Posts Tagged ‘Election Law’

How a Company May Legally Make a Campaign Contribution to a Candidate for Federal Office

Tuesday, October 14th, 2008

The Federal Election Commission is charged with administering and enforcing the financing of federal elections.  The states individually govern financing law for non-federal, state elections.  For a local election, state law and local ordinances govern.

For a federal election, both profit and non-profit corporations, membership organizations, trade associations and labor unions are prohibited from contributing to or spending money on behalf of a candidate.  However, they may establish or contribute to a political action committee (“PAC”).

Two types of PACs exist, separate segregated funds (“SSFs”) and nonconnected committees.  SSFs, which the afore-mentioned types or organizations can form and administer, may only solicit contributions from individuals associated with the sponsoring organization.  They may absorb the costs of establishing and administering the PAC.  By contrast, nonconnected committees are financially independent and must pay for their expenses using the money they raise.  PACs must register with the Federal Election using FEC Form 1 and have reporting requirements regarding their receipts and disbursements.   Downloadable campaign guides for both types of PACs are available on the FEC website.

All political commitees, such as a PACs, that register and file reports with the FEC are considered 527 organizations.  They are organized under Section 527 of the U.S. Tax Code.  However, the concept of a 527 organization is broad and not all 527 organizations are required to file with the FEC.

The federal contribution campaign limits for 2007-08 are as follows: