AO 2009-29: Membership organization may establish SSF without vote of its membership

The Federal Election Campaign Act (the Act) does not require a non-profit 501(c)(4) incorporated membership organization to submit a proposal to its membership in order to form a separate segregated fund (SSF).

Background

The Retiree Support Group of Contra Costa County (“Contra Costa Retirees”) is a non-profit membership organization established under California law and organized under section 501(c)(4) of the Internal Revenue Code. Its members include retired employees of the Contra Costa County government, including the county’s special districts, and surviving spouses of certain retired employees.

Contra Costa Retirees has a Board of Directors (Board) which manages the organization. The Board is elected by the membership, and members may approve or disapprove of certain actions undertaken by the Board. Contra Costa Retirees is considering whether to establish an SSF to make political contributions in connection with state and federal elections.

Analysis

An incorporated membership organization may establish an SSF under the Act and Commission regulations for the purpose of making contributions or expenditures in connection with federal elections. 2 U.S.C. §441b(b)(2)(C) and 11 CFR 114.5. Commission regulations do not specifically address how a membership organization may form an SSF. However, Commission regulations do provide a non-exhaustive list of examples of events that Advisory Opinions may suffice to form an SSF. These examples include: “[a] vote by the board of directors or comparable governing body of an organization to create a[n SSF] to be used wholly or in part for federal elections; selection of initial officers to administer such a fund; or payment of the initial operating expenses of such a fund.” 11 CFR 102.1(c).

Once an SSF is established by an organization, the SSF must file a Statement of Organization (FEC Form 1) with the Commission within 10 days after the establishment of the SSF. 11 CFR 102.2.

Since neither the Act nor Commission regulations specifically address how to determine whether or not to establish an SSF, the Commission concludes that Contra Costa Retirees is not required to submit the question to its members for a vote in order to establish an SSF.

AO 2009-29: Date issued: January 19, 2010; Length: 4 pages.