AO 2017-13: Trade association’s proposed checkoff system permissible

National Sorghum Producers and certain state producer organizations constitute a federation of trade associations under Commission regulations. Additionally, a proposed checkoff system for contributions and the use of those state producer organizations as collecting agents for contributions to the National Sorghum Producers Political Action Committee are permissible.

Background

National Sorghum Producers (“NSP”) asked whether it and several state sorghum producers organizations constitute a federation of trade associations, whether a voluntary checkoff system is a permissible method of soliciting and collecting contributions to its separate segregated fund, the National Sorghum Producers Political Action Committee (“Sorghum PAC”), and if the state organizations may serve as collecting agents for Sorghum PAC.

NSP is a non-profit, non-stock corporation with members, organized with the purpose of promoting and protecting the interests of U. S. sorghum producers. Dues are collected through grain elevators known as “E-Members.” Participating grain elevators collect a fixed amount per each bushel of sorghum sold and remit it to NSP as that member’s dues.

Sorghum producers are also represented by state-level producer organizations. Organizations in five states, Colorado, Kansas, New Mexico, Oklahoma and Texas, might participate in the activities proposed in the advisory opinion request. The state-level producer organizations are structured and governed similarly to NSP and the organizations are connected in several ways.

NSP and Sorghum PAC propose to establish a voluntary checkoff system for producer members to make contributions to Sorghum PAC through a preauthorized automatic deduction from the proceeds due to them from the E-Member grain elevators, at a suggested rate per bushel.

Analysis

Commission regulations define a federation of trade associations as “an organization representing trade associations involved in the same or allied line of commerce.” Further, Commission regulations define a trade association as a “membership organization of persons engaging in a similar or related line of commerce, organized to promote and improve business conditions in that line of commerce.” As NSP was established for the purpose of promoting and protecting the interests of U. S. sorghum producers, it constitutes a trade association if it qualifies as a membership organization.

The Commission concluded that NSP and the five state organizations that might participate in the activities proposed in the advisory opinion request meet the criteria to qualify as membership organizations and constitute trade associations. Under FEC regulations, all five of the state organizations are affiliated with NSP and are the state affiliates of NSP in a federation of trade associations. NSP and Sorghum PAC may solicit the non-corporate members of these five state organizations and their corporate members’ restricted classes (provided that those corporate members have granted prior approval).

The Commission has previously approved similar checkoff systems for soliciting and collecting voluntary contributions. Accordingly, the Commission concludes that NSP and Sorghum PAC’s proposed checkoff system satisfies the requirements set forth in Commission regulations.

Finally, the Commission concludes that NSP’s state affiliates may serve as collecting agents for Sorghum PAC. Commission regulations provide that a separate segregated fund’s connected organization or any of its branches, divisions, or local units may serve as a collecting agent. The Commission has previously concluded that a state affiliate of a federation of trade associations may be considered as a branch, division, or local unit of the federation.

Date issued: February 8, 2018; Length: 9 pages

Citations: 

Regulations: 

11 CFR 102.6(b) and (c)
Fundraising by and procedures for collecting agents 

11 CFR 114.7
Membership organizations, cooperatives, or corporations without capital stock 

11 CFR 114.8
Trade associations 

Resources: 

• Advisory opinion 2017-13 
  
• Commission consideration of advisory opinion 2017-13 
  
• Help for candidates and committees: Fundraising for an SSF