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| Best Practices: Politics |
Give Wisely
Jill Duman
01/01/2008
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Furthermore, the scrutiny of 527 organizations by the
commission has essentially closed what many believe is a loophole in election
finance law. "It has, in effect, shut them down as a vehicle," says Jan Witold
Baran, a consultant in Washington, D.C., who advises corporations, political
groups, trade associations, PACs and individuals on compliance. As a result,
Baran advises that donors make contributions to 527 groups with great caution. The IRS has also indicated that it may begin pursuing its own investigations
into complaints about tax-exempt groups engaging in illegal political
activity—further evidence of the quagmire that political giving has become.
Dos and Don’ts
Current interpretations of McCain-Feingold provisions already
require that donors navigate a confusing morass of overlapping
inflation-adjusted donation limits. For example, an individual donor may give
$2,300 to each presidential candidate committee per election—for a total of
$4,600 during this election year, when there is both a primary and general
election. Donors may make their general-election contributions prior to the
primary. (If the candidate is not nominated, there are rules about how that
money should be returned.)
(Click image to enlarge)
An individual donor can also contribute up to $28,500 per
calendar year to a national party committee, up to $10,000 (combined) per
calendar year to local, district and state party committees, and up to $5,000
per calendar year to any other political organizations. But the combined
donations cannot exceed a biennial limit of $108,200. "When it comes to
individual contributions, the blunders are always the same," Baran says. "People just don’t keep track of the contributions they made, and they end up
going over their aggregate limits."
Steve Churchwell, a partner in the law firm DLA Piper and a
general counsel for California’s Fair Political Practices Commission from 1993
to 2000, says that when campaigns have activities that span two calendar years,
even a contributor who participates at a modest level could unknowingly exceed
the limit of $2,300 per candidate per election by donating at several events. The ease of making credit card contributions through the Internet exacerbates
this problem. Many sites are not traditional PACs, but rather act as conduits to
particular candidates.
There are still other restrictions that donors need to
consider. Any donation, including the use of a jet, supplies or materials—even
the food or drink donors serve at parties (limited to $2,000 per year)—may count
as contributions against the biennial limit. Nominal fees for room rentals do
not count as contributions. "A contribution is anything of value, so it’s not
just the checks they write," Baran says.
If a contributor sells an item or service to a committee, that
item or service becomes a donation if the donor asks less than the customary
price. Legal and accounting services may be contributed to a candidate or PAC,
but only if the services are for the purpose of complying with federal campaign
finance laws, and do not further the election of a federal candidate. The
campaign that receives the service must report its value, based on the amount
paid to the people who provided the accounting or legal service by their
employers. "Generally, the rule is fair market value for anything that is
nonmonetary," Churchwell says.
Big-Donor Blues
Before making campaign contributions, consult an
attorney.
Donors who want to have a
substantial impact on federal elections are finding that they need expert help
to handle and track their contributions—especially as the names of high-profile
donors crop up in database searches regularly publicized in news reports and
disseminated on the Internet.
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