With important federal and New Jersey elections quickly approaching, and people feeling increasingly comfortable returning to the office, many businesses may be considering hosting a political fundraiser in their offices. Before your business hosts a political candidate for a fundraiser in the office this fall, the following pointers will help ensure a successful and compliant event.
Under the laws that apply both to federal and New Jersey candidates, a contribution can be broader than just writing a check to a candidate or political committee. Instead, in-kind contributions—that is, contributions of goods and services—must be tracked and reported. For example, an individual who lets a campaign use his or her vans for free on election day has made an in-kind contribution to the campaign, which should be calculated as the fair market value of the goods or services (in this example, the amount that it would cost the campaign to rent vans for the day).
When it comes to hosting a political fundraiser in the office, two common questions arise to determine whether an in-kind contribution has been made. First, there will likely be food and beverages served at the event. Who is paying for these refreshments? If the campaign pays for the food, there is no in-kind contribution made because the campaign has handled that expense directly. But if the business purchases food for use at the campaign event, the cost of the food would be an in-kind contribution from the business to the candidate. Similarly, if an individual pays the caterer directly, that individual has made the in-kind contribution to the candidate.
Second, it is important to determine whether use of a conference room or event space in an office would itself constitute an in-kind contribution. If the business has a standard fee for use of the room, then the campaign can either pay the fee to the business or the business can make an in-kind contribution to the campaign by letting the candidate use the room without charge. The trickier situation arises when there is no standard fee to use a conference room. In that situation, the business should consider all relevant factors, including whether the business typically lets outside groups use a conference room without charge, to determine whether an in-kind contribution has been made.
Why is it important to know whether an in-kind contribution has been made? Remember that in-kind contributions are contributions—if a business has already maxed out to a candidate by writing a check, then the business purchasing food for a campaign event may itself result in an excessive contribution that violates campaign-finance limits. In addition, for a business that holds governance contracts, it is also crucial to ensure that any in-kind contribution does not exceed reduced pay-to-play contribution limits. Last, some businesses are prohibited from making contributions at all—this would include corporations when it comes to federal candidates, or highly regulated businesses (such as bank, insurance companies, and utilities) when it comes to New Jersey state or local recipients.
Simply buying food for an event can cause campaign-finance concerns or even jeopardize eligibility for government contracts.
When hosting an event at the office, people may get caught up in the excitement of hosting a political candidate. This may mean that people who don’t normally participate in the political process may consider making a contribution for this event.
Because New Jersey’s varying pay-to-play laws can treat a wide array of individuals as covered contributors (officers, owners and partners, and even individuals who earn more than $100,000 per year) it is important that all contributions made at an event are reviewed for legal and pay-to-play compliance.
Solicitation of Contributions
When a candidate attends an event, the event hosts try to ensure that there is broad support for the candidate. This may involve two compliance challenges.
First, many pay-to-play laws and ordinances place limits on the solicitation of contributions by covered individuals. Therefore, even if the CEO of a company with government contracts complies with applicable contribution limits for his or her own contributions, the very fact of the CEO soliciting others to contribute can potentially jeopardize eligibility for contracts.
Second, political contributions must always be voluntary. When it comes to solicitation of contributions, care must be taken to ensure that no one feels pressure to contribute so that all activities are truly voluntary. We often tell clients that a CEO or Senior Partner should never ask a junior employee to make a political contribution—there may be an inherent pressure to contribute in that situation just based on the disparate positions in the company.
Compliance Tip: Before hosting a political event in the office, the first key step is having a compliance plan. This may involve internal conversations with the company ethics officer, conversations with an attorney, and conversations with the campaign. These conversations should be aimed at agreeing on the logistics of the event and ensuring compliance under relevant laws.
Avi D. Kelin is Counsel in Genova Burns LLC’s Corporate Political Activity Law Practice Group and Chair of the firm’s Autonomous Vehicle Law Practice.
This column is for educational and informational purposes only and is not intended and should not be construed as legal advice. It is recommended that readers not rely on this column, but that professional advice be sought for individual matters.