vast majority of its voting and accredited clubs are non-profit corporations without capital stock, and the AKC meets the six enumerated requirements:

• It is composed partly of voting clubs vested with the power and authority to operate or administer the organization pursuant to the AKC Charter;
• The AKC Charter expressly states the requirements and qualifications for membership;
• The AKC Charter and bylaws are available to its members on its web site and upon request;
• The AKC expressly solicits membership by advertising the benefits of AKC registration on its web site and providing guidance on how to form a new club;
• The AKC acknowledges acceptance of membership by sending a letter to the voting club and publishing the names of new voting clubs;
• The AKC Charter shows that it is not organized primarily for the purpose of influencing federal elections, but instead for the purpose of ensuring the purity of specific breeds of dogs and of promoting the fitness of the dogs. 11 CFR 114.1(e)(1)(i)-(vi).

In addition, the AKC is composed of persons that are "members" under Commission regulations. 11 CFR 114.1(e)(2). The voting clubs are members because they satisfy the membership requirements set forth in the AKC Charter, affirmatively accept invitations to become members and pay annual dues of a predetermined amount.(1) 11 CFR 114.1(e)(2)(ii).

Both the voting clubs and the accredited clubs also meet all six requirements for being a membership organization and are composed of persons who are "members" under Commission regulations, as described above.

Solicitation and affiliation

A membership organization or its SSF may solicit its individual members for contributions to the SSF. 2 U.S.C. §441b(b)(4)(C); 11 CFR 114.7(a). When a membership organization has several levels, such as national, regional, state and/or local affiliates, then a member of any entity or affiliate within the multilevel structure automatically qualifies as a member of all affiliates. 11 CFR 114.1(e)(5). In addition, a membership organization or its SSF may solicit the individual members of the membership organization's affiliates. AO 2005-03.

Per se affiliation. Under Commission regulations, organizations that are established, financed, maintained or controlled by a single corporation and/or its subsidiaries, or by the same person or group of persons, are per se affiliated. 11 CFR 100.5(g)(3)(i) and (v). In this case, neither the AKC, nor the voting clubs and accredited clubs, owns any portion of the others, and thus no organization is a subsidiary of either of the others. Moreover, the AKC and the voting and accredited clubs are not established, financed, maintained or controlled by the same person or group of persons.

Under Commission regulations, organizations established by a membership organization, including related state and local entities of the organization, are also per se affiliated. 11 CFR 100.5(g)(3)(iv). The AKC and its voting clubs and accredited clubs, however, are not per se affiliated under this provision because the voting and accredited clubs are not state or local chapters or entities within the AKC.

Affiliation factors. In the absence of per se affiliation, Commission regulations provide for an examination of various factors in the context of the overall relationship to determine whether one sponsoring organization has established, financed, maintained or controlled the other sponsoring organization. 11 CFR 100.5(g)(4)(i) and (ii)(A)-(J). These ten circumstantial factors do not constitute an exhaustive list, and other factors may be considered. Three of these factors are relevant in this case.

The first factor considers whether a sponsoring organization has the authority or ability to direct or participate in the governance of another sponsoring organization through provisions of constitutions, bylaws, contracts or other rules, or through formal or informal practices or procedures. 11 CFR 100.5(g)(4)(ii)(B). The AKC and the voting clubs exercise reciprocal rights of participation in each other's governance. The voting clubs participate in the AKC's governance through the delegates they appoint to represent them, and the AKC participates in the governance of the voting clubs by reviewing and approving the voting club's organizational documents. Moreover, the AKC can discipline voting clubs and their individual members, and the AKC Board can approve or disapprove a voting club's designation of a delegate. Finally, through the dog show rules, the AKC governs all aspects of voting clubs' dog shows.

Although the accredited clubs are not "members" of the AKC under the Commission's regulations, individuals who are members of the accredited club need not have rights and obligations with respect to the AKC in order for the accredited club to be affiliated with the AKC. AO 1999-40. Moreover, the AKC participates in the governance and operations of the accredited clubs because it can discipline them and governs all aspects of their dog shows.

Further, the AKC furnishes both voting and accredited clubs with prototype constitutions and bylaws that the clubs follow substantially. Finally, the voting club must submit its organizational documents and its membership list to the AKC before it is accepted for membership. The AKC reviews and approves the organizational documents and membership lists of both voting and accredited clubs to determine whether the clubs are eligible for membership or accreditation. Once a club's organizational documents are approved, the AKC has effective veto power over any proposed amendments. Together, these facts suggest affiliation between the AKC and the voting and accredited clubs.

The second relevant factor addresses whether a sponsoring organization has the authority or ability to hire, appoint, demote or otherwise control the officers, or other decision-making employees or members of another sponsoring organization. 11 CFR 100.5(g)(4)(ii)(C). The AKC and the voting clubs each exercise some authority over each other's officers or other decision-making employees. The voting clubs' delegates appoint members of the AKC Board of Directors from their own ranks. The Board then appoints the AKC's officers. Furthermore, the AKC reviews the membership lists submitted by clubs applying for membership. The AKC has the authority to strip any person of the privileges of association with the AKC. Thus, this factor also suggests affiliation between the AKC and the voting and accredited clubs.

The third factor considers whether a sponsoring organization or its agent had an active or significant role in the formation of another sponsoring organization. 11 CFR 100.5(g)(4)(ii)(I). The AKC takes an active role in the formation of voting and accredited clubs by establishing the requirements a club must satisfy to attain club status. Both voting and accredited clubs substantially follow prototype constitutions and bylaws provided by the AKC. In addition, the AKC reviews the organizational documents and membership lists of both voting and accredited clubs to determine whether the clubs are eligible for membership or accreditation.

Intent of individual members of voting and accredited clubs to join the AKC. In determining affiliation, the Commission also considers the intent of the people who join an organization.(2) Groups become voting or accredited clubs of the AKC because this allows them to conduct AKC-approved dog shows. Without AKC sponsorship, they would lose substantial revenue from exhibitors. Thus, clubs are motivated to subordinate practically all aspects of their dog shows to the direction of the AKC. In this sense, the individual's primary purpose in joining voting or accredited clubs is to be associated with the AKC as a whole.

Conclusion

The AKC and the voting clubs are affiliated because they exercise reciprocal rights of participation in each other's governance. The AKC also assumes a significant role in the formation of the voting clubs, and an individual's primary purpose in joining a voting club is to be associated with the AKC. With regard to the accredited clubs, the fact that the AKC participates in the governance of the accredited clubs and has a significant role in their formation, coupled with the fact that the individual's primary purpose in joining an accredited club is to be associated with AKC, outweighs the absence of influence or control over the AKC through voting rights. AO 1995-12. Thus, because the voting and accredited clubs are affiliates of the AKC, the AKC or any SSF it forms may solicit all of the individual members of its voting and accredited clubs for contributions to its SSF.

AO 2007-16: Date issued: October 12, 2007; length: 10 pages.