In-Kind Fundraisers: The Path to Power Begins with Compliance

Competition for political power in Washington, DC is at an all-time high.  One way to get a political “leg-up” on your competition is to host in-kind fundraisers for members of Congress and candidates for Federal office.  Not only do in-kind fundraisers provide you and your organization much-sought-after face time with Congressmen, but positions you as the pivotal political player within your industry.

Throughout the years, associations and corporations have pursued in-kind fundraisers as a highly-rated tactic to gain the attention of officeholders and candidates for their respective industries.  While these activities are usually related to political action committee contributions and compliance issues, the procedures and rules governing these events often escape the notice and attention of many PAC professionals.  The following information offers general guidelines to effectively implement these activities through your political action committee.

Put it in writing

A services agreement should be signed between the corporation and the corporation’s political action committee (PAC).  If the corporation is embarking upon multiple in-kind fundraising events for a number of candidates for federal office, the agreement should list all individuals for whom in-kind fundraisers will be held and all of the corporation’s staff involved in the activities of these fundraisers.  These staff members typically include PAC staff, lobbyists, administrative staff, etc.

If an outside consultant is being used to organize these fundraiser events for the corporation, a separate services agreement should be signed between the PAC and the consultant.  This document should also list all activities and costs associated with the planning and/or implementation of these fundraisers.

Provide notice to staff

All corporation staff who may be involved in implementing fundraisers should be specifically instructed that they may not perform services to facilitate the fundraising event until they are advised that a) a consulting services agreement has been executed between the corporation and the corporation’s PAC, and b) that the PAC has provided payment under that agreement to the corporation for the services of staff as described below.

Prepay the costs

After services agreements are executed the PAC should compensate the corporation for the services being provided by staff or outside consultants for all fundraiser activities at an established rate of fair market value.  Moreover, if corporate facilities are used for the event, the PAC should also compensate the corporation for the use of these facilities at the fair market value of facilities used for similar events, such as the rate for a hotel or restaurant banquet room.

Once all costs born by the corporation have been determined, the PAC should transfer that amount to the corporation to be held in an escrow account that the corporation will debit as expenses related to these events are incurred.  This is required so the corporation does not provide goods and/or services to a federal campaign as a corporate contribution prohibited by the Federal Election Campaign Act (FECA).

Planning and logistics

Now that agreements have been entered into and payments have been made by the PAC to the corporation’s escrow account, the staff involved may enter into planning and implementing the event(s) directly with the campaign(s).  After dates have been finalized, staff can arrange for an event location, identify prospective attendees, distribute invitations, coordinate food service and décor, follow-up on invitations to garner attendees and most importantly, raise money for the candidate(s).

Planning for the event should include confirming that the event can be conducted for a cost to the PAC of less than the amount that the PAC can contribute to that candidate for that particular election (Primary, Run-off and General).   If the cost of the event exceeds the contribution limit, a commitment to pay the excess must be obtained from another FECA-permissible source such as another PAC or individual.

Document everything

Prior to the event being held, an in-kind fundraiser document, summarizing the logistics and expenses for each event should be updated and payment arrangements for expenses should be established by the PAC and corporation.  Such payment arrangements may be in accordance with the usual and normal procedures followed by vendors generally.

Then, as soon as the event has occurred, staff should verify the amount to be allocated from the PAC to the individual candidate(s).  Any staff involved in implementing the event should compile their records regarding the dates and amounts of time spent in doing so and forward those records to the PAC in order to determine the total PAC contribution to be appropriately allocated to the candidate’s campaign(s).  A complete in-kind fundraiser document for the event that reconciles contribution amounts and expenses of the event(s) should be finalized, forwarded to the PAC and corporation staff, and maintained on file within the corporation.

Finally, the PAC should then create and deliver an in-kind fundraiser notice to the candidate(s) signifying the entire amount of the event (staff time, direct expenses, contribution amount from the corporation’s PAC, if any, etc.) as an in-kind contribution to the respective election.

Things to remember

The amounts allocated, spent and reported by the PAC as a contribution to the candidate(s) does not include the amounts contributed to the candidate(s) by attendees of the event, other than contributions from the corporation’s PAC.  Also, to establish a clear distinction between the contribution made by the corporation’s PAC in conducting the event and the contributions made by those attending the event, it is advised that corporate staff should handle only funds related to payments for the expenses incurred for such fundraising events and not contributions from individuals or other PACs made payable to candidate(s) before, during or after the events.

While these are general guidelines and procedures for hosting and implementing in-kind fundraisers, always consult your legal counsel regarding your specific event activities and details of the law before performing in-kind fundraising events on behalf of your organization.  Accordingly, the information contained herein is presented following a review of its contents by Paul Sullivan, Esq. of Sullivan & Associates, PLLC a Washington, D.C.-based law firm specializing in federal and state campaign finance law.

Trey Richardson is principal of Sagac Public Affairs, a national company providing communications, research, fundraising and management solutions to hundreds of political, non-profit and corporate organizations.  Sagac is the leader in the political community for strategy and implementation of candidate, committee and PAC finance operations.

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