April 18, 2014
A political action committee (PAC) is a type of organization that pools campaign contributions from persons or members and donates those funds to campaign for or against candidates, ballot initiatives, or legislation.
The purpose of political action committees is to give organizations, companies, and other groups, who are otherwise prohibited by law from supporting political candidates, a vehicle so that they can do so.
In Michigan, an organization or persons (2+) become a PAC when it or s/he receives or spends more than $500 for the purpose of influencing a state election. Once the $500.00 threshold is met, the organization or persons has 10 days to form and register with the appropriate filing official.
A candidate must form a Candidate Committee upon filing to run for elective office, upon nomination as a candidate or upon receiving contributions or making expenditures for nomination or election to an elective office.
It is helpful to know the differences between committee types when making contribution decisions. In this article, I will define the most common political committee types, their characteristics and help demystify recognizing the different forms of committees.
A committee that meets certain criteria that allows it to make contributions up to 10 times the limit of individuals or political committees. These criteria are:
- The committee must receive contributions from at least 25 persons.
- Make expenditures in support of or in opposition to 3 or more candidates for nomination to or election to an elective office.
- The above-mentioned must occur in the same calendar year.
- The committee must file/amend a statement of organization as an independent committee at least 6 months prior to an election for which it expects to accept contributions or make expenditures in support/opposition to a candidate running for an elective office.
A committee that has filed a statement of organization but has not met the criteria of an independent committee. It is subject to the same contribution limits as an individual (e.g. $2k Senate, $1k House & $6,800k for Gov.)
Here’s where it gets complex. Independent and Political committee’s can be registered two ways: as Separate Segregated Funds (SSF)– or Non-SSF’s.
Separate Segregated Funds
1are political or independent committees formed by corporations, labor organizations or Indian Tribes. SSF’s can do the following:
- Use its sponsoring organizations funds to pay for the administrative costs of running the PAC.
- Use sponsoring organizations funds to pay expenses for soliciting contributions.
However, a Separate Segregated Fund:
- Is limited to soliciting funds from a restricted group such as the sponsoring organizations executives, salaried employees, members, shareholders, their families or other SSF’s.
- Must identify the sponsoring organization in the committee name.
Non-SSF Committees are organized by two or more persons that form a political action committee to raise money and are permitted do the following:
- Solicit a personal voluntary contribution from people that have a common interest.
- Solicit contributions from the general public .
- Must pay their own costs from those funds.
Independent Expenditure PACs
Independent Expenditure PAC’s, commonly referred to as Super PAC’s, are organized specifically for the purpose of making independent expenditures to advocate expressly2 for or against the election of a candidate.
- Super PAC’s are prohibited from coordinating with a candidate, candidate committee, political party or political party committee be it directly or indirectly.
- Super PAC’s are prohibited from making contributions directly to candidate committees.
- Super PAC’s are not limited to how much they can raise (soft dollar3) and spend in an election cycle.
- A separate committee is required to be registered even if the corporation, labor union, or domestic dependent sovereign has a registered (hard dollar4) Separate Segregated Fund.
A candidate committee is established by a political candidate for the purpose of paying expenses of the campaign or for paying incidental expenses related to holding an elected office. Elected officials must maintain a candidate committee for as long as they hold public office. Typical expenses incurred by a candidates’ committee are:
- Yard signs, leaflets, door hangers
- Mailings and website expenses
- Travel and mileage reimbursement
- Event tickets (limited to $100/yr. for another candidate committee)
- Fundraising costs and campaign events.
Candidate committees are limited to how much they can accept from individuals and PAC’s in an election cycle. Conversely, the candidate is allowed to contribute or loan unlimited amounts to their own campaign. If a candidate does loan money to his/her own campaign it must be reported as a loan at the time of the transaction.
Identifying Committee Types
It is possible to get a general idea of a committee type by its name.
Political and Independent Committees– Examples are:
- Citizens for a Improved Michigan
- Driving the Economy
- Victory Fund, Majority Fund, etc.
- John Smith Leadership PAC
SSF Political and Independent Committees- If the committee is registered as a SSF it must include part of the sponsoring organizations name in its title such as:
- Michigan Association of ______ PAC
- ABC Corporate PAC
Candidate Committees include the candidate’s name:
- Committee To Elect Jim Brown
- Friends of Ted Smith
- John Smith for State Representative
- Jane Smith for State Senate
- Smith for Governor
Can’t ID The Committee Type by Its Name?
Look it up!
State of Michigan’s online searchable database:
Committee types are identified, on the web, under the Michigan Committee Statement of Organization.
FAQ’s: Can my PAC give to Congressional races?
- Michigan PAC’s may contribute to Federal races, however, once a PAC contributes more than $1,000 total in a calendar year it must register as a Federal PAC.
- A similar rule applies for Federal PAC’s giving to state races. Once a Federal PAC gives a total of $500 to state races in Michigan it is required to register as a state PAC.
Of course, the content above is meant to serve only as a guide. Every filing situation is different and you should always call me or email your questions (517/482-5311 or Lfarnum1@gmail.com), visit the Bureau of Elections for more information (http://www.michigan.gov/sos/0,4670,7-127-1633_8723—,00.html) and consult with your attorney.
Lisa Farnum, MPP is President of Honeycutt Executive Resources, LLC, a firm that specializes in PAC compliance, research and association management. Lisa has been helping clients resolve campaign finance issues and maintain compliance for more than 15 years. She earned a Bachelor of Arts in Business Administration from Northwood University and a Master of Public Policy from the University of Michigan, Dearborn. Ms. Farnum has over 25 years of experience in business and association management.
- Separate Segregated Funds (SSF)– A Separated Segregated Fund can be either a Political Committee or an Independent Committee. Corporations, labor organizations and Indian Tribes can establish a PAC to support or oppose candidates in Michigan. The corporations, labor organizations and Indian Tribes may use treasury funds to pay the costs of the establishment, administration and solicitation of contributions to a SSF. However, the corporations, labor organizations and Indian tribe may not use its treasury funds to give direct support to candidates. Rather, the SSF can solicit and accept funds from a restricted group of employees and/or members and other SSFs.
An SSF must include in the name of the committee the name of the person or persons that sponsor the committee, if any, or with whom the committee is affiliated.
- Express Advocacy– Advocating the election or defeat of a clearly identified candidate.
- Hard Dollars –Hard dollars are political donations that are raised from personal contributions regulated by Elections. Hard dollars can be given directly to a candidate’s campaign committee.
- Soft Dollars– Money that is raised from corporate sources but is not allowed to be given directly to candidates. Soft dollars can be used in issue advocacy and to pay for certain PAC administrative expenses.