Insights

HIGHLIGHTS OF MAJOR FEDERAL FUNDRAISING RULES

Tuesday, April 26, 2016

This blog post was written by Chris Gober, Managing Partner of The Gober Group. Chris currently serves as legal counsel to Senator Ted Cruz’s presidential campaign and represents dozens of other U.S. Senators, Representatives, and multi-billion-dollar companies in litigation, federal investigations, and political compliance matters.

CONTRIBUTIONS

  • Contribution limit from individuals is $2,700 per election (note that primary, runoff, and general elections are treated as separate elections for contribution limit purposes).
  • Two spouses may contribute a combined $5,400 per election, with $2,700 allocated to each.
  • Contribution limit from federal multicandidate PACs is $5,000 per election (note that primary, runoff, and general elections are treated as separate elections for contribution limit purposes).
  • Candidates may accept contributions for both the primary and the general elections prior to the primary, but contributions to the general election cannot be used until after the candidate formally becomes the party’s nominee (i.e., after the primary or nominating convention process has occurred). If the candidate does not become the party’s nominee, for whatever reason, then the candidate must return general election contributions to the contributors. The same rules also apply to potential runoff elections.
  • Corporations may not contribute to candidates; checks drawn on a corporate account cannot be accepted.
  • Partnership, including limited liability partnerships (LLPs), may make contributions to influence federal elections (although additional guidance should be sought if the partnership has corporate members, foreign national members, or members with federal government contracts). The entity itself is subject to the $2,700 per election contribution limit, but the contribution must also be attributed among the entity’s partners (the portion attributed to each partner must not exceed the individual partner’s contribution limit). If all partners within the organization are contributing, the partnership may attribute the contribution according to each partner’s share of the entity’s profits. If the partnership attributes a contribution on another basis agreed to by the partners, or if it attributes contributions only to certain partners, the following rules must be observed:
    • The profits and losses of only the contributing partners must be affected; and
    • The profits of each contributing partner must be reduced (or his/her losses increased) by the amount of the contribution attributed to him or her.
  • In some cases, limited liability companies (LLCs) are treated as partnerships. For the purposes of contribution limitations and prohibitions, an LLC is treated as a partnership if it does not have publicly traded shares and has either chosen to file, under IRS rules, as a partnership or made no choice at all.
  • Foreign nationals may not contribute unless they have a “green card” indicating lawful admittance for permanent residence in the United States.
  • Government contractors may not contribute (their PACs may, as can employees of government contractors).
  • It is illegal to give money in the name of another (no bonus to employees for political contributions, no giving in the name of children, etc.).
  • It is a good policy to not accept contributions from minors. By law, however, any individual of any age may make a contribution if all of the following conditions are met:
    • The decision to contribute is made knowingly and voluntarily by that individual;
    • The funds, goods, or services contributed are owned or controlled exclusively by that individual, such as income earned by that individual, the proceeds of a trust for which that individual is the beneficiary, or a savings account opened and maintained exclusively in that individual’s name; and
    • The contribution is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.
  • Strict limits on cash contributions (although law permits $100 from known person, $50 from anonymous source).
  • No post-dated checks.

VOLUNTEER EXEMPTIONS/CORPORATE RESOURCES

  • Volunteer’s use of corporate resources (phones, faxes, meeting facilities, food, etc.) is limited to one hour per week and four hours per month.
  • Any out-of-pocket costs incurred by individuals on behalf of a campaign must either be reimbursed by the campaign or treated as an in-kind contribution.
    • Cannot use corporate or business credit cards for out-of-pocket costs.
  • Facilities (such as a phone bank) may be rented from a corporation for fair market value.
  • Neither candidates nor their fundraisers may use corporate letterhead or corporate staff for fundraising.

Contributions should be sent directly to the campaign headquarters or to a volunteer fundraiser’s home address.  Contributions should not be sent to corporate or business or government office locations.