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Trade Association Solicitations  

This article answers frequently asked questions regarding FEC rules for trade associations and their PACs.

Trade Associations and the Restricted Class

What is a trade association?

An organization is a trade association under FEC regulations if it is a membership organization whose members are engaged in a similar or related line of commerce or business (i.e., all the members of the organization are in the same industry) and if the organization promotes and tries to improve the business conditions of its membership. 11 CFR 114.8(a).

Who is a member?

Generally, a member of a trade association is an individual or other entity that:

  • Satisfies the requirements for membership by the trade association;
  • Affirmatively accepts the association’s invitation to become a member; and
  • Maintains a relationship with the trade association in one of the following ways:
    • Has a significant financial attachment to the association; or
    • Pays annual dues set by the association; or
    • Has significant organizational attachment to the association that includes:
      • Affirmation of membership on annual basis (e.g., meeting or responding to a survey); for example, direct participatory rights in the governance of the association (e.g., right to vote directly or indirectly for at least one individual on the highest governing board; right to vote on policy questions; or the right to approve the association’s annual budget. See, e.g., Advisory Opinion (AOs) 2003-13 (American Academy of Opthamology), 2000-15 (Credit Union National Association, Inc., the New York State Credit Union League, Inc., and the Credit Union Legislative Action Committee, 2000-04 (National Association of Federal Credit Unions) and 1999-40 (National Rural Electric Cooperative Association and the Action Committee for Rural Electrification).

11 CFR 114.1(e)(2).

Note that the Commission may determine, on a case-by-case basis, that individuals or other entities who do not precisely meet the requirements of the general rule above, but who have a relatively enduring and independently significant financial or organizational attachment to the organization, may be considered members of the association. For example, student members who pay a lower amount of dues while in school, long term dues paying members who qualify for lifetime membership status with little or no dues obligation, and retired members of the organization may be considered members. 11 CFR 114.1(e)(3).

Who is in the restricted class for PAC solicitations?

A trade association’s PAC may solicit:

  • Noncorporate members (such as individuals and partnerships) of the association;
  • The association’s executive and administrative personnel and their families; and
  • Executive and administrative personnel and stockholders of member corporations, and their families (with prior approval).

11 CFR 114.5(g)(1), 114.7(a) and 114.8(e). 

Prior Approval

What is prior approval?

Before soliciting the executive or administrative staff and stockholders of a corporate member, a trade association must request and receive the member corporation’s permission to do so. This written request for “prior approval” is sent to the corporate representative with whom the association normally conducts its activities. The approval form on which the representative enters his/her signature should also indicate that the signatory is doing so on behalf of the specific named corporation, e.g., “[the signature], for ABC Corp.” 1 See AO 2000-22 (Air Transportation Association of America, the American Land Title Association, the Council of Insurance Agents and Brokers, the Independent Insurance Agents of America,and the Society of Independent Gasoline Marketers of America). The corporate member may only approve solicitations by one trade association per calendar year, and approval is necessary before the trade association or its PAC may conduct a solicitation. 11 CFR 114.8(d)(3).

Can a sample solicitation be included with a request for prior approval?

Yes, the request for approval may contain a sample of the solicitation materials the PAC will use if approval is granted, but the sample must specifically indicate that approval is required before the PAC can solicit the corporation’s restricted class. 11 CFR 114.8(c) and (d)(3).

Can approval be requested via the Internet?

Yes, a trade association can distribute a “permission to solicit” form to its members on a members-only website. The form must include all the required information for obtaining approval and its wording must be sufficiently specific so as not to be considered a solicitation for contributions. See AO 2000-10 (America’s Community Bankers).

Do you need prior approval from individual and noncorporate members?

No, for individual and noncorporate members (e.g., partnerships) prior approval is not required; however, they do need to be members of the association before they may be solicited for contributions.  See 11 CFR 114.8(c).

Solicitations

Can you include a PAC solicitation in a dues statement sent to members?

The trade association may include a request for voluntary PAC contributions in a bill for another payment, such as membership dues, so long as only those who are legally solicitable receive it, and it meets all of the qualifications of a proper solicitation. 11 CFR 102.6(c)2).

May the PAC post a solicitation on the association’s website?

The association’s PAC must confine the solicitation to areas of the association’s website that are accessible only to the restricted class via a password. See AOs 2006-03 (Whirlpool Corporation Political Action Committee), and 2000-10.

Can a PAC solicitation be included in a membership packet sent to potential new members?

No. Potential new members do not yet satisfy the conditions for membership in the association and are thus not within the restricted class for PAC solicitations. See 11 CFR 114.1(e)(2).

Can a PAC solicitation be included in internal publications?

The association or its PAC may solicit contributions through a publication that is directed only to members of its restricted class. If the trade association’s publication is circulated to persons outside the restricted class, the association may generally not include a PAC solicitation in that publication. 11 CFR 114.5(g)(1).

As an exception to this rule, a solicitation in a publication that is circulated outside the restricted class may be permissible if:

  • The article includes an explicit caveat stating the contributions will be screened and those from persons outside the restricted class will be returned; and
  • Both the number and the percentage of unsolicitable persons receiving the publications are incidental.

As for what is considered “incidental,” the Commission has said in advisory opinions that three percent of the circulation (representing 1,000 persons outside the restricted class) was incidental, whereas 10 percent of the circulation (representing 8,000 persons outside the restricted class) was not. See AOs 1979-15 (Independent Insurance Agents of America, Inc.) and 1978-97 (National Association of Postal Supervisors); See also AOs 1999-06 (National Rural Letter Carriers Association), 1994-21 (American Pharmaceutical Association Political Action Committee) and 1980-139 (Agway, Inc.).

Special Notices

Is any sort of disclaimer required for solicitations?

While the “paid for by…” disclaimer for public communications is not necessary, certain notices are required on all solicitations (oral or written) undertaken by the trade association’s PAC. These notices include:

  • A statement of the PAC’s political purpose;
  • A statement informing solicitees of their right to refuse to contribute without reprisal; and
  • A statement on a guideline for an amount is merely a suggestion; no minimum may be specified.

11 CFR 114.5(a)(2)-(5).

Additional Information

For additional information on trade associations and their PACs, contact the FEC's Information Division at 1-800/424-9530 (press 6) or 202/694-1100.

1/ In AO 2000-22 (Air Transportation Association of America, the American Land Title Association, the Council of Insurance Agents and Brokers, the Independent Insurance Agents of America,and the Society of Independent Gasoline Marketers of America) the Commission approved the use of an electronic signature, so long as security measures are taken to verify that the permission-to solicit forms are only available to authorized corporate representatives, and so long as the associations have the ability to verify that each electronically signed authorization came from the corporate representative.

(Posted 6/21/2013; By: Kathy Carothers)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Alex Knott, Senior Writer/Editor; Dorothy Yeager, Production Manager

 

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