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COMMENTARY: Top-10 things to understand about making political contributions

By Jason Kohout and Erika Alba
Foley & Lardner

Jason Kohout is a partner practicing with Foley & Lardner. He is the chair of the firm’s Family Offices Team and assists families and business owners in areas of tax planning, business succession and philanthropy.

Jason Kohout is a partner practicing with Foley & Lardner. He is the chair of the firm’s Family Offices Team and assists families and business owners in areas of tax planning, business succession and philanthropy.

1. It’s all public!

All contributions to political candidates and independent expenditure political action committees are publicly disclosed. Some groups are “data-mining” this publicly available information. Disguising gifts is a criminal act and can (and has) resulted in jail time. Reporters and bloggers know how to use these databases.

2. But, sometimes it’s not all public.

Contributions to advocacy organizations such as 501(c)(4) (social welfare) and (c)(6) (business league) organizations are not publicly disclosed, unless the organization spends the money for political activity in such as California and New Jersey, which require disclosure (other states and localities have started efforts to join the list). Donors need to be careful not to step on landmines.

3. Business contributions.

There are significant limitations on businesses making contributions to candidates, including an outright ban on corporate contributions in federal elections and in some states such as New Jersey.

Erika Alba is a political law attorney and public affairs director with Foley & Lardner LLP and is a member of the firm’s Political Law and Government & Public Policy Practices.

Erika Alba is a political law attorney and public affairs director with Foley & Lardner and is a member of the firm’s Political Law and Government and Public Policy Practices.

4. “Doing business restrictions. 

Before giving to a state or local candidate, owners of closely held businesses should review whether they are subject to limitations on contributions because their businesses have contracts (or would like to have contracts) with the state or locality.

5. It’s limited. 

Despite all of the big talk of big donors, most campaign cash comes in small numbers. A donor can contribute a maximum of $2,800 to a federal candidate per election (the Primary and  a General Election are separate elections; each spouse or family member has their own limit). Certain types of contributions, called “independent expenditures” are unlimited; but they must be truly “independent” and not coordinated with a candidate.  Individuals have been sent to jail for violating that rule.

6. It’s limited based on jurisdiction.

Is that a federal or state or local candidate? For federal candidates (president, house, senate) the maximum allowed its $2,800. For other candidates it all depends on the jurisdiction and every state has its own limits.

7. Raising dollars.

Politicians have to raise significant dollars. But, a candidate is limited. Instead, the candidate must rely on individuals who can fundraise from their friends/acquaintances/employees. This may mean hosting a fundraiser. Two caveats: an employer can’t reimburse an employer for making a contribution (“I’ll raise your salary $2,800 if you come to my fundraiser” or “go ahead and expense the amount of the contribution”).  Also, there are strict rules about using corporate assets (including meeting rooms and stationery) for fundraisers and candidate events.

8. Be strategic.

Give first — dollars early in the cycle are worth three times as much as dollars at the end of a campaign. Campaigns need “venture capital” to get started, and if flush with cash, campaigns can lock in TV advertising early at lower rates; later in the campaign it becomes expensive. Candidates are generally more appreciative of early donors.

9. All politics is local so give local.

Give to the lower state house, the caucuses and the AG — you get more “bang for the buck” and those elected officials are likely to remember your name.

10. Build relationships before you need them.

Make sure that the elected official knows your business or family and the impact you make on your community. Take the time to educate them on the issues critical to you. Your involvement with a trade association or chamber of commerce with an affiliated political action committee can be very helpful in moving policy after the election.

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