Federal Election Commission Main Page
October 5, 1990
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1990-16
Robert T. Markowski
Jenner & Block
One IBM Plaza
Chicago, IL 60611
Dear Mr. Markowski:
This responds to your letter dated August 2, 1990, requesting an
advisory opinion on behalf of James R. Thompson, the Governor of the
State of Illinois, and his campaign committee, Citizens for Thompson,
concerning the application of the Federal Election Campaign Act of
1971, as amended ("the Act"), and Commission regulations to a proposed
transfer of funds from a state campaign committee to a Federal
political committee.
You state that, in July 1975, Governor Thompson formed Citizens
for Thompson ("CFT"), a state campaign committee organized under the
laws of Illinois. CFT was the Governor's authorized campaign
committee for his election as Governor in 1976 and his reelection in
1978, 1982, and 1986. In 1989, CFT's statement of purpose was
expanded to provide that the committee is organized "for the purpose
of supporting ... other candidates for state and local elective,
appointive, and party offices ...." Newspaper reports have disclosed
that Governor Thompson announced in 1989 that he was not seeking
reelection.
You state that CFT has conducted fundraising activities since 1975
and, as of July 1990, has a balance exceeding $1 million. You state
that "a substantial portion of this amount" was raised from
contributions not exceeding $1,000 from individuals and that the
remainder was raised from corporations, labor unions, and individuals
contributing more than $1,000.1/
Governor Thompson has recently established a Federal nonconnected
political committee to support a number of candidates for Federal
office. The Statement of Organization for this committee, named "The
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1/ Individual contributions exceeding $1,000 and
contributions from corporations and labor unions are, with
certain exceptions, permissible under Illinois law. Illinois
Revised Statutes, ch. 46, Sc9-1, et seq.
America 2000 Fund" ("America 2000"), was received at the Commission on
August 2, 1990. Governor Thompson wishes to transfer funds from CFT
to America 2000. You state that, with respect to each transfer, CFT
will demonstrate through reasonable accounting methods that it has
sufficient funds obtained through individual contributions not
exceeding $1,000 to make the transfer. Initially, CFT proposes to
transfer approximately $25,000 to America 2000.
You ask whether CFT may make unlimited transfers of permissible
funds to America 2000. You also wish to know whether, if such
transfers are permissible, America 2000 may count toward the
contributor requirement for becoming a multicandidate committee those
persons who were the original sources of the funds transferred.
Commission regulations provide that transfers of funds may be made
without limit on amount between affiliated committees whether or not
they are political committees under the Act. 11 CFR 102.6(a)(1),
110.3(c)(1). Included within the definition of affiliated committees
are committees established, financed, maintained, or controlled by the
same person or group of persons. 2 U.S.C. Sc441a(a)(5); 11 CFR
100.5(g)(2), 100.5(g)(3)(v), 110.3(a)(1)(ii) and 110.3(a)(2)(v). The
situation presented by you essentially involves the proposed transfer
of funds from a state campaign committee supporting a number of
non-Federal candidates and committees to a political committee that
wishes to support a number of Federal candidates. Both committees are
controlled by Governor Thompson for campaign-related purposes and are,
therefore, affiliated committees. See Advisory Opinions 1987-12 and
1984-46. As such, the state campaign committee, CFT, may make
transfers to America 2000 that are not subject to the limits of 2
U.S.C. Sc441a and 11 CFR 110.1.
According to the Act, a committee which receives contributions
aggregating in excess of $1,000 during a calendar year, or which makes
expenditures in excess of $1,000 during a calendar year, is a
political committee.
2 U.S.C. Sc431(4); 11 CFR 100.5(a). The terms "contribution" and
"expenditure" include any gift, payment, distribution, advance, or
deposit of money or anything of value "for the purpose of influencing
any election for Federal office."
2 U.S.C. Sc431(8)(A)(i) and 431(9)(A)(i); 11 CFR 100.7(a)(1) and
100.8(a)(1).
By making transfers exceeding $1,000 in a calendar year to America
2000, CFT will become a political committee.
2 U.S.C. Sc431(4); 11 CFR 100.5(a). However, CFT may qualify as a
political committee even before making such transfers, i.e., if CFT
disburses in excess of $1,000 in a calendar year to solicit funds that
it intends to transfer to America 2000 or if it receives in excess of
$1,000 in response to solicitations informing contributors that such
funds may be transferred to America 2000 or otherwise used for Federal
purposes.
Upon achieving political committee status, CFT would be required
to register and report as a political committee, disclosing on its
first report the sources of the funds in its accounts when it became a
political committee. See
11 CFR 104.12. This cash on hand would be presumed to be composed of
those contributions most recently received by CFT prior to the
transfer, and CFT would have to itemize such prior contributions to
the extent required by the Act.
11 CFR 104.12. 2 U.S.C. Sc434(b); 11 CFR 104.3(a). CFT would be
required to exclude from the amount of cash on hand any funds not
permissible under the Act, i.e., contributions from corporations,
labor organizations, and Federal contractors.2/ CFT would also be
required to exclude contributions from individuals and committees
which, when aggregated for each donor, exceed the $5,000 limit per
donor for contributions to political committees that are not
authorized committees or
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2/ Presumably, CFT, regardless of its present non-Federal
status, has not received contributions from national banks,
corporations organized by authority of any law of Congress,
or foreign nationals. Such entities are forbidden from
making both Federal and non-Federal contributions. 2 U.S.C.
ScSc441b(a) and 441e.
national party committees.3/ No funds required to be excluded from
cash on hand may be included in any proposed transfer to America 2000.
2 U.S.C. ScSc441b, 441c, 441a(a)(1)(C), and 441a(a)(2)(C). Advisory
Opinions 1985-2, 1984-46, and 1982-52. See 11 CFR 104.12 and
102.6(a)(1)(iv).
Since funds not permissible under the Act may not be combined with
permissible funds of a political committee, the impermissible funds
must be transferred out of CFT's account within 10 days of CFT
becoming a political committee. See
11 CFR 103.3(b).4/ Because the impermissible funds are being purged
from CFT's account, CFT would not be required to disclose the
impermissible funds. Rather, the cash on hand would consist of those
permissible contributions and receipts remaining. In addition, since
the funds of the beginning cash on hand, although originally
contributed for state campaign purposes, will now be used for Federal
activity, the persons contributing those funds should be notified that
their contributions will be subject to the limitations and
prohibitions of the Act. See 11 CFR 102.5(a)(2). See Advisory
Opinion 1985-18.
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3/ Such aggregation shall occur for contributions to CFT
regardless of whether they were made in 1990 (presumably the
year of the transfer) or in previous years. The first year
of CFT's existence as a Federal committee will be the year
that such funds are received for the purposes of Federal
activity. Additionally, as a result of the affiliated status
of CFT and America 2000, those whose transferable donations
to CFT reached $5,000 may not contribute to either America
2000 or CFT, for Federal purposes, during the remainder of
1990 (and those whose transferable donations are less than
$5,000 may only contribute up to that amount to both
committees in 1990). 11 CFR 110.3(a)(1).
For the permissibility of including funds from state
committees contributing to CFT that are not political
committees and that may themselves have funds from
impermissible sources, see Advisory Opinion 1983-34.
4/ The Commission would not extend the requirement to
actually transfer out the impermissible funds from CFT if CFT
were transferring funds on a one-time basis and then
terminating its political committee status. CFT, however,
apparently intends to continue as a political committee.
(See discussion below as to Federal and non-Federal accounts
under 11 CFR 102.5(a)(1).)
In practice, the cash on hand would be determined as follows: If
CFT has $1 million cash on hand when it becomes a political committee,
but $200,000 of the most recently received $1 million is from
prohibited sources, then CFT is left, preliminarily, with $800,000
cash on hand. In addition, if some of the aggregate contributions
from individuals exceeded $5,000, and the total of the amounts in
excess of $5,000 per donor is another $100,000, then that figure
should also be subtracted, leaving $700,000. Finally, the total of
contributions from persons to whom a 102.5(a)(2) notification has not
been sent also should be subtracted. The contributions comprising
this total must be itemized in accordance with the requirements of 2
U.S.C. Sc434(b) and listed as the beginning cash on hand for the first
report. See Advisory Opinions 1985-2, 1984-46, and 1982-52.
Your request indicates that CFT proposes to make an initial
transfer of $25,000 and then continue to make transfers to America
2000. It appears, therefore, that CFT will continue as a political
committee after the initial transfer. In addition, there is no
indication from your request that CFT will cease to raise funds for
non-Federal activities. Under 11 CFR 102.5(a)(1), an organization
that qualifies as a political committee and that finances political
activity in connection with both Federal and non-Federal elections has
the affirmative duty to adopt one of two accounting plans. Advisory
Opinion 1988-33.
The first plan entails the establishment of a Federal account in a
depository in accordance with 11 CFR 103.2. This account will be
treated as a separate Federal political committee that must comply
with all of the requirements of the Act. Only funds subject to the
Act's prohibitions and limitations may be deposited in such an
account. All disbursements, contributions, expenditures, and
transfers by the committee in connection with any Federal election
must be made from this account. Furthermore, no transfers may be made
to this account from any other account maintained by the organization
for non-Federal purposes. 11 CFR
102.5(a)(1)(i). The second plan entails the establishment of one
political committee that shall receive only contributions subject to
the Act's limitations and prohibitions regardless of whether the
committee makes disbursements (including contributions) with respect
to both Federal and non-Federal elections. 11 CFR 102.5(a)(1)(ii).
Assuming CFT proceeds with its proposed activity and registers as
a Federal political committee, it shall either comply with the first
plan and maintain the impermissible funds in a separate non-Federal
account, or comply with the second plan and divest itself of the
impermissible funds so that such funds are used only for purposes
other than influencing any Federal election. In either event, the
Federal political committee may only raise contributions that are
designated for the Federal account (whether the separate account or
the committee in the second option), that result from a solicitation
expressly stating that the contribution will be used in connection
with a Federal election, and that come from contributors who are
informed that all contributions are subject to the limitations and
prohibitions of the Act. 11 CFR 102.5(a)(2).
Therefore, if CFT wishes to continue to raise funds for use with
respect to non-Federal elections that are not subject to the
limitations and prohibitions of the Act, it must do so in accordance
with the plan set forth in 11 CFR 102.5(a)(1)(i). In addition, if CFT
chooses the first plan, it may not transfer funds from any non-Federal
account to any Federal account for subsequent transfer to America
2000.
11 CFR 102.5(a)(1)(i). CFT may, however, continue to make transfers
to America 2000 from those funds comprising its beginning cash on hand
as a "political committee" since those funds must be brought into
compliance with the Act and Commission regulations.
You ask whether America 2000, for purposes of meeting the
qualifications for a multicandidate committee, may count as
contributors those persons who are the original sources of the funds
transferred by CFT.
Under the Act and Commission regulations, a multicandidate
political committee is a political committee which has been registered
for not less than six months, which has received contributions from
more than 50 persons, and which (except for any State political party
organization) has made contributions to five or more Federal
candidates.
2 U.S.C. Sc441a(a)(4); 11 CFR 100.5(e)(3). Contributions by a
multicandidate committee are subject to the limits of
2 U.S.C. Sc441a(a)(2), rather than Sc441a(a)(1), thus enabling it to
contribute $5,000, rather than $1,000, to a Federal candidate with
respect to an election.5/
In prior opinions, the Commission has concluded that, since all
affiliated political committees share a single contribution limit and
may make unlimited transfers among themselves, a newly created
political committee that becomes affiliated with a pre-existing
multicandidate committee qualifies for treatment as a multicandidate
committee. Advisory Opinions 1986-42 and 1983-19. Accordingly, the
Commission has permitted two affiliated political committees to rely
on the contributions made and received by either one, along with the
period of FEC registration of the older committee, to achieve
multicandidate committee status. Advisory Opinion 1980-40. In
addition, the Commission, in permitting the conversion of a principal
campaign committee into a potential multicandidate committee, has
determined that the transformed committee may avail itself of the
period of registration of the principal campaign committee and the
number of contributions received and made by the principal campaign
committee. Advisory Opinions 1985-30 and 1982-32. See Advisory
Opinions 1988-41 and 1987-11. Those persons who have been notified
that their CFT donations are subject to Federal limitations and
prohibitions can be viewed as having had their non-Federal donations
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5/ Multicandidate committee status, however, limits the
committee's contributions to a national party committee to
$15,000 in a calendar year, rather than $20,000.
converted to CFT Federal contributions. Accordingly, the Commission
concludes that such persons may be counted toward the 51 contributor
requirement to enable America 2000 to achieve multicandidate committee
status.
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the Commission,
to the specific transaction or activity set forth in your request.
See 2 U.S.C. Sc437f.
Sincerely,
(signed)
Lee Ann Elliott
Chairman for the
Federal Election Commission
Enclosures (AOs 1988-41, 1988-33, 1987-12, 1987-11, 1986-42,
1985-30, 1985-18, 1985-2, 1984-46, 1983-34,
1983-19, 1982-52, 1982-32, and 1980-40)