After an exhausting midterm cycle and a brief holiday respite, practitioners are back in the swing of things.
Even though 2019 is largely an off-election year, there are many types of political committees and organizations that want to hit the ground running for 2020.
The time to lay the proper foundation is now. As was previously mentioned in these pages, it’s imperative to hire a competent campaign finance/election law attorney. A good attorney is the starting point for everything.
How to structure the entity? Where to register the entity? Where do I need to file? The lawyer is a good quarterback for the team. After a lawyer, the second people to call is an experienced compliance team. The compliance team is like the offensive line. They protect the quarterback and block for the running back and wide receivers, who are the strategic decision makers of the campaign.
The first item a political organization should look into is insurance. Insurance is a topic that no one likes to discuss but it’s important. Insurance is something that you don’t need when you have it, but don’t have when you need it. Key insurance products to explore include general liability insurance, directors and officers insurance, and even workers compensation insurance. Beware of each state’s idiosyncratic administrative requirements.
For example, some states require that any entity that has employees must procure workers compensation insurance. The fine for not doing this can be pretty hefty. New campaigns without institutional knowledge are particularly susceptible to botching this. For example, it was reported recently that newly elected Congresswoman Alexandria Ocasio-Cortez’s campaign was fined $1,500 by New York for not fulfilling that requirement.
In many cases, with the new cycle also comes new campaign finance rules with which campaign participants must become familiar. Just when campaign professionals get used to a state’s quirks, the rules often change overnight. For example, New York State was known for its so-called “LLC loophole.” Basically, an individual could theoretically circumvent individual contribution limits by donating through various LLCs. New York recently passed a law that eliminated the loophole and has now imposed filing requirements on the LLCs themselves to disclose ownership interests.
At the federal level, most likely starting sometime in March or April of 2019, there are also changes to how committees report multi-state IEs in presidential primaries.
For a long time, there was confusion among campaign finance practitioners regarding how to report IEs disseminated in several states, but whose content was not geared to any state in particular. The FEC Form 3X had space limitations in the state field. It also wasn’t clear to which state’s primary the committee should use as the metric for complying with the applicable 24-hour or 48-hour reporting requirements.
The previous guidance directed committees to allocate the cost among all the states where the IE was disseminated. For IEs disseminated in less than six states, the old rule is still in effect. But for IEs disseminated in six or more states, a new approach will be required.
The committee will be required to report the IE as a single expenditure and indicate the specific states or region where the IE was distributed. In terms of determining when the report is due (whether it be within 24 hours or 48 hours of dissemination), the committee would look to whichever of those states has the next presidential primary.
With each election cycle, there’s a combination of the fundamentals, mixed with new twists. The key is to lay the proper groundwork with seasoned professionals with lots of experience from prior cycles yet at the same time nimble enough to adapt to changes in the environment.
Brad Crate is the founder and president of Red Curve Solutions, a GOP compliance firm.