AO 2016-15: Joint fundraising committee may hold contributions in escrow pending state party status determinations

A joint fundraising committee may solicit, accept, and hold in escrow certain contributions designated for participating committees, pending their recognition as state party committees. If the Commission approves state party status for the committees, they would be able to accept twice as much from an individual contributor as they can accept currently—up to $10,000 per calendar year, rather than $5,000 per calendar year. However, if the Commission does not approve state party status, or if a participating committee does not submit a timely advisory opinion request (AOR) seeking recognition as a state party committee, then the joint fundraising committee must return any excessive contribution amounts from the escrow account to the original contributors.

Background
The Gary Johnson Victory Fund (GJVF) is a joint fundraising committee that is composed of Gary Johnson 2016, the principal campaign committee of Libertarian presidential nominee Gary Johnson, and 24 separate Libertarian committees. None of the participating Libertarian committees have been recognized by the Commission as a "state party committee," although 13 of the 24 have submitted pending AORs seeking such recognition. Eight of the remaining 11 committees have submitted letters regarding their status as state party committees, but those submissions have not yet qualified as AORs. The remaining 3 Libertarian committees have not submitted requests to the Commission regarding their potential status as state party committees.

GJVF solicits contributions on behalf of all of its 25 participants and distributes the net proceeds according to the joint fundraising agreement signed by all participants. Currently, the contribution limit for Gary Johnson 2016 is $2,700 per individual contributor, per election, and the contribution limit for each participating Libertarian committee is $5,000 per calendar year from each contributor. As such, the maximum contribution that GJVF may accept from any single individual contributor is currently $122,700.
GJVF wishes to solicit and accept contributions up to $227,700, the maximum amount an individual could give if each participating Libertarian committee were recognized as a state party committee. Of the $227,700 from each donor, GJVF would designate $2,700 to Gary Johnson 2016, $10,000 (the current calendar year limit for individual contributions to a state party committee) to each of the participating Libertarian Party committees, and $5,000 (the current calendar year limit for individual contributions to a nonconnected political committee) to each of the other participating committees.

GJVF proposes to hold any funds in excess of the $5,000 calendar year contribution limit for nonconnected committees (including party committees not recognized as state parties) in escrow pending Commission approval of any AOs that grant state party status to participating committees. GJVF will not disburse any contribution amounts in excess of $5,000 to a participating committee unless the Commission expressly recognizes it as a state party committee. In the event that the Commission denies a pending request (or does not reach a determination by the required four affirmative votes) for state party committee status or if a pending committee were to withdraw its request before the Commission issues a response, GJVF will return any escrowed funds designated for such a committee directly to the original contributor(s).

If any participating committees do not submit an AOR to the Commission by November 8, 2016, GJVF proposes to return the funds held in escrow for those committees to the original contributor(s).

Analysis
As noted above, the Federal Election Campaign Act (the Act) and Commission regulations currently permit individuals to contribute up to $2,700 per election to federal candidates. 52 U.S.C. § 30116(a)(1)(A) and 11 CFR 110.1(b). An individual may also contribute up to $10,000 per calendar year to a state political party committee, and up to $5,000 per calendar year to any other nonconnected political committee. 52 U.S.C. § 30116(a)(1)(C)-(D) and 11 CFR 110.1(c)(5) and (d).

The Act and Commission regulations permit federal candidates and committees to engage in joint fundraising by establishing a separate political committee to serve as a joint fundraising representative. 52 U.S.C. § 30102(e)(3)(ii) and 11 CFR 102.17(a). The joint fundraising representative is required to collect contributions, pay fundraising costs from gross proceeds and disburse net proceeds to each participant. 11 CFR 102.17(b)(1). A contributor may make a contribution to the joint fundraising representative that represents the total amount the contributor could contribute to all of the participants under the applicable contribution limits. 11 CFR 102.17(c)(5).

Commission regulations define a state committee of a political party as one that "by virtue of the bylaws of a political party or the operation of a State law is part of the official party structure and is responsible for the day-to-day operation of the political party at the State level, including an entity that is directly or indirectly established, financed, maintained, or controlled by that organization, as determined by the Commission." 11 CFR 100.14(a). A political committee is considered a state party committee (and thus eligible for the higher contribution limits) once the Commission makes such a determination through the Advisory Opinion process. See, for example, AO 2010-13 (Libertarian Party of Florida).

In several previous advisory opinions, the Commission has concluded that committees may solicit, accept and hold contributions that will be passed along to other committees upon the occurrence of certain conditions. For example, the Commission held in Advisory Opinion 2014-19 (ActBlue) that a committee could accept contributions that were designated by the contributors for an as-yet-unnamed "nominee" of a political party or for a specific individual who had not yet become a candidate. See also, AOs 2006-30 (ActBlue), 2003-23 (WE LEAD) and 1982-23 (Westchester Citizens for Good Government). In each of these opinions, the contributors had ultimate control as to whom or which committee their contributions would be directed and the intermediary political committee would exercise no discretion with regard to the disposition of the conditional funds.

GJVF's proposal is analogous to these previous proposals approved by the Commission. GJVF will hold any potentially excessive contributions in escrow pending a participating committee's recognition as a state political party committee. GJVF will inform contributors of the conditions and potential disposition of funds if state party status is not met or if a committee does not ultimately submit an AOR to the Commission.

The Commission concluded that GJVF may solicit and accept contributions of up to $227,700 per individual contributor (of which up to $2,700 would be directed to Gary Johnson 2016, $10,000 to each participating Libertarian state party committee, and $5,000 to each nonconnected political committee), and that GJVF may hold any amounts in excess of $5,000 per committee in escrow until the Commission approves its status as a state party committee. In the event that state party status is not requested by a committee or is not granted by the Commission, or in the event that the Commission does not reach a determination by the required four affirmative votes, GJVF must refund any amount over $5,000 to the original contributor.

Date issued: October 13, 2016; 6 pages

Editor's Note: In AO 2016-14, approved on October 27, 2016, the Commission recognized 11 of the committees in this request as state party committees.

Resources:

• Advisory Opinion 2016-15 [PDF]