With the election season well underway, politically active individuals, companies and associations should be familiar with the myriad of laws governing direct and indirect political contributions. There have been significant changes in recent years to these laws through court rulings and legislation. It is important to be fully aware of the laws governing individual and corporate political activity to ensure that the legal bounds of allowable activity are not breached. Below is a brief summary of some of the more important federal election law provisions.
In 2014, the Supreme Court, in McCutcheon v. FEC, issued a ruling striking down the aggregate limits on individual campaign contributions under the Federal Election Campaign Act (FECA). There is now no limit on the aggregate dollar amount a single individual may contribute per 2-year election cycle to f federal political candidates, political action committees and parties. It is important to note, however, that the Court did not strike down the base limitations on individual contributions. Under current law, an individual is permitted to contribute up to US$2,700.00 to a federal candidate’s committee, per election. This means that, per election cycle, an individual may contribute US$2,700.00 for a candidate’s primary election and US$2,700.00 for a candidate’s general election, for a total of US$5,400.00. An individual is also permitted to contribute up to US$5,000.00 per calendar year to any multi-candidate political action committee. An individual may also contribute up to US$33,400.00 to a single national party committee per calendar year, and up to US$10,000.00 to state, district and local party committees per calendar year. Individuals may contribute unlimited amounts to independent-expenditure-only committees (Super Pacs).
Corporate Political Activity
Corporations are prohibited from using their general treasury funds to make direct contributions to federal candidates. Also, corporations, including officers, directors or other representatives acting as agents of corporations, are prohibited from facilitating the making of contributions to candidates or political committees other than through a PAC formed and administered by the corporation. Facilitation means using corporate resources or facilities to engage in fundraising activities in connection with any election. Common violations of the corporate facilitation prohibition include:
- A corporation is prohibited from allowing a federal campaign to use its facilities for political or fundraising events without receiving advanced payment for the use of the facilities. The corporation must be reimbursed by the campaign at the usual and normal rental charge.
- A corporate executive must keep his/her personal political fundraising activities completely separate from the work place. A corporate executive is prohibited from using his or her corporate title or letterhead for personal solicitation to a political fundraiser. Also, when a corporate executive hosts a political fundraiser, the invitations for the fundraiser must be sent by the executive in his or her personal capacity. The corporation’s computers and other equipment should not be used by the executive to send invitations.
- Corporate executives are prohibited from assigning a subordinate to assist with the executive’s personal political fundraising activities during work hours unless the corporation has received advanced reimbursement from the political campaign. Even if the corporation is reimbursed for such services, the executive may not use coercion to urge anyone to engage in fundraising on behalf of, or make a contribution to, a candidate or political committee.
- Corporations are prohibited from reimbursing or rewarding its employees for making political contributions. This ban includes providing bonuses to employees who make political contributions. There are no exceptions to this ban. Violations of this rule have resulted in substantial civil and criminal penalties being imposed upon corporations.
Corporations are permitted to use its treasury funds to make direct independent expenditures expressly advocating the election or defeat of federal candidates. However, such expenditures may not be coordinated with political candidates or committees. For example, corporations are allowed to directly fund independent media communications including, but not limited to, radio, television, internet and mail.
There are a number of additional rules governing corporate political activity. We urge you to seek counsel before engaging politically to ensure that you are compliant with the legal limits and restrictions.