Nonprofits May Not Be Able to Increase Dues for a PAC

Paul F. Bohn, Esq.

Recently, the Michigan Secretary of State Elections Division responded to the question of whether a nonprofit could specify a portion of a dues increase for members to be dedicated for a “separate segregated fund” (i.e. a PAC), without violating the Michigan Campaign Finance Act (MCFA).

The preliminary response from the state issued last week suggested that any portion of a dues increase specifically dedicated for a nonprofit’s PAC could violate Michigan law, if the dues increase was paid to the nonprofit first.

That could sound a bit confusing – what does it matter whether the dues increase go to the nonprofit general treasury fund first, or to the separate segregated fund first?

Nonprofit corporations – or any corporation – setting up a separate segregated fund can only use their general treasury funds to pay for the establishment, administration, and soliciting of contributions for that separate segregated fund. Therefore, if a nonprofit transferred money from its general fund directly to their PAC for any other purpose, it would violate the MCFA prohibition against treasury funds being used for campaign activity.

In its response, the state said that this prohibition applies even if it is made clear that member’s contributions from the dues increase to the PAC are voluntary.

To clarify, members of nonprofits can donate directly to the separate segregated fund of the nonprofit, as long as it is voluntary and not a condition of membership. In addition to members, a nonprofit may also solicit and accept funds for its PAC from stockholders, employees with non-clerical responsibilities, officers and directors of the corporation, and other separate segregated funds.

For all of the above, contributions must also be voluntary, and not a condition of employment. A separate segregated fund can be a great vehicle for individuals and businesses to advocate for their political preferences in an election – but the key is staying in compliance.

Nonprofits and other corporations need to keep pace with the changing landscape of campaign finance. If you are in need of legal counsel or want to set-up a separate segregated fund or other political committee, contact Fausone Bohn, LLP today and we can help you accomplish your goals and advise you on best-practices to stay in compliance with the law. Contact Jim Fausone or Paul Bohn today at (248) 468-4536, or visit us online at www.fb-firm.com. 

Wisconsin Governor at the Center of Alleged Campaign Finance Conspiracy

Matt Worley, Esq

 

Wisconsin Governor and potential Republican candidate for the presidency in 2016, Scott Walker, appears to have found himself in the center of an alleged campaign finance criminal conspiracy.

The conservative groups in this case are called “independent expenditure committees,” often referred to as Super PACs.  This type of political committee is allowed to spend unlimited amounts of money advocating for or against candidates for office and for ballot issues.  However, there are very specific requirements that these groups must follow. Specifically, they are prohibited from coordinating in any way with a candidate’s campaign.  This means that they cannot communicate or work together with the candidate himself.  They are also prohibited from coordinating with other committees that support specific candidates.

Prosecutors allege that Governor Walker and several of his top aides did just that – illegally coordinated fundraising and spending among 12 conservative groups in order to help his campaign.  It is also alleged that these groups coordinated with several state senators who faced recall elections in 2011 and 2012.

Responding to these allegations, the independent groups do not deny that they coordinated; however, they do deny the coordination was illegal.

The moral of this story is that political campaign financing regulations, and specifically those relating to political committees, are complex.  Attempting to operate a PAC, without knowledge of the many laws and regulations, creates the potential for disaster.  As the situation with Governor Walker illustrates, violators may face fines, fees, and even criminal charges.

If you are interested in creating a political committee, but don’t know where to start, contact the experienced legal professionals at Fausone Bohn, LLP.  We can help you create your PAC and set up a compliance program to satisfy the state’s reporting requirements.  Contact John Walsh or Matthew Worley at (248) 380-0000 or online at www.fb-firm.com. 

 

To read more on the Governor Walker case, please visit:

http://www.jsonline.com/news/statepolitics/john-doe-prosecutors-allege-scott-walker-at-center-of-criminal-scheme-263839791.html

VFW PAC in Dispute

by Jim Fausone

The Veterans of Foreign Wars (VFW) set up an independent political action committee (PAC) years ago. The VFW has about 1.5 million members, and the endorsement from its PAC is usually widely advertised by the candidates. Now the VFW PAC is being challenged for endorsing incumbents in Congress.

VFW's commander in chief, Richard L. Eubank, and two other officers called for the rescission of the endorsements and said that the endorsement process "unintentionally provided favoritism to the incumbents." It is hard to get real change at VA when groups like this PAC simply rubber stamp the incumbents. If you want to read more about it:

http://ap.stripes.com/dynamic/stories/U/US_VFW_PAC_ENDORSEMENT?SITE=DCSAS&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2010-10-13-12-32-47