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Campaign Finance Compliance
Ten Tips for Lobbyists
By Jan Witold Baran
Many lobbyists are political junkies. Part of their job is to know what is happening in elections, who is up and who is down. Lobbyists may be veterans of electoral politics or may continue active involvement during the campaign season. When lobbying, individuals must be mindful of rules, laws, and compliance issues. Lobbying, after all, is not only a profession, it is also a regulated industry. The same is true of political campaigns.

The purpose of this article is to provide a list of 10 legal topics that lobbyists, or anyone else for that matter, should keep in mind when engaging in election campaign activity.

1. Check Which Laws Apply
As with other areas of our federal legal system, different laws can apply to different campaigns. In general, federal laws govern campaigns for federal office, which include the offices of president, representative, or senator. Elections for delegates from the District of Columbia, Virgin Islands, Puerto Rico, Guam, and American Samoa also are covered. But other elections such as governor, state representative, mayor, or county commissioner will be subject to state or local laws and ordinances. If you decide to work for or on a campaign, check which laws apply.

There are some activities that are regulated by both federal and state laws. For example, political parties and their committees may be subject to both laws. Also, political action committees, or PACs, may have to contend with multiple rules. In all instances, know the rules.

2. Know What Is a Contribution
All campaign finance laws regulate the raising and spending of money. Each statute will contain broad definitions of contributions and expenditures since both forms of financial activity are subject to prohibitions, restrictions, limits, and disclosure. For the sake of simplicity, a "contribution" is something that is worth something and can take many forms including cash, credit, goods, services, and in-kind donations. There are, however, many exceptions that should also be confirmed.

3. Volunteering Is Legal
Individuals may volunteer their services to a candidate or political party. Being a volunteer, however, means just that. Volunteer services must be uncompensated. An individual cannot be paid by another person or company, including his or her employer, to work on a campaign and be considered a volunteer. There is a major exception. Employees may take earned leave or vacation time, still be paid by an employer, and work on a campaign.

When volunteering, an individual may incur certain expenses. For example, a volunteer might use a vehicle to travel or incur lodging or meal expenses. All such expenses will be subject to rules. Under federal law, volunteers may pay their own subsistence expenses for food and lodging and the expenses are not contributions or reportable. Travel expenses up to $1,000 are also exempt. These rules apply when the volunteer pays his or her own expenses and is not reimbursed. If you are spending money while volunteering, check the rules and make sure it is permitted.

4. Know the Contribution Limits
In those instances in which a lobbyist or a lobbying firm or client makes a contribution to a candidate where lawful, there may be limits on the amount that may be contributed. Under federal law, only individuals and registered PACs may make contributions. An individual is subject to a limit of $2,300 per election, per candidate. This limit is adjusted every election cycle for inflation and therefore will change. There also are limits on the total amount that an individual may contribute to all candidates and committees. A PAC is usually subject to a limit of $5,000.

Many states also will have limits. Florida has a limit of $500, while California has higher and more varied limits depending on the office being sought. Lobbyists who make contributions must confirm the applicable limit and keep track of all contributions in order to ensure compliance.

5. Watch Out For Corporate/Union Contributions and Laundering
Federal law and the law of many states prohibit contributions to candidates and/or political parties from corporations or unions. Most of the remaining states have limits on the amount that corporations and unions may contribute. As stated above, a contribution may take many forms in addition to cash. Therefore, it is important to not donate corporate or union money and also not to use corporate or union resources such as offices, personnel, equipment, vehicles, etc., unless permitted under applicable law. This is true even when an individual is a volunteer.

In addition, all federal and state laws prohibit money laundering or the disguising of the true source of a contribution. For example, a corporation may not reimburse an employee for making a contribution, even in those states that permit corporate contributions. Never reimburse an individual for a contribution either directly or through gimmicks such as bonuses or salary increases.

6. Pay-to-Play Laws
For years, the Municipal Securities Rulemaking Board (MSRB) has had a rule that municipal finance professionals may not make contributions to candidates who have authority over bond underwriting. Violation of MSRB rule G-37 can disqualify the professional's firm from bond underwriting in the candidate's jurisdiction for two years. The concept of prohibiting or disclosing certain contributions from individuals that have business with a governmental entity has expanded to state and local jurisdictions such as Connecticut, California, New Jersey, and Philadelphia. In these jurisdictions, contributions to candidates from government contractors may result in disqualification, violations, or public disclosure reports. Lobbyists who represent clients with government contracts will need to pay special attention to these so-called pay-to-play laws to ensure compliance and to avoid disqualification for themselves or their clients.

7. Special Campaign Finance Laws
There are some types of business organizations that may be prohibited from making contributions even when other corporations may do so. For example, federal law bars corporations from foreign countries from making political contributions to any candidates or political parties in the United States, even to candidates in states that permit corporate contributions. The same is true of corporations that have been chartered by the United States, such as national banks. Under some state laws, certain types of corporations may be targeted such as state banks, insurance companies, or utilities. If you are a lobbyist for such an industry or company, you must ensure compliance with any of these special laws.

8. Know When to Report
The vast majority of mandatory public filings under campaign finance laws are the responsibility of candidates, political parties, and political committees. However, there are numerous instances in which a donor or a noncampaign entity may have to file a report with a government agency. For example, California and a handful of other states require donors to file reports. In California, an individual or entity that donates more than $10,000 in a calendar year to candidates, committees, and even ballot issue committees usually will have to file a Major Donor Report with the Fair Political Practices Commission. Under the recent federal lobbying reform law, the Honest Leadership and Open Government Act of 2007, registered lobbyists must include certain political contributions on their semiannual lobbying reports. The MSRB also has a reporting requirement.

Jan Witold Baran is the author of the updated 5th edition of the Election Law Primer for Corporations, a practical guide to the laws that regulate politics and lobbying. It contains up-to-date information and expert interpretation to help business leaders and lawyers keep pace with the rules on corporate political activities, lobbying, PACs, and gifts. The book explains what constitutes a contribution, which corporations and organizations are barred from contributing, how the law differs from federal to state and local elections, what the exceptions to the law are and who qualifies for them, as well as guidance about PAC formation and operation, contribution limits, reporting and record-keeping requirements, when a person becomes a lobbyist, tax issues, and useful, ready-to-use tax, campaign finance, and lobbying forms and charts.

New and updated forms have been added to the 5th edition, including Federal Election Commission disclosure forms, IRS forms, and Lobbying Disclosure Act forms. Further, the appendix includes updated resource material such as lobbying disclosure guidelines, IRS publications, charts on contribution limits, and state contribution law and enforcement-agency Web sites.
To order, call the ABA Service center at 800-285-2221, or order online at www.ababooks.org.
Separately, federal law will require reports from those who spend money for certain types of advertising. Independent expenditures and electioneering communications are subject to filings with the Federal Election Commission. A growing number of states also require similar filings for public ads discussing state candidates.

9. Independent Expenditures and Issue Ads
Sometimes individuals and groups will want to collect some money and pay for advertising supporting or opposing a candidate. Such activity must be done independently of the campaign in most instances in order to avoid contribution limits and other restrictions. When the advertising expressly advocates the election or defeat of an identified candidate, it is an "independent expenditure." When the message simply mentions the name of a candidate, under certain conditions it may be an "electioneering communication." And in other instances the ad may be an "issue ad." All of these variations have legal and constitutional significance. Some ads may be prohibited if paid by corporations or unions; others may be subject to filing reports; and still others may not be subject to any restrictions. This area of activity is highly regulated and should not be undertaken without thorough legal review and guidance.

10. No Quid Pro Quo
In addition to all the various campaign finance laws and rules, there is one overarching principle. Under no circumstances may anyone provide a campaign contribution or anything else of value to a government official in exchange for an official act. That is a quid pro quo, or what the laws usually refer to as bribes and gratuities. While rare, it is not unheard of for an official or private individual to be tried for bribery in connection with campaign contributions. The circumstances will involve other related activity but will focus on whether the official or the lobbyist offered or requested a contribution in exchange for an official act such as introducing a bill or an amendment or authorizing a government contract. Obviously such agreements must be avoided. In addition, lobbyists should avoid the appearance of such arrangements. Do not associate specific acts with campaign contributions. Both the reality and the appearance can be harmful.

The top 10 list of things to watch out for when campaigning are guidelines. While the list raises the prospect of intimidating legal obstacles, the items really are commonsense notions. Check the rules; don't make contributions until you know what the rules are; if possible, avoid spending money or using anyone's money or resources other than your own. Notwithstanding the expansion of campaign finance regulation and the professionalism of modern political campaigns, candidates still depend on the voluntary assistance of millions of contributors and supporters. Lobbyists, who after all are exercising the First Amendment right of petitioning government for redress of grievances, have an equal right to be involved and support the candidates of their choice. They just need to keep the rules in mind.

Baran is a partner at Wiley Rein LLP in Washington, D.C. His e-mail is jbaran@wileyrein.com.

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