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But, there are a lot of ways to improve PAC fundraising.

A Florida-based trade association voluntarily came forward to the FEC to disclose that it had reimbursed travel expenses for PAC contributors and was fined $9,000. The FEC found that the group developed a schedule for reimbursing travel expenses based on the amount given or pledged to the PAC. Under that system, the association reimbursed approximately $55,000 in travel expenses over the course of four years. Because of those travel reimbursements, the FEC concluded that the association had, in effect, reimbursed the PAC contributions. As such, it made impermissible corporate contributions and contributions in the name of another.

The reimbursement formula depended on the amount given or pledged to the PAC. Those who gave $1,000 per year, would get $750 in travel for each of two meetings, or a total of $1,500 per year. $100 contributors got $150 per meeting, or $300 total. If the association had reimbursed all directors for travel regardless of PAC contributions, that would have been fine. The problem was that the reimbursements were tied to the PAC contributions.

The FEC has said that the method for reimbursement does not matter. Bonuses, expense reimbursement, etc. are all impermissible. There are, however, permissible ways to incentivize PAC giving:

Continue Reading Don’t Reimburse Contributions. Period.

Many issues important to public charities are addressed in the platforms adopted by the political parties. As Republican, Democratic, and Libertarian parties wrap up their conventions and the Green Party meets this week, charities are asking how they can talk about the issues raised in the platforms. Charities can advance their position on the issues that they had been advocating before the platforms were adopted; however, they should consider carefully whether to opine specifically on the positions of candidates and the political parties.

Section 501(c)(3) of the federal tax code strictly prohibits all charities from engaging in activities to support or oppose candidates for public office. However, public charities, in particular, can advance public policy goals—many involving specific legislative solutions that are in the platforms.

The Internal Revenue Service (IRS) and, ultimately, the courts evaluate whether a charity improperly engages in candidate campaigns by considering the context. Could the charity’s statements about policy and candidates or political parties reasonably lead an audience to believe the organization has an opinion on the candidate or party? Facts and circumstances are considered in the context of the statement and the issue.

In considering the statement:

  • Does it identify one or more candidates or parties or express approval or disapproval for positions of a political party platform or candidate?
  • Is it delivered close in time to the election or make reference to voting or the election?
  • Is the timing of the statement instead linked to a specific legislative action by an officeholder who happens to be a candidate?

In considering the issue addressed in the statement:

  • Has the position on the issue been raised to distinguish between parties or candidates?
  • Is the issue part of an ongoing series of communications by the charity on the same issue without regard to the election?

There is a safe zone for a charity that has previously advocated for a policy position that later becomes a political party platform issue or the subject of a candidate’s position.

A charity can:

  • Use earned and paid media to advocate for the charity’s position on an issue;
  • Call for all candidates and parties to support the charity’s position without calling out particular parties or candidates or mentioning the positions they’ve already taken;
  • Send materials to all candidates and party leaders to educate them about the charity’s issues;
  • Invite all candidates in a race to meet with charity leaders to discuss the issue and visit the charity’s facilities or work projects; and
  • Ask its members or the public to educate all candidates on the charity’s issues.

Charities should take care when:

  • Inviting a current officeholder who is also a candidate to a public event of the charity;
  • Naming an officeholder in paid advertising who is up for election, because of federal and state election laws that regulate campaign speech and may be triggered, requiring disclosure and other requirements close in time to the election;
  • Holding panel discussions or debates with candidates; or
  • Providing an “open forum” on social media about issues without careful monitoring or control of comments posted.

Charities should avoid:

  • Publicizing the positions of political parties and candidates on issues on which the charity has taken a position; and
  • Holding debates or developing voter guides limited to a small set of issues, such as environmental topics, on which the charity has taken a position.

Planning and Executing Activities Involving the Candidates, Parties, and Their Positions

Many activities—such as debates, voter guides, and voter registration—can also be considered by a charity on a broad range of issues of interest to the public. The key is to remember that these activities must be nonpartisan, and not favor one candidate over another. In addition, charities should consider their underlying mission and determine whether activities like general voter education are reasonably part of the chartered purpose of the charity.

Unfortunately, the line between prohibited and permissible activities for a 501(c)(3) organization is murky and can easily be crossed if not properly managed. Careful planning, clear communication about the limitations of all involved, and control in executing the activity are critical. Now might be a good time to review the rules that will help your charity stay on the right side of the line while involved in the process.

If done correctly, 501(c)(3) organizations can:

  • Help register voters;
  • Conduct get-out-the-vote activities;
  • Publish voter guides on a broad range of issues of interest to the public;
  • Create candidate questionnaires on a broad range of issues of interest to the public;
  • Host candidate appearances that are not debates;
  • Host debates on a broad range of issues of interest to the public;
  • Conduct issue advocacy;
  • Allow leadership and staff (on their own time) to be politically active; and
  • Create an affiliated organization to engage in political activities that they cannot.

Continue reading for more information on prohibited intervention and permissible activities.

The Lobbying Disclosure Act Guidance (Guidance) issued by the Clerk of the House of Representatives and the Secretary of the Senate was updated on June 15. The updates clarify currently existing provisions of the LDA, add additional examples, replace references to the LDA with hyperlinked citations to the U.S. Code, and remove references to Line numbers (the online reporting platform does not have Line numbers for drafting reports, but the final version of the reports available on the House and Senate websites still have Line numbers).  The Guidance is available here. A brief discussion of the changes to the Guidance is below:

Continue Reading Revisions to the Lobbying Disclosure Act Guidance: What These Changes Mean for You

cleanslateFor those who have placed lobbying registration at the top of their New Year’s resolution list, New York State and New York City have made it easier to take the plunge. Starting on January 1, lobbyists and organizations that employ or retain lobbyists that have failed to register with either the state and/or city may register and file back reports without facing penalty.

New York State: This amnesty program, conducted by New York’s Joint Commission on Public Ethics (JCOPE), runs from January 1 to June 30, 2016. Entities or individuals that have previously been contacted by regulators for failure to comply with New York’s lobbying laws do not qualify. The amnesty program permits those who have never submitted required filings to apply. The amnesty covers any unregistered lobbying that has taken place since December 10, 2006.

To participate in the program, applicants must submit a form found on the JCOPE website. They must also submit (1) all registration statements and periodic reports for lobbying activity occurring between January 1, 2013 and the date of application for amnesty, and (2) applicable fees for those “old” filings. In addition, applicants must comply with a training component.

New York City: The New York City Clerk’s office has established a similar program for lobbyists and companies that should have filed a statement of registration or client annual report under NYC’s lobbying rules. NYC’s program also runs from January 1 to June 30, 2016 and covers unreported lobbying conducted from December 10, 2006 to the present.

We recently hosted a webinar on political compliance in the new election cycle. With the first criminal prosecution of a coordination case, changes in state ethics laws, and new disclosure requirements, we provided information you need to engage in political activities while staying compliant.

The slides are also available, and the following publications may be of help as well:

Yesterday, we focused on the honoring and recognizing categories of expenses that have to be reported. There are also three other categories that have to be disclosed on the LD-203 report.

  • Political Contributions: Contributions made by registered lobbyists, the connected PAC of a registrant, or a PAC controlled by a lobbyist must be disclosed on the LD-203 if:
  1. the aggregate contributions to an entity equal or exceed $200 during the six-month reporting period; AND
  2. the recipient is a federal candidate, leadership PAC, or federal political party.

Contributions to other PACs (e.g., a trade association PAC or a company’s connected PAC) from a lobbyist do not have to be disclosed. State contributions also do not have to be                 disclosed.

  • Presidential Library Foundations: If contributions to a presidential library foundation aggregate to $200 or more during the six-month reporting period, they must be disclosed.
  • Presidential Inaugural Committees: Contributions that equal or exceed $200 during the six-month reporting period must be disclosed. The Guidance makes clear that this includes payments to the official Presidential Transition Organization. It also would include payments to the official inaugural committees for tickets to inaugural events, but would not include payments to other entities that host inaugural events (e.g., a state society).

The LD-203 requires registrants and lobbyists to disclose a variety of payments made for the purpose of honoring and recognizing covered officials. Guidance issued by the House and Senate includes some very helpful examples.

Payments that need to be disclosed fall in four different categories.

  1. The cost of an event to honor or recognize a covered legislative branch official or covered executive branch official;
  2. Payments to an entity that is named for a covered legislative branch official, or to a person or entity in recognition of such official;
  3. Payments to an entity established, financed, maintained, or controlled by a covered legislative branch official or covered executive branch official, or an entity designated by such official; or
  4. The costs of a meeting, retreat, conference, or other similar event held by, or in the name of, one or more covered legislative branch officials or covered executive branch officials. Continue Reading Honoring and Recognizing

The end of the second quarter is a good time to terminate individuals who will no longer serve as lobbyists because they can end their LD-203 obligations with this mid-year report. If the individuals do not have a reasonable expectation of being a lobbyist in the current or next quarter, then the Guidance says that the individual may be terminated. A lobbyist is someone who has made more than one lobbying contact (ever) and spends more than 20 percent of his or her time on lobbying activity in a three-month period. Thus, if an individual is changing roles, or the organization has determined that the person does not (and will not in the next quarter) spend 20 percent of his or her time on lobbying activity, then termination is appropriate. Remember, an organization can always re-list the person if things change. Continue Reading To be a Lobbyist or not to be a Lobbyist

puzzle

For what seems like such a simple question, many organizations have a very hard time calculating the amount they spend on lobbying activities.

A few reminders might help:

  • Include any payments to outside lobbying firms in this figure. Even if it seems like double counting (since those firms will report the amount they receive from your organization), the LDA and guidance are clear that payments to lobbying firms must be included. Continue Reading Reporting the Amount Spent on the LD-2

Second quarter federal lobbying disclosure reports are due on July 21 and LD-203 expenditure reports are due on July 30. In addition, many states have mid-year lobbying reports due this month. We’ll have a series of posts on things to remember when preparing these reports in the next few days.

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