AO 2013-03: Potential candidate may consult for nonprofit
A potential federal candidate may serve as a paid consultant to a nonprofit corporation even if she decides to become a candidate. The consulting fees she receives would not be considered prohibited contributions to the campaign.
Background
Erin Bilbray-Kohn is considering a run for the U.S. House of Representatives. In anticipation of her potential candidacy, Ms. Bilbray-Kohn resigned her Executive Director position with Emerge Nevada and became a paid consultant. Emerge Nevada is a nonprofit Nevada corporation that helps elect Democratic women to state and local offices. As a consultant, Ms. Bilbray-Kohn will organize and conduct trainings for Emerge Nevada, and will provide fundraising advice to the program’s candidates. She will not solicit, direct, or receive any donations for the candidates or for Emerge Nevada itself, and she will not have authority to spend Emerge Nevada’s funds or otherwise to exercise any control over the organization. Ms. Bilbray-Kohn’s compensation of $5,500 per month represents half of her former salary plus an additional $500 per month to account for some of the extra costs that she will bear as a consultant (such as payroll taxes and business expenses).
Analysis
The Federal Election Campaign Act (the Act) and Commission regulations prohibit federal candidates and officeholders from raising or spending funds in connection with a federal election “unless the funds are subject to the limitations, prohibitions, and reporting requirements” of the Act. 2 U.S.C. § 441i(e)(1)(A); 11 CFR 300.61. Such persons are also prohibited from raising or spending funds in connection with a nonfederal election unless the funds are raised within the Act’s contribution limits and source restrictions. 2 U.S.C. § 441i(e)(1)(B); 11 CFR 300.62.
The Commission found that the Act would not prohibit Ms. Bilbray-Kohn from consulting for Emerge Nevada if she becomes a federal candidate. As a consultant, Ms. Bilbray-Kohn’s duties will be limited to organizing Emerge Nevada’s training program, conducting candidate training sessions, and providing advice to individual candidates. She will not solicit or receive funds for the candidates or for Emerge Nevada, and she will not direct or control any of the candidates’ or organization’s spending of nonfederal funds. In addition, the program’s candidates would not be acting as Ms. Bilbray-Kohn’s agents when they subsequently raise funds for their own nonfederal campaigns. Therefore, Ms. Bilbray-Kohn can serve as a paid consultant to Emerge Nevada after she becomes a federal candidate.
The Commission also concluded that Emerge Nevada’s payments of consulting fees to Ms. Bilbray-Kohn would not be prohibited corporate contributions. Commission regulations state that payments of “compensation” to a candidate are contributions unless the compensation satisfies three requirements. 11 CFR 113.1(g)(6). The Commission determined that Ms. Bilbray-Kohn’s consulting fees would satisfy these requirements. First, the payments would result from Ms. Bilbray-Kohn’s “bona fide employment” as a consultant and would be genuinely independent of her candidacy. 11 CFR 113.1(g)(6)(iii)(A). The Commission found that Emerge Nevada retained Ms. Bilbray-Kohn as a consultant based in part on her past experience with the organization and on her expertise with Nevada politics, not on her candidacy for Federal office.
Second, her compensation also will be “exclusively in consideration of [her] services” as a consultant since she will perform a subset of the duties she previously performed as Executive Director, and she will be compensated only for those reduced duties, not for any activities she undertakes as a federal candidate. 11 CFR 113.1(g)(6)(B).
Finally, Ms. Bilbray-Kohn’s compensation will not exceed the amount that would be paid to any other similarly qualified person for the same work over the same period of time, since the amount of her compensation is no more than the organization is paying any other training consultant with Ms. Bilbray-Kohn’s level of knowledge and experience. 11 CFR 113.1(g)(6)(C). Therefore, the payment of the consulting fees would not be prohibited contributions to the campaign.
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