AO 2010-09: Corporate sponsored IE-only committee may solicit and accept unlimited individual contributions

A nonprofit corporation may establish and administer a political committee that plans to make only independent expenditures. The committee may solicit and accept unlimited contributions from individuals in the general public, including contributions given for specific independent expenditures.

Background

The Club for Growth (the Club), an incorporated 501(c)(4) organization, plans to establish, administer and pay the solicitation costs of a political committee (the Committee) that intends to solicit unlimited contributions from individuals in the general public and to use those funds to finance independent expenditures. The Committee will comply with all disclaimer and notice requirements of the Federal Election Campaign Act (the Act) and Commission regulations, and will file regular reports to disclose its activity.

The Committee does not plan to accept contributions from any political committee, candidate, labor organization, foreign national, government contractor or corporation, nor will it make any contributions or transfer any funds to any political committee if the amount of a contribution to the recipient committee is governed by the Act. The Committee will also not make any coordinated communications or coordinate any expenditures with any candidate, authorized committee, political party committee or agent of such persons.

In addition to the Committee, the Club maintains a separate segregated fund (SSF), Club for Growth PAC (Club PAC). The President of the Club serves as its treasurer and will also serve in that capacity for the Committee. However, the two committees will not make any contributions or transfers of funds to one another.

Analysis

Recent court decisions have altered the landscape for financing independent expenditures. In Citizens United, the Supreme Court found the ban on corporate independent expenditures unconstitutional. Citizens United v. FEC, 558 U.S. ___, 130 S. Ct. 876, 913 (2010). In SpeechNow, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the Act’s contribution limits are unconstitutional as applied to individuals’ contributions to independent expenditure groups. SpeechNow.org v. FEC, 599 F.3d 686, 689 (D.C. Cir. 2010). Consistent with these decisions, and based upon the facts presented, the Commission determined that the Committee may solicit and accept unlimited contributions from individuals.

That conclusion applies equally to contributions the Committee solicits specifically for independent expenditures advocating a particular candidate. Under certain circumstances, contributions given to a PAC for the benefit of a specific candidate count against the contributor’s limit to the candidate, in order to avoid circumvention of the limits. 11 CFR 110.1(h). In this case, however, the Committee will not use the funds it receives to make contributions, so there is no possibility of circumventing any contribution limits.

The Commission further determined that the Club’s proposed payment of the Committee’s establishment, administrative and solicitation expenses is not exempt from the definition of “contribution” or “expenditure” because the Committee is not an SSF. Therefore, any establishment, administrative or solicitation expenses paid by the Club must be reported by the Committee, which exclusively makes independent expenditures, as contributions from the Club. Alternatively, the proposed political committee may pay its own establishment, administrative and solicitation expenses.

The Commission noted that many of the issues addressed in this opinion implicate forthcoming rulemakings and that the agency may need to update its registration and reporting forms to facilitate disclosure. In the meantime, a committee that intends to accept unlimited contributions for the purpose of making independent expenditures may send a letter with its Form 1 Statement of Organization to identify itself as such. A sample letter was included as an attachment to the AO, and is available on the Commission’s website at http://www.fec. gov/pdf/forms/ie_only_letter.pdf. Electronic filers may include this information in a Form 99.

AO 2010-09: Date issued: July 22, 2010; Length: 6 pages