Using Campaign Funds the Right Way

ElectaFile Short Summary: One key challenge for treasurers is knowing which expenses are appropriate for campaign funds….There’s a simple test but it’s best illustrated with examples…We incorporate Ahoskie, Supply, and Kenny Chesney to prove our points!

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Some campaigns have thousands of dollars flowing through them. Contributions come in and expenses go out the door.

Knowing what campaign dollars can and cannot be used for is critically important. Campaign funds misuse is the most likely pathway to big trouble for candidates, political parties and PACs. Careers have been ruined over the misuse of campaign funds.

This issue is important to the ElectaFile Team because it’s the one issue—bar none—most likely to transform a bad bookkeeping situation into something requiring you to see the judge.

Today’s we’re focusing on 14 measly but important words located in the General Statutes.

Here’s the State Board’s formulation of the rule in an Opinion Letter from this summer:

The 14 words are straightforward. The words “resulting from the campaign for public office” and “resulting from holding public office” have spawned more headaches and heartaches across North Carolina than even the three words State, Duke and Carolina combined.

This is so because every expenditure of campaign funds must result from, i.e., be caused by, the campaign or the service in office. This has been referred to by some as the “but for” test: if you would not have had the expense but for your campaign or service in office, then you’re likely in the clear. If, however, you would have that expense either way, you’re likely not.

Like many tests with which lawyers are familiar, the “but for” test is best understood by example—i.e., “you know it when you see it…”

Here are some examples:

*Driving from your house in Ahoskie to Supply to attend a fish fry for libertarians while you’re campaigning for Court of Appeals likely passes the “but for” test. That is, you likely wouldn’t have driven all the way from Ahoskie to Supply on a Tuesday night to eat flounder if you weren’t running for office. This means your mileage, your ticket to the fry, even perhaps some nabs you bought on the way there, all likely pass the “but for” test.

*Your filing fee to seek office likely passes the “but for” test.

*A hotel at the state convention where you’re speaking and campaigning likely passes the “but for” test.

*You’re from Jackson Springs and you pay for a hotel or an apartment or home in Raleigh where you stay when you’re doing legislative business.

Some Examples likely do not pass the test:

*You’re tired from your campaign, so you take your family to Disney World in January. Your election is not until November, and you’re not running for Chief Mouse. This looks like a personal expense that you would have incurred either way.

*You buy a new set of tires for your ‘57 Chevy. You’re not driving it on your 100 count tour nor are you driving it in the Decoration Day Parade. You store it in Santa Monica, California. This sure looks like a personal expense.

*You want to spring for Kenny Chesney tickets for you and your college buddies. Kenny is not endorsing you—he doesn’t even know you’re running! This sure looks like a personal expense.

The tricky examples are the areas where it pays for a treasurer’s peace of mind to think twice and document:

*Going out to dinner in your hometown. On the one hand, you’re in your hometown and you have to eat. Thus, mere food doesn’t pass the “but for” test. Certainly not groceries at your house for you and your family. However, in this example, the attendees at the dinner are you, the incumbent who is thinking of endorsing you and your political consultant. You’re there talking shop. Likely passes the “but for” test.

*Renting a vacation house for a week at Emerald Isle. On the one hand, if you took your family and spent the week playing mini-golf, doesn’t sound like it passes. On the other hand, what if there’s a week long conference for one party’s candidates to meet convention delegates in an informal setting? You might not have rented the house at all if you weren’t politicking.

These closer cases turn on instances where a reviewer might question whether the expense was personal or truly necessary because of the campaign. In such instances, use your good judgment. The closer it is—if you decide to authorize it or reimburse, document, document, document the rationale and the benefit to the campaign.

If you document the close cases in real time, you’re not scrambling and panicking later if the State Board auditors come calling. The “ounce of prevention” rule wins nearly every time!

One easy way to study up on the “but for” test is to read about more examples in the State Board’s library of opinion letters located at this handy link.

That’s all for now—put some thought into the fairway of “expenses” now so you’re not ripping out your hair later.

If you have wacky situations you’d love us to write about, please let us know.

See you Monday!

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