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Lisa Farnum

Lisa Farnum

Transitioning Your Campaign Committee

Guidelines for a Trouble-Free Conversion

December 18, 2015

It is important for candidates to understand how election cycles and contribution limits can impact their campaign activities, especially when transitioning from one campaign committee to another.

Contribution limits are prilisamarily based on election cycles and the office the candidate is seeking (Re: size of the population the office covers).  Contribution limits and election cycles are directly related; the longer a committee’s election cycle the larger the

committee’s contribution limit.  For example, a Senate committee has a four year campaign cycle and a $2,000 individual contribution limit, while a House committee has a two year campaign cycle and a $1,000 individual contribution limit.

What you should know:

  • The length of your committee’s election cycle (e.g. when it begins and ends) so that you can accurately track contribution limits
  • Your committee’s campaign contribution limits

Tracking when an individual or other committee’s (e.g. “PAC’s”) contribution was received is imperative when transferring funds from one committee to another; the date is needed to determine what method of transferring should be used.  A candidate will also need to track contribution totals going forward when moving funds to a new candidate committee.

Termed-Out Candidates Seeking another Office

Transferring funds from one Candidate Committee to another Candidate Committee belonging to the same officeholder 

Filing a NEW Candidate Committee:

Current office holders may file to organize and raise funds for a new campaign now. Candidates may form this new committee while their current committee is still active after one of the following requirements is met:

  • The candidate receives a contribution or makes an expenditure to further his/her nomination or election to the new office,
  • The candidate gives someone else permission to receive a contribution or make an expenditure to further their nomination to the new office,
  • The candidate files for the ballot (once filed, they have 10 days to file the Statement of Organization for the new committee)

Transferring Funds FROM a Current Committee TO a New One:

  1. The committee you want to transfer funds to must have equal or higher contribution limits (i.e.: House $1,000 per Individual, $10,000 for Independent PAC’s; Senate $2, 000 per Individual, $20,000 for Independent PAC’s) http://www.michigan.gov/documents/sos/2014_Contribution_Limits_443582_7.pdf
  1. You must have both committees open at the same time
  2. Recording transfers:
    1.   Contributions received before your last General Election (ie: Election Cycle) of your final term may be transferred in a lump sum.
    2. Contributions received after the last General Election of your final term must be itemized and attributed to specific contributors. These funds will count towards your new candidate committee’s contribution limits for each individual or PAC fund transferred.

In-Kind Transfers/Transfer of Assets:

The remaining value of any assets can be transferred to the new committee as an in-kind contribution (i.e. office furniture, equipment, etc.).  The transferring committee should record the transfer as an in-kind expenditure, while the receiving committee should record the asset as an in-kind contribution labeled “Transferred Assets”.

Non-Term Limited Candidates Running for another Office

The rules for transferring funds are similar for non-term-limited officeholders.

When the transferring committee raises funds after the candidate files to form a new committee (to run for a different office), these funds may be transferred to the new committee.  However, the contributions must be itemized and identified by contributor (using the LIFO or FIFO accounting method).  Campaign contribution limits will apply towards the candidate committee receiving the funds.

Use of Funds in Current Candidate Committee:

Candidates may continue to use their current candidate committee for incidental expenses that are ordinary and necessary expenses to holding that office.  However, they may no longer use this fund for campaigning or disbursements that further the nomination or election for any public office.  Some examples of how you may use these funds include:

  • Expenses used to assist, serve or communicate with a constituent(s)
  • Disbursements for supplies, furnishings or equipment for the current office
  • Expenses for a district office except for any campaign-related activity
  • Expenses for the public official or staff to attend conferences, meetings, receptions, etc.

A complete list of incidental expenses can be found at:

http://mertsplus.com/mertsuserguide/index.php?n=MANUALCAN.ExpendituresAndDisbursements 

Term Limited Officeholders Serving their Final Term (e.g. Transitioning Out) 

Use of Funds:

These officeholders may no longer use their candidate committee to make election

related expenses or expenditures that further the nomination or election for any public office.  However, the officeholder may continue to use committee funds for incidental expenses that are necessary to holding that office (see, “incidental expenses”). 

Disposing of Debts:

A committee must dispose of all of its debts to be eligible for dissolution.

Disposing of Debts from a Previous Election Cycle:

A contribution received by the committee is intended for the election cycle during which it was received.  However, a candidate committee may request that funds be designated for a previous election cycle in order to pay off debts incurred during that prior cycle, provided three conditions are met:

  1. The request for designation is in writing;
  2. The person contributing did not exceed the contribution limit during the election cycle the designation is requested for;
  3. The contribution designation does not exceed the candidate committee’s outstanding debts during the election cycle it is being assigned to.

Disposing of Funds:

A committee must dispose of all of its funds in order to be dissolved.  Unexpended funds may be:

  • Donated to a tax‐exempt charitable organization (note: The candidate may not assume the role of an officer or director of—or receive compensation from—the receiving organization);
  • Given to a Political Party Committee (state central, congressional district or county);
  • Returned to contributors;
  • Given to a House or Senate Political Party Caucus Committee if the person was a candidate for the office of State Representative or State Senator (the maximum contribution is $40,000 per year);
  • Given to an Independent Committee;
  • Given to a Ballot Question Committee;

A committee may request dissolution (it is not always automatic) after filing a final campaign statement as well as the schedules with the appropriate filing official.

Link to the Bureau of Elections Dissolution Form: http://michigan.gov/documents/Single_Page_Dissolution_Form_47225_7.pdf?20130806135546

Candidates for Local Offices – Village, Township, City, School or County

Candidates for local offices are allowed to use their same Candidate Committee to seek a second local office as long as the contribution limits for the new office are the same as, or greater than, the office they currently hold.

The rules for transferring funds from a local to a statewide Campaign Committee are the same rules for transfers between two statewide Candidate Committees.   However, the candidate must register the new (statewide) committee with the Michigan Bureau of Elections.  Each County may have different rules; it’s always a good idea to check with your local clerk to verify you are in compliance.

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 L Farnum, Incorporated.  L Farnum, Inc. is a firm that specializes in PAC & Lobby compliance, research and association management.  Lisa has been helping clients resolve campaign finance issues and maintain compliance for more than 16 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.

Links & Glossary

Contribution Limits by Elected Office:

http://www.michigan.gov/documents/sos/2014_Contribution_Limits_443582_7.pdf

Incidental Expenses

http://mertsplus.com/mertsuserguide/index.php?n=MANUALCAN.ExpendituresAndDisbursements

 

December 17, 2015 · Filed under Lisa Farnum


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