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Archive for the ‘Compliance’ Category

What is a PAC Solicitation?

Monday, August 30th, 2010

Corporations and trade associations may solicit funds for their PACs only from a restricted class of employees or members.

So just what is a “solicitation”? (I’ll address “restricted class” in a subsequent post.)

Federal Election Commission (FEC) rules and court decisions construing what constitutes a solicitation for the PAC are surprisingly broad. An e-mail or letter asking employees or members to write a check or sign up for payroll deduction is clearly a solicitation. But many other activities such as routine government relations or grassroots web sites or newsletters and conference or meeting invitations can easily include inadvertent PAC solicitations.FEC4

Among the examples the FEC has concluded are solicitations are:

• A simple announcement of the time, location, and featured guest for a PAC fundraiser (AO 1976-27);
• Disclosure of the fact that the PAC may accept unsolicited contributions;
• Mentioning a PAC fundraiser in a convention mailing (AO 1976-27);
• Setting up a PAC Booth at a convention (unless contributions from non-restricted class members are declined)(AO 1976-96 and TK);
• Praising employees who have contributed to the PAC (AO 1979-13).

The FEC recently summed up its PAC solicitation rule by saying that communications that “encourage” or “facilitate” contributions to a PAC are solicitations.

In a somewhat surprising development a U.S. District Court recently concluded the “encourage or facilitate” test may not go far enough. The court ordered the FEC to explain why it did not also prohibit communications merely “informing” persons of fundraising activity as solicitations. (Utility Workers v. FEC, DDC 2010)

These rules can be particularly problematic for trade associations due to the “prior approval” requirement for soliciting employees of member corporations. Many announcements that association managers might consider routine (and even necessary) communications with members (such as publicly thanking members who contributed to the PAC) can run afoul of the very broad solicitation standard.

Aristotle’s professional services professionals can assist PACs in navigating the solicitation rules in their fundraising campaigns, web sites, newsletters, and other communications, helping craft effective and fully compliant PAC campaigns. Please contact Jeff Ashe (803-524-2198), Katie Anderson (202-758-9218) or Dave Mason (202-543-8345, x 242) on the professional services team for a review of your PAC communications and advice about making your PAC more effective while keeping it compliant.

David M. Mason, J.D.,
Senior Vice President, Compliance Services

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Posted in Compliance, FEC, Fundraising, PAC, Staff | No Comments »

One PAC’s $900,000 Oops!

Wednesday, August 11th, 2010

Some recent news stories and editorials give the impression that the Federal Election Commission (FEC) has virtually gone out of business.

An early August enforcement announcement from the FEC provides a striking reminder that a lax approach to FEC compliance can lead to very high costs.

The American Resort Development Association’s Resort Owner’s Coalition PAC (ARDA-ROC PAC) paid $300,000 in penalties and disgorged over $600,000 on account of a series of violations of FEC rules between 2003 and 2008. The PAC’s violations included misstatements of financial activity, receipts of impermissible contributions, and improper solicitations.

One remarkable aspect of this case, given the high penalty, is that nearly all of the contributions were small – almost all under $200 – and there was evidently no malicious scheme involved. The PAC simply made some small mistakes, over, and over, and over again until they snowballed out of control.

The impermissible contributions occurred because the PAC lacked a system to review the thousands of small contributions to sort out those from corporations or overseas. The improper solicitations arose because the PAC failed to include one or more of three disclaimer statements the FEC requires for a combined dues/PAC solicitation.

These are mistakes any busy PAC administrator could make, and they underline the value of professional filing and compliance assistance. For ARDA-ROC PAC the consequence of failing to have professional PAC administration and regular review of PAC activities was extraordinarily large: Call Aristotle for a review of your PAC operations and compliance to avoid letting small mistakes become six-figure headaches.

David M. Mason, J.D.,
Senior Vice President, Compliance Services

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Posted in Compliance, FEC, PAC | No Comments »

Digital Politics

Tuesday, June 1st, 2010

Our CEO, John Aristotle Phillips, will be a guest on the Digital Politics internet radio show and podcast this afternoon discussing fundraising, voter targeting, and GOTV efforts. Go here to listen live at 12pm PST/4pm EST: http://wsradio.com/. You can also hear the podcast here.

John will be joined on the show by Stephen Hershkowitz, partner of the law firm Sandler, Reiff and Young and former assistant general counsel at the Federal Elections Commission; and Peter Pasi (Executive Vice President) and Ben Olson (eCampaign Director) from emotive.

________

Update

The podcast is now live – check it out! http://wsradio.com/internet-talk-radio.cfm/shows/Digital-Politics-Radio.html

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Posted in Compliance, Events, FEC, Fundraising, Political Campaigns | No Comments »

Independent Expenditure Reporting Using Form 5

Tuesday, April 6th, 2010

Most committees are probably well versed on the standard filing forms Form 3 or 3X.  There is, however, a different form for committees to disclose independent expenditures. Form 5 isn’t used often, but knowing how to fill it out correctly can save you a lot of time.

Form 5 is used to disclose the quarterly reports of independent expenditures (IE), or to file a 24- or 48- hour notice of an IE. A 48-hour notice is required anytime a committee spends $10,000 or more on a specific election during a calendar year. If the date of the IE is within 20 days of a specific election then the committee must file a 24-hour notice once the committee spends $1,000 or more.

Form 5 starts out pretty standard. The form is split in two parts. Schedule 5-A asks you to itemize receipts that were expressly given to the committee for the purpose of running an IE. This is not an itemization of all your committee’s receipts, simply those that were donated just for independent expenditures. Schedule 5-E is the itemization of all the disbursement to vendors for the purpose of running an independent expenditure. 

The difference with Form 5 is at the bottom of each transaction. For each vendor transaction on Schedule 5-E, you will have to list the name of the federal candidate supported or opposed by the expenditure, and check whether the disbursement was intended to support or oppose the candidate. Another part that must be filled out for each transaction is the office being sought by the candidate and what cycle (Primary, General or other) the disbursement occurred in. 

The reason that filling out the Office Sought and Cycle Period fields is so important is that Form 5 calculates aggregation differently than almost all other FEC forms. Most FEC forms fill out an aggregation field with the amount paid to a specific vendor during a cycle. Form 5 calculates the aggregation field by the election in which the independent expenditure occurred. That means that all of the transactions that make up any independent expenditures for say the Ohio Senate Primary 2010 should be added together, and have a different aggregation total than the Ohio Senate General 2010. That is why Form 5 has the aggregation field called “Calendar Year-To-Date per Election for Office Sought”. It is important to know that currently the software provided by the FEC, FECFile, does not correctly calculate these fields. The FEC is aware of this problem, and suggests that until a patch is released, committees file a memo entry with any report stating the correct aggregation totals. Recently, Aristotle launched their own version of Form 5 through our 360 software that does calculate the aggregation fields correctly and is fully compliant with FEC standards. 

If anyone has any questions about Form 5 or other independent expenditure questions feel free to give me a call anytime at 202-543-8345 ext. 229.

John Mannion
Outsourcing Manager

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Top five things to do before your FEC filing

Thursday, September 10th, 2009

Many people tend to get overwhelmed or over stressed when it comes to FEC filing. Most PACs keep a ledger of all contributions and checks as they are received or issued. Here are 5 tips to make generating your FEC report easier using a ledger and a few tips of the trade:

1)      Make sure all payroll files are imported correctly and match what is in the original file. Also make sure that all of your counter check deposits are entered into your data.

2)      Make sure that all address, employer, and occupation information is entered into your data for all contributions into the PAC.

3)      Make sure all checks are entered correctly in the data and are coded for federal, state/local; contribution to committee, operating expenditure, etc.

4)      Reconcile all of your payroll deposits, counter deposits, and cleared checks to your current monthly bank statement.

5)     Compare your monthly receipts and disbursements to what is on your contributions/disbursements ledger for the month. If it matches, generate your report!

Happy filing!

- Elizabeth Yorns

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There’s no such thing as a dumb compliance question

Wednesday, September 9th, 2009

work folders overwhelmedMy life is busy – between home and work, compliance reports and deadlines, keeping up with the kids and their school work… it can be difficult to balance everything!

Much like raising a family, compliance requires constant attention – state reporting requirements are always changing, if you blink an eye, you just might miss something.

So my quick tip of the day? It’s a pretty simple one. If you’re overwhelmed with reports or get lost in the details, don’t be afraid to ASK QUESTIONS!  Like I tell my kids, “there’s no such thing as a dumb question.”  The state (or states) in question can often answer your questions if you give them a call, or you should always feel free to contact us (sales@aristotle.com) and one of our compliance experts can talk you through whatever challenge you’re facing.

Good luck!

- Kerri Gurinski

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