Friday, July 25, 2008, 2:43 PM

Political GPS: When Executives Raise Campaign Cash: Forewarned is Forearmed

With Election Day just a few months away, fundraising season is in full swing. Executives are hosting fundraising events, at their businesses and homes, and are helping candidates fill their war chests in other ways.

While such activities often seem like a personal matter, there are strict rules in this area that if violated can lead to hefty fines and even criminal prosecution. Here’s the concern -- not only are corporations prohibited from contributing to federal candidates, but their facilities, resources, and personnel are also off-limits for supporting federal candidates, subject to limited exceptions. In this area, known as “corporate facilitation,” the FEC and the Justice Department have been eager to flex their enforcement muscle, particularly when companies lack appropriate policies and training.

So what do you and your company need to know this campaign season? Here are a few pointers:

Raising Funds. The corporate facilitation ban means that an executive engaging in fundraising activities cannot use company resources such as postage, envelopes, or delivery services, without reimbursing the company. In addition, advance payment is required for using customer, client or vendor lists. Companies also may not reimburse employees for most expenses associated with attending fundraising events.

Events on Company Premises. Fundraising events may be held at a company’s office, provided someone other than the company pays the fair market value for using the space. The company can also direct employees to plan, organize and carry out the fundraising event and can provide catering and food services, but the company must receive advance payment for the fair market value of these services, including compensation, benefits and overhead with regard to employees’ time. All of these expenses can be paid by permissible sources - the campaign, an individual or group of individuals, a PAC, or any other legal contributor up to the applicable contribution limits.

Home Sweet Home. An executive has fewer concerns when hosting a fundraising event at home. Under FEC regulations, the use of your own home is not considered an in-kind contribution to the candidate. Similarly, the cost of invitations, food, and beverages for an event at home are not treated as contributions, up to certain amounts.

Volunteer Activity. Company employees are free to volunteer their time to campaigns, but there are limits on the amount of time they can devote to such activity during normal business hours. The fewest restrictions exist on employees' use of computers and the Internet. So long as company policy permits, the use of computers is generally permissible. Volunteer fundraisers are generally advised to avoid physically collecting and transmitting checks.

Take Away Point. In the world of political fundraising, there is usually a way to do what you want to do. The key is for executives and their employers to know the rules before engaging in fundraising efforts that implicate the company and that place themselves in legal jeopardy. Our experience in leading the FEC enforcement taught us that appropriate training and policies, and sometimes a call to counsel, could have spared many companies significant civil penalties, large legal bills, and public relations problems.

New House Ethics Panel Named

The House leaders yesterday named eight individuals to the new Office of Congressional Ethics (OCE). This independent board (current House Members cannot serve) will review allegations of misconduct and make recommendations to the House Ethics Committee. OCE does not have authority over ethics issues involving Senators.

The six regular board members are former Representatives David Skaggs, Porter Goss, Yvonne Brathwaite, and Karan English; former House Chief Administrative Officer, Jay Eagen; and our former FEC colleague, Professor Allison Hayward of George Mason Law School. The two board alternates are former Representatives Abner Mikva and Bill Frenzel.

The establishment of this panel marks the first time that either house of Congress has handed authority for the review of allegations of impropriety to persons other than Members. The OCE has the authority to receive allegations about ethical violations by Members and employees of the House, and it can initiate cases at the request of two board members from different parties. Since the House Ethics Committee is barred from receiving a matter from the OCE within 60 days of the election, the committee will not have any ethics complaints to consider from September 5 to Election Day on November 4.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

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