AO 2009-30: Trade association corporate members may use treasury funds to assist their SSFs
A trade association's corporate members may use their general treasury funds to pay for fundraising services to assist the members' separate segregated funds (SSFs). The trade association would not be making contributions to the SSFs as long as it charges its corporate members the fair market value for the services.
Background
TechNet is an incorporated trade association whose members include corporations and executives in the technology industry. TechNet currently provides government relations services, issues briefings and provides continuing education to its members. The costs for these services are included in the corporate members’ annual membership dues. TechNet would like to offer additional fundraising assistance services to its member corporations for their SSFs. The services would include an assessment of the SSF's recent fundraising activities and recommendations for future efforts, a periodic newsletter, fundraising and marketing materials and assistance with planning and executing fundraising events. The corporate members would pay for the fundraising assistance services as an additional assessment in their annual membership dues. The amount charged would be set at a level that ensures that TechNet receives the fair market value of its services.
Analysis
The Federal Election Campaign Act (the Act) prohibits corporations from using general treasury funds to make any contribution in connection with a federal election. 2 U.S.C. §441b; 11 CFR 114.2. However, the Act and Commission regulations permit a corporation, including an incorporated trade association, to pay for the establishment, solicitation and administrative costs of a separate segregated fund. 2 U.S.C. §441b(b)(2)(C); 11 CFR 114.1(a)(2)(iii). Establishment, solicitation and administrative costs include the costs of fundraising and other expenses incurred in setting up and running a separate segregated fund. 11 CFR 114.1(b). In previous advisory opinions, the Commission concluded that payments by corporations to help their SSFs increase their fundraising are permissible "establishment, administration and solicitation" costs. AOs 2006-33 and 1980-50. Here, TechNet’s corporate members would pay for the proposed services in order to help their SSFs with fundraising activities. The payments for the fundraising services would constitute fundraising expenses under 11 CFR 114.1(b). Therefore, TechNet's corporate members may use their general treasury funds to pay for TechNet’s fundraising services for the members' SSFs.
The Commission also analyzed whether TechNet would be making a prohibited contribution to its members' SSFs by providing the fundraising services. As an incorporated trade association, TechNet would be prohibited from making contributions in connection with a federal election. 2 U.S.C. §441b; 11 CFR 114.2. A contribution includes the provision of goods and services without charge or at a charge that is less than the usual and normal charge for such goods or services. 11 CFR 100.52(d)(1). The "usual and normal charge” for goods means "the price of those goods in the market from which they ordinarily would have been purchased at the time of the contribution." The "usual and normal charge" for services means "the hourly or piecework charge for the services at a commercially reasonable rate prevailing at the time the services were rendered." 11 CFR 100.52(d)(2). In this case, since TechNet’s proposal would charge its corporate members the fair market value for the fundraising services, TechNet would not make prohibited contributions to its member corporations' SSFs.
Date issued: January 29, 2010; length: 4 pages