It's an election year, and people are getting worried. Can
your favorite candidate win? What would happen to your business if
the wrong person took office? Is there anything you can do to help
the campaign?
Before you commit your business to financial, volunteer or
in-kind contributions, know the law. The Federal Election Campaign
Act, designed to prohibit influence peddling, strictly regulates
who can help finance a campaign for federal office and by how much.
The Bipartisan Campaign Reform Act of 2002 tightened some rules,
loosened others and made everything more complicated.
Some things haven't changed: No corporation or union may
donate money or services to a federal election campaign. The
Federal Election Commission is especially strict about this rule.
However, a corporation or a union may form and finance a separate
political action committee, which can host fund-raisers or solicit
contributions from individuals.
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If your business is a federal government contractor, you may not
contribute to a federal election campaign from business funds, or,
if you're a sole proprietor, from your own funds. This does not
apply to partners, shareholders, officers and employees, who, like
other individuals, are now allowed to contribute up to $2,000 each
per campaign, plus up to $25,000 per year to a national party
committee and $10,000 per year to state district and local party
committees. (Note that these limits are higher under the new rules.
The value of in-kind donations and services counts toward those
limits.)
So can you just tell employees to contribute to a campaign?
Definitely not. If you think electing a particular candidate would
be good for business, you can encourage executives, administrative
employees and stockholders, and their families to support the
candidate. But it's not OK to tell rank-and-file employees to
give money to a campaign, even if you reimburse them.
For instance, a Chicago telecommunications company pressured
employees to buy tickets for a political fund-raiser. A supervisor
circulated a memo urging them to buy tickets-with thinly veiled
threats of termination if they didn't. The company raised
$113,125 for the party-but had to pay a $150,000 penalty for
violating election laws.
Likewise, a New York City car dealer hatched a plan with his
congressman. He gave $2,000 "bonuses" to 29 current and
former employees, told them to put the money in their personal bank
accounts, and had husbands and wives each make a $1,000 donation to
the congressman's re-election campaign. Suddenly, the campaign
was getting large donations from secretaries and mechanics
who'd never contributed before. The opposition uncovered the
plot, the congressman was voted out of office, and the business
owner landed in court.
In the same vein, don't direct employees to help with a
political campaign. One exception: You can direct your company
accountant, bookkeeper or lawyer to do financial record-keeping and
file reports for a campaign to ensure a candidate complies with
election laws. It's also illegal for a corporation to take out
an ad in favor of a candidate.
Election law is more complicated than this column can cover. If
in doubt, talk to your lawyer before you write the check.
Jane Easter Bahls is a writer in Rock Island, Illinois,
specializing in business and legal topics.