Regulatory: 4 ways corporations can participate in federal elections

The rules are strict but allow a little room for corporate political participation

With the 2012 election in full swing, Americans are closely following the brewing civic debate over corporate political participation. While Citizens United and several lower court decisions have indeed opened the door to new avenues for corporate political activity, the reality is that corporations remain subject to strict regulation in this area. At all levels of government—and increasingly within the boardroom, as well—corporations must contend with a complex array of restrictions on political activities, presenting a significant compliance challenge for corporate counsel. Over the coming weeks, this column will discuss important and timely compliance issues spanning the range of corporate political regulation. This week, we highlight the basic rules governing corporate participation in federal elections, and some of the most common ways corporations can get involved.

The basic rule: Corporations may not give political contributions.

2. Fundraising activities. In addition to making candidate contributions through PACs, corporations may support candidate fundraising through carefully structured events. A PAC may host a candidate fundraiser and invite the general public. The PAC or the candidate—not the corporation—must pay for event costs (food, room rental, invitations, etc.) and treat amounts spent as in-kind contributions to the candidate, subject to the PAC’s $5,000 per candidate contribution limit. Additionally, unless FEC reimbursement and advance payment rules are met, use of corporate facilities or participation by lower-level corporate personnel may result in illegal corporate facilitation of contributions.

Alternatively, the corporation may itself host a candidate fundraiser, but only if the guest list is limited to the corporation’s restricted class. The corporation may pay for reasonable event costs, and both the corporation and invited candidate may solicit contributions. However, only the candidate or candidate’s staff may collect the contributions. Any use of the corporation’s personnel or other resources to collect or forward the donations to the campaign will be considered illegal facilitation, and violators of this rule have been severely sanctioned.

Contributing Author

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Ronald Jacobs

Ronald M. Jacobs is a Washington-based partner in Venable’s regulatory group. He co-chairs the political law practice at Venable LLP, and counsels clients on all...

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Contributing Author

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Janice Ryan

Janice M. Ryan is an associate in Venable’s regulatory group, where she focuses her practice counseling clients on all aspects of state and federal political...

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