Summer is the perfect time to learn how to set up an efficient, scalable campaign treasury office. But forget summer school, we’ve put together a three-part Campaign S.U.N. Series. It contains the practices CMDI has developed from our experience working with 13 presidential campaign committees, including every GOP presidential nominee since Bob Dole.
S.U.N. stands for:
S is for “Structure”
Establish and document strict, internal controls on receivables and payables management at the beginning.
U is for “Unauthorized/Undisclosed/Unaccounted”
The three most costly infractions that you avoid through best practices.
N is for “Neutralize”
Neutralize the FEC and your opponent’s chance to embarrass or penalize you when an internal audit reveals an error.
The first concept we’ll focus on is how to structure your campaign treasury office. Establishing best practices for your campaign treasury office is where the groundwork is laid to empower your finance team to bring their fundraising strategies to life.
Aside from initial filing requirements for new committees, the treasury office is responsible for setting up vital internal controls to ensure compliance with FEC law and maximized control over campaign operations.
We highly recommend that your committee implement a self-auditing campaign treasury structure. In a nutshell, that’s a process of checks and balances that safeguard your campaign’s budget, assets and, just in case, prepares you for an FEC audit.
Budget
The establishment of a budget is a critical linchpin that will set the strategy of your campaign. Without a budget, it’s impossible to manage cash flow or the parameters for which your different departments can set their strategies. Finance and political will be unable to set their goals without knowing what resources are available to them. Without goals, it’s impossible to check on your managers’ effectiveness.
Campaign assets
Setting formal expenditure guidelines and policies for your treasury operations will reduce the risk of unmanaged cash drain and/or embezzlement. Treasurers who do not establish and follow expenditure policies can be considered legally complicit and financially responsible should embezzlement take place or to go-undetected. Why take the risk?
Preparing for a campaign audit
FEC audits are not an uncommon occurrence and their first request is usually a personnel record and flow-chart. Document the structure of your committee’s personnel roles at the formation of your campaign. Schedule monthly reviews of your committee structure documents to assure that they are always up to date. Should the unthinkable happen, you need to be able to prove that your committee structure took steps to guard against nefarious behavior or theft.
To implement a self-auditing treasury structure, follow these steps:
Develop strong internal controls
Think of internal controls as your campaign’s checks and balances.
Expenses
A simple but effective self-auditing tool for your accounts payable department is the use of two-step payment authorization. One individual should be responsible for managing vendor payments and creating/printing checks. A second person should be the “official” signer on the campaign account who will verify that the payments are correct. As the use of checks becomes less and less common, expense approval should still require a two-person process.
Revenues
Most revenue-related pitfalls can be avoided by implementing accounts-receivables best practices during the caging process. A comprehensive caging process that includes initial compliance screening and batch based processing insures that your donations are received in a FEC-compliant manner. If there’s any chance at all that your committee will be processing donations in volume, it is wise to hire a professionally tested team of donation-cagers and data-entry specialists who can quickly identify simple compliance infractions and resolve them during the caging process.
Often campaigns underestimate the requirements of the caging process and utilize volunteers who are unfamiliar with FEC compliance or have a higher risk of “misplacing” funds. The other advantage of hiring a professional caging and compliance service is the speed in which they can make donated funds available to a committee.
Require expense documentation and approvals
Establish and document all expense-approval requirements. For instance, each division director has a deputy who’s also authorized to approve expenses. For expenses over a certain amount, the campaign manager must also approve, so the campaign manager is always a third option for approval if the first two are unavailable.
In this time of instant communication technology, an invoice or expense request, followed by approval(s) can take place by text message. There’s never a reason why money should be going out the door without proper approval(s), and this principle must be applied to check, credit card or petty-cash expenditures.
FEC auditors, during their initial review of the personnel flow-chart, will determine who has been responsible for expense-authorization and will look for a clear pattern of approvals throughout the expense files. All communication that relates to the expense approval must be stored with the invoice or receipt for the goods or services.
Employ filing manager(s)
This may sound like overkill for a small committee, but selecting a staff member or vendor to be a filing manager creates your very own in-house Audit Response Liaison(s). Why is this important? This simple move will demonstrate to the FEC that you respect campaign finance law and have documented your activity to reflect adherence and appreciation for its intent: Transparency and accountability.
Filing managers serve as a final check on the expense and receipt-documentation requirements. If unable to file incomplete records, the filing manager will alert division directors so that proper back-up material can be collected and then filed.
Erik currently runs sales and marketing for CMDI, the largest Republican fundraising technology platform. Prior to joining CMDI, Erik founded numerous fundraising technology companies whose products have raised over $300 million for hundreds of political and cause-based organizations.