Understanding Administrative Support for PACs

ElectaFile Short Summary: “Administrative Support” is a generic pair of words but it is a significant piece of information that NC PACs must report to the State Board of Elections…

“Administrative Support” is the term for the financial and labor support that a parent entity of a political action committee provides to that PAC. It must be reported as part of the disclosure report that PACs make in North Carolina.

You first see it on Form 2100D which is the Statement of Organization for Political Action Committees….indirectly. Here’s what we mean: to understand “administrative support,” you also need to know the concept of “parent entity.” Essentially, NC law recognizes and acknowledges that many PACs are related to businesses operating in NC. While corporate contributions to political committees are generally prohibited, “administrative support” constitutes a narrow exception.

Parent entities—provided you disclosed them on the Statement of Organization for the PAC—are allowed to provided “administrative support” so long as that administrative is disclosed and within allowable limits.

Here’s the State Board Manual’s paragraph on administrative support from Page 102:

PACs report the dollar value of administrative support as part of their regular disclosure report. For paper filers it’s known as CRO-1710. For electronic filers, the data appears on the State Board’s website like this screenshot which is public:

So How Do We Figure the Dollar Amount of Administrative Support? We now know how to report administrative support using the forms. The tough question often is “how much…” The State Board puts this onus on the parent entity to value the support it provides, and the parent entity has to document it to the PAC.

Valuing the support is more art than science but fiscal prudence is the order of the day. In the screenshot above, we don’t know how the cited committee calculated that number but we can make some guesses based on State Board guidance.

Here’s an Example: if employees of the parent are doing PAC work, the employees’ salary is knowable. And its a math problem to multiply the time the employee devotes as a percentage of his or her work times the salary he or she received for the relevant time period. Similarly, if professional legal or accounting services are provided, assigning a market value to that time is calculable because prevailing billing rates are knowable.

The key to valuation is to have the parent entity represent in writing what that number is. As with most things in reporting, transparency and reasonableness are the orders of the day.

We’re going to write separately later on more guidance regarding calculation but for now PACs and their parents should be reasonable in valuation, show their work, and be prepared to explain it. Eliminate outlying statistics on the front end…for example, charging a $1.00/hour for legal services is an outlier. Renting office space for a penny is an outlier. Similarly, reporting $1,000,000 for paper and staplers is an outlier. As long as you stay away from outliers and remain thoughtful, you’ll be in good stead.

Drop us a line if you have administrative support tips of the trade or questions. We’ll get you to the right place!

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