Political action committees (PACs) play an important role in the American political landscape, enabling groups to pool resources and support candidates, legislation, and other political initiatives. Federally connected PACs are governed by the Federal Election Commission (FEC).
The FEC has a stringent set of regulations that dictate everything from the people you can collect donations from to how much you can contribute to a single campaign or candidate. Here are some tips to help you maintain compliance when managing a federally connected PAC.
Know the Basics
Familiarize yourself with the basics of political action committees. Learn foundational concepts and terms like “contribution limits” and who is eligible to donate to your PAC.
For instance, most political action committees can only contribute up to $5,000 per year to a party or candidate. However, super PACs have no contribution limits. They face other restrictions that limit their ability to give funds directly to candidates.
Choose the Right Type of PAC
Determine what type of political action committee best aligns with your goals and mission.
A connected PAC is one of the most common types of federally connected committees. These entities are directly affiliated with a union, trade association, or corporation. Connected PACs can only accept donations from individuals who affiliate with their organization.
Non-connected PACs can accept contributions from the general public, as they aren’t linked to any union or corporation. However, they are subject to the $5,000 annual contribution limits, as are connected PACs.
Super PACs can raise and spend unlimited amounts of money from virtually any donor. They can use these funds to advocate for or against candidates or issues. They aren’t allowed to donate funds directly to candidates, nor can they coordinate with a candidate’s campaigns. Instead, all donations must be used for independent campaigning and advertising efforts.
Hybrid political action committees combine the features of traditional and super PACs. They are allowed to run an unlimited independent expenditure account and a separate account for limited contributions to candidates.
Managing a hybrid PAC can be exceptionally complex, as the entity must avoid commingling funds and keep two separate sets of accounting records.
Establish a Clear Governance Framework
After you’ve formed your political action committee, you’ll need to create a set of policies and rules to promote compliance. Establish a committee responsible for running the PACs day-to-day operations. Every member should have a solid understanding of FEC regulations and the authority to implement governance procedures.
Establish written policies for managing your PAC. These should include guidelines for fundraising, contribution limits, and record-keeping requirements. Regularly review and update your policies to ensure they remain current with federal regulations.
Maintain Accurate Records
Accurate record-keeping is crucial for PAC compliance. Maintain detailed records of all contributions you receive and any expenses your committee incurs. You’ll need to document the names and addresses of contributors, as well as the dates and amounts of their donations.
You must record similar details for each donation. Be specific and maintain meticulous records in case of an audit.
Use the Right Software
Managing a political action committee and keeping up with the FEC’s stringent compliance requirements can be incredibly challenging.
Manually tackling your compliance hurdles opens the door for data entry errors and can expose you to fines or other penalties. Avoid these challenges by using reporting and PAC management software.
Aristotle offers FEC reporting software that makes it easy to create and maintain detailed records. Our dynamic solution is user-friendly and seamlessly integrates with other political action committee tools, including Aristotle 360 PAC, the only software you need to run a successful campaign.
Follow Contribution Limits
Contributing too much to a political campaign represents one of the most egregious violations a PAC can commit. Be aware of the contribution limits for both individuals and organizations, both of which are set at $5,000 per year per entity for the 2024 election cycle.
Regularly monitor contributions to ensure that they do not exceed legal limits. Implement a system of checks and balances to catch any over-contributions before they are accepted.
Get Your Reports Filed on Time
The FEC strictly enforces all filing deadlines. If your political action committee doesn’t file its documents on time, you could face major penalties, including an audit or fines.
Make sure you submit detailed, accurate, and complete reports. Errors or omissions can trigger an audit.
Educate Your Team
Knowledge is power, especially in the tightly regulated world of political action committees. Ensure that everyone in your PAC understands basic compliance requirements. Provide regular training sessions on FEC regulations, reporting rules, and contribution limits.
Create resources your team can reference if they have questions or concerns. Make sure to update these tools periodically to ensure they are consistent with FEC regulations and other relevant laws. Consider subscribing to FEC newsletters and attending webinars to improve your compliance posture.
Schedule a Demo With Aristotle
Creating a political action committee can help you and your supporters contribute to important campaigns and affect meaningful change in your community. However, it’s vital that you make compliance a priority so you can avoid audits and preserve the integrity of your PAC.
Aristotle can help support your committee’s mission and keep you in compliance with our FEC reporting software platform and expert Compliance Outsourcing team. Learn more today.
