Publications
A Campaign Finance Primer
Certain corporate communications are protected under federal law and exempt from the definition of contribution. A corporation may freely communicate about campaigns with its restricted class, which includes its stockholders and executive and administrative personnel and their families. Such communications may
- expressly advocate the election of a particular candidate,
- solicit contributions on behalf of a candidate and
- be coordinated with the candidate’s campaign.
Any communication beyond the restricted class that expressly advocates the election or defeat of a particular candidate or solicits contributions on behalf of a candidate is an illegal corporate contribution. However, under federal law, a corporation may allow a candidate to “meet and greet” employees. The candidate, but not the corporation, may advocate his or her own election and request contributions but may not accept contributions from employees on the premises.
Individuals are free to volunteer their time in support of federal candidates. Because of the ban on corporate contributions, however, corporate resources may not be used to subsidize these individual activities. Under federal law, employees may make occasional, isolated or incidental use of corporate facilities for campaign purposes.
Employees may use regular earned vacation or personal days to work on a campaign but may not be given paid leaves of absence. The value of an employee’s salary would be considered an illegal corporate contribution. Even an unpaid leave of absence could pose problems because the cost of the employee’s health insurance and other benefits could be considered an illegal corporate contribution.
An employee may not use corporate resources (paper, envelopes, copying machines and computers) for campaign-related activity unless the corporation is paid for such services by a person or entity legally authorized to make a campaign contributions such as a political action committee. Corporate meeting rooms can only be made available to a campaign on terms equal to those offered other civic or community organizations.
A corporation may form a political action committee or PAC to contribute to campaigns. A corporation that intends to contribute to both federal and state elections must form two PACs. The PACs must have separate bank accounts and maintain separate records but may have the same officers. Under federal law, a corporate PAC is generally limited to soliciting contributions to the PAC from members of its restricted class. All contributions to the PAC must be voluntary, and the corporation may not reimburse employees for their contributions to the PAC.
If corporate individuals wish to host a fund-raiser for a particular candidate and their company has a PAC, the PAC may pay for the invitations, food, beverages, meeting hall and other items necessary to sponsor the event. These expenses count towards the PAC’s contribution limit and must be reported. If the company does not have a PAC, the individuals must pay for the fund-raiser.
A “multi-candidate” federal PAC may give up to $5,000 per election to candidates for federal office. To qualify as a multi-candidate PAC, the PAC must have
- received contributions from more than 50 people,
- been registered with the FEC for at least six months and
- made contributions to at least five federal candidates.
A nonmulti-candidate PAC may contribute up to $1,000 per election to candidates for federal office. Individuals may also contribute up to $1,000 per election to candidates for federal office. These limits apply separately to each primary, special, run-off and general election.
A review of corporate policies and procedures for campaign contributions and employee campaign activity should be included in a company’s overall compliance plan. With the increased scrutiny being given to campaign contributions at both the federal and state level, knowledge of the law and employee education are the best tools to avoid inadvertent violations.