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Problem-free PACs.

Here's a little nightmare for you: The Federal Election Commission is all geared up for the heavy volume of contribution reports from political action committees (PACs) expected in this election year. Meanwhile, FEC already has a file full of violations and letters like this one from the treasurer of a major national association PAC:

"Upon assuming the position of treasurer, we [sic] have made extensive efforts to insure compliance with all rules and regulations. Unfortunately, due to some confusion as to different filing requirements between election and other calendar years, we have consistently been late. However, we have filed regularly and accurately."

Not minding the store has unfortunate consequences. The association hires expensive lawyers. Then FEC makes the case public, naming the PAC treasurer as respondent. The treasurer may be a manager from the association's government relations, finance, or public affairs division, or even an association member. And under FEC regulations, he or she is personally responsible for filing timely, complete, and accurate reports.

The media may pick up the story, and the management integrity of the association itself is brought into question. What does it say about an association that can't report on time or add and subtract properly?

Finally, FEC levies fines. They may not be fatal, but they certainly sting. The association above paid $2,500.

To avoid being an FEC casualty this election year, zero in on these three problem areas.

Late filings

In 1992, no matter what schedule your PAC follows, you'll have numerous required filings. Despite the best intentions, some associations will be late making these reports, and FEC does institute enforcement actions based on late filings.

Filing options. PACs have two filing options in an election year. The first is to file quarterly, which, as you'll see, has some drawbacks in a busy year. Each of the first three reports is due 15 days after the last day of the quarter--that is, on April 15, July 15, and October 15. The year-end report due January 31 of the following year is filed in lieu of a fourth quarter report.

A 30-day post-general election report also is required. However, the PAC choosing this option must be prepared to file additional, unscheduled reports triggered by contributions it may make in connection with primary elections.

For example, some 16 states will hold presidential primaries on five different dates in September. If a PAC that files quarterly makes contributions in July and August for any of these, it will have to file pre-primary reports 12 days before the appropriate primary. The PAC is obliged to disclose contributions made in connection with a primary election that would not have been reported in the PAC's last quarterly report covering April, May, and June activity.

Contributions made close to the more than two dozen primaries held in May and August could create similar, additional reporting requirements for quarterly filers in 1992. So you can see how a uniform schedule for the quarterly reporting options will be hard to maintain.

The other and more widely used option is to file monthly reports: Monthly filers are not required to file pre-primary reports.

Monthly filers submit reports no later than 20 days after the last day of each month for the first nine months of an election year. The 12-day pre-general election and 30-day post-general election reports satisfy the monthly filer's reporting obligations for October and November, and the year-end report, due January 31 of the following year, substitutes for the December report.

Changing frequency. During a nonelection year, a PAC may decide to change its reporting frequency from monthly to semiannually. However, the PAC must first notify FEC in writing of this intention at the time it files a report under its current filing frequency. The PAC may then file the next report under its new filing frequency without waiting for approval. But remember, you may change filing frequency only once in any calendar year. New PACs should determine which schedule is desirable and begin filing accordingly; you don't need formal FEC notification or approval

Solving the problem. PAC officials need to review their history of giving, examine their projected contribution activity for the calendar year, and then make sure they have selected the filing schedule that fits best their actual operations. For example, if your PAC is relatively active and its contributions are made on and ad hoc basis, monthly filings in an election year could make good sense. On the other hand, low levels of activity and/or a limited period of time in which all political contributions are made may mean that quarterly filings will be least burdensome for you.

Now the PAC treasurer should schedule a meeting of everyone involved in the PAC process to work out record-keeping needs and assignments and deadlines for getting information to the treasurer. Invite association staff, involved members, and any outside businesses that handle accounting or legal activities. Also include those who decide which candidates receive PAC contributions. They may not be aware of required record-keeping and reporting, deadlines, and legal consequences when mistakes are made. Getting them to understand and appreciate this side of political contribution activity can go a long way toward solving those detail problems--like candidate committee addresses or applicable election cycles.

In the meeting, establish procedures whereby all required reports will be ready for the treasurer's signature at least five business days before they are due. For example, staffers--or departments--who process receipts and disbursements should have all their internal reports of PAC activity completed no later than 12 days after the close of the reporting period. This should leave time to receive and reconcile bank statements and identify any incomplete information about a contribution made to or by the PAC during the reporting period.

Don't relegate ultimate responsibility for preparing the FEC report to a support staffer who doesn't have the necessary authority to make association department heads meet their PAC responsibilities. Make it clear that you and the association take the matter seriously. Follow through after your meeting to make sure everyone involved is meeting deadlines.

Handling the report. Now preparing the final report and itemized schedules can proceed with a built-in time buffer to let you resolve any irregularities. Having the report ready to sign five business days before it is due can be a lifesaver when unforeseen absence makes getting the treasurer's signature a national (or even international) crisis.

Send your reports by certified mail, return receipt requested. That gives you until midnight of the due date to have your report postmarked and proves you sent the report on time and to the right address. Sending your report by first-class mail can be risky: It's considered filed on the day it's actually received by the FEC, not the date postmarked.

Finally, if your PAC does not have an assistant treasurer named in your "Statement of Organization" on file with FEC, consider one. This is the only individual other than your PAC treasurer who can legally sign the PAC report.

This individual should be located where the FEC report is actually prepared so you can meet deadlines when your treasurer is elsewhere or unavailable. Just file an amendment to your Statement of Organization, designating an individual as assistant treasurer and providing FEC with his or her name and address.

Erroneous reports

Anything from the wrong contribution recipient's name to errors in addition can result in an FEC summors. The law is lengthy and detailed, but the primary requirement is accurate and complete disclosure. You need to develop a system to accurately document each PAC receipt and distribution.

PAC receipts. Capture all information that may be required about contributors when each receipt is processed. First create a master file of individuals solicited by the PAC. This file should include the individual's name, home address, employer, and occupation (your membership files may have this information). If information is missing, take time to complete it now, not when you are trying to finalize an FEC report for filing.

As the PAC receives contributions, only dollar amount and date need to be posted to the master file, which cuts down the time involved and reduces the opportunity for error. Provide contributors with an enrollment card asking for this same information to be returned with the contribution; then verify and update as the receipt is processed.

You're also ready to itemize contributions as required if a second contribution causes total calendar year receipts from an individual to exceed $200.

PAC disbursements. Write checks only after you have obtained and recorded this information:

* address of the check payee;

* full name of the contribution's beneficiary;

* office being sought;

* type and year of the election; and

* date the contribution is made.

In the scramble to get a contribution check to a political candidate in time for the fund-raiser, all the PAC treasurer may be given is the name of the check payee. You ay cut corners with the understanding that all of the other information needed to accurately report the disbursement will be tracked down tomorrow. Unfortunately, tomorrow often arrives only when the FEC report is due, which can be weeks or even months later. That's when errors occur.

For example, a check made out to "Democratic Victory in '92 Dinner" can easily be attributed to the wrong Democratic national party committee. Or the date of a fund-raiser can be misreported as the date of the contribution, even though the PAC check was written and mailed several weeks earlier. For reporting purposes, the earlier date is when the PAC is considered to have made (relinquished control of) the contribution, not the date of the event itself.

Another mistake is incorrectly reporting a contribution to Representative Smith's Committee to Elect Smith as a federal contribution--reported in one place on FEC forms--when it turns out to be for a nonfederal election; Smith's race for governor (not for re-election to the U.S. House) is reported on a different line of the report as an "other" contribution.

Excessive contributions

The law is very clear on this point. A multicandidate PAC cannot make contributions to a candidate for federal office in excess of $5,000 in the aggregate per election (i.e., primary, run-off, general, or special election). For contributions to national party committees, the limit is $15,000 per calendar year.

Yet every year, many PACs exceed these limits and are fined.

Sometimes a PAC simply fails to correctly aggregate past contributions. But frequently the problem is the PAC fails to indicate clearly to the recipient to which election limit the contribution applies. When this happens, FEC regulations require the contribution automatically to apply to the candidate's next election for the federal office being sought.

For example, it is permissible to make a contribution to a candidate's general election before his or her primary election is held. However, it will be applied to the primary unless the contribution is specifically designated for the general election. Thus, a PAC might give a candidate in excess of $5,000 prior to the primary, intending the amount in excess of $5,000 to apply to the general election. But absent a written designation of this attribution on the check or in some other signed statement from the PAC, all of the contribution iwll be designted for the primary.

Similarly, if a candidate has debts from a primary, he or she can accept contributions to retire the debt after the election. However, unless a post-primary contribution is clearly designated for debt retirement, it will count toward the candidate's upcoming election.

Solving the problem. The short-term solution is a policy that no contribution check is signed without written designation on the face of the check of the type of election and the election year to which the contribution is to be attributed.

The complete solution is to design a record-keeping system. You need to maintain running tallies of contributions to each recipient by election cycle. For Senate campaigns, records should aggregate for as long as six years (the length of the term of office); for House elections, two years; and one year for party committees and multicandidate PACs.

Now, before making a disbursement, the PAC treasurer can know the total of the PAC's past contributions to the candidate for the specific election involved. Ascertain that the donation, when added to past contributions, does not exceed the applicable limit.

Do it anyway. Yes, setting up these systems can be difficult. You need the cooperation of all sorts of other people. Existing systems may not have been designed with FEC data gathering and reporting requirements in mind. In small associations with tight budgets, your emphasis may have to be more on obtaining and disbursing PAC contributions than on the fine details of FEC compliance.

However, FEC and its rules and regulations are unavoidable consequences of playing a part in our nation's political process. Get your PAC management systems in place. Because that's easier than having to say mea culpa to FEC.

Leigh Snell is vice president of Public Affairs Support Services, Alexandria, Virginia.
COPYRIGHT 1992 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes related article on advantages of ASAE membership; political action committees
Author:Snell, Leigh
Publication:Association Management
Date:Feb 1, 1992
Previous Article:Technology at work; standard software sets the pace.
Next Article:The outsource option.

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