NC Campaign Finance Compliance: Understanding Who Can Contribute to Candidate Committees...

ElectaFile Short Summary:In the merry wilds of NC campaign fundraising, there are contributors and prohibited givers. Generally, the prohibited givers are a very lawyerly-described group of non-folks called “non-natural persons”. This means big corporate cannot give contributions to most committees. Nearly all humans can contribute to candidate committees.

Happy Monday morning! One thing we’ll be thankful for this week is all the support Matthew Lesko still gets from our last post. IYKYK.

Today, we’re going to try to drill down on who and what entities can donate to your candidate committees.

Generally, natural persons (in other words, “humans”) can contribute to candidate committees in North Carolina.

Here’s the State Board Manual’s Quick Hitter on the Who’s In and Out Discussion (note that the listed prohibited givers are notably not human):

Let’s Clear Some Underbrush About Human Contributors: The narrow exception to the general rule that humans can contribute is registered lobbyists cannot contribute to legislative candidates or council of state candidates. Period. 4-Eva.

Nor can lobbyist principals or lobbyist agents (this is a concept from lobbyist registration law over at the Secretary of State’s Office…) contribute during the blackout period discussed below. “Lobbyist Principal” just means the person or company that hires the lobbyist. Read a bit further on this below:

What About A.L.F.? Children of the 80s and those with access to classic TBS Superstation remember the TV tale of Gordon Shumway aka ALF who came to live with an American suburban family. Hilarity ensued. We’ll use Mr. Shumway to teach an important caveat to the rule that generally humans can contribute to candidate campaign committees.

While we are not experts in actual alien law, our thinking is A.L.F. cannot contribute. While it is not expressly prohibited by the law (A.L.F. per se is an alien life form and therefore not a corporation), giving in the name of another is clearly prohibited. You cannot hand money to someone else to contribute to a campaign. If A.L.F. contributed, our thought is he couldn’t possibly have a bank account and therefore any money to contribute, thus, if A.L.F. purported to max out to a campaign committee, someone very likely would be using A.L.F. to give in his name. This is not allowed. Sorry A.L.F.

But What About Big Corporate? Your default rule should be that corporations, LLCs, businesses d/b/a a business name, and just about any other “entity” cannot contribute to your candidate committee. This means GloboGym is not coming to your fundraiser!

OK. No GloboGym Big Corporate Donors, But What About Political Action Committees? PACs are not human. We agree. PACs are one example of non-human contributors that are acceptable contributors subject to the contribution limits to candidate campaign committees.

PACs Have a Catch Though…PACs that have hired a lobbyist or whose parent entity has hired a lobbyist cannot contribute. It’s not just checks written by the PAC during the blackout period but also checks delivered during the legislative session.

Key Point: While it is technically not all PACs that are prohibited from giving while the legislature is in session, in the real world, practically every PAC that exists has a parent entity that has hired a lobbyist. So, for you, assume a PAC that tries to contribute during or near the legislative session is a prohibited giver.

The Legislative Restricted Period is tricky. Legislative enthusiasts know that calculating when the legislature is “in session” for purposes of the PAC window is only slightly less complicated than calculating the date for Easter in the year 2139 (it can be done…). For today, though, just understand that PAC donations have an “on/off” switch by date that is knowable and you should gut check yourself and ask your donor before accepting PAC checks near the legislature coming in or going out. We can refer you to a dozen professionals—regardless of party—who live and die by the calculation of the PAC restriction window. The political bros know their stuff.

What About Political Parties Donating to Campaigns? Great question. The actual Political Party Committee, i.e., the executive committee at the state, district or county level, may make unlimited contributions to candidate committees. However, there’s a tricky part here, too: “clubs” are subject to the contribution limits.

This means that the Republican County Executive Committee in Lenoir County can make unlimited contributions to candidate committees. However, the Republican Cat Enthusiasts of Caldwell County, which is a club, cannot. The Cat People are limited as to how much they can donate.

What Happens if You Get a Contribution from a Prohibited Giver? If you get a contribution from a prohibited giver? One way or the other you must return it.

If you catch the donation before the check is deposited or the credit card is processed, many treasurers will just return the check and make a note in their file. Or don’t swipe the credit card!

If you figure out that a donation is prohibited after the deed is done, you’ll need to issue a refund and record it as an expenditure to be reported. All good. These are more common than you think, but you have to make sure the money is returned.

What Happens if You Get a Contribution in Excess of the Limit? Same thing. You have to refund it. The onus is on the committee to keep track of donor limits. It’s not the donor’s responsibility in the eyes of the State Board. That may seem a bit unfair but it is the only way enforcement can work.

What Happens if You Get a Contribution During a Restricted Period? Give it back. That is the cleanest move. Leave no doubt. It is a hassle for sure, but that is the best way to avoid any factual questions from the State Board about whether your committee received a PAC check during the legislative session.

Final tip: if you’re refunding or returning funds, make notes that you will keep with you in case you need to remember later what you did.

That’s it for today. Prohibited Givers are tough sledding. Your default should be if you receive a donation from a non-human, go through your checklist of whether the donor fits into an exception. Err on the side of doing your homework.

PS: We’ll write about building funds that can receive corporate funds later. For purposes of today, focus on the main thing of “big corporate cannot contribute….”

Happy Thanksgiving to All of You! We’re thankful for this community!!!

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