May Lobbyists Still Host Campaign Fundraisers?

Posted March 20, 2009 at 2:54pm

Q: As a lobbyist in the Washington, D.C., area for many years, I have frequently hosted fundraisers for Congressional campaigns. I am a one-man operation, and these events have been one of my most reliable ways to network with Members and staffers. I am trying to determine whether the recent efforts to crack down on lobbyists’ interactions with Members require me to discontinue these fundraisers. In particular, I know that there a new rules concerning funds raised by lobbyists. Do these rules prohibit me from hosting fundraisers for Members’ campaigns?

[IMGCAP(1)]A: Your question is very timely. Just last month, the Federal Election Commission published new rules requiring campaign committees to disclose funds raised by lobbyists. Their stated purpose is to make transparent the influence that lobbyists such as yourself might gain by fundraising on behalf of a campaign committee.

The rules implement requirements set forth in Section 204 of the Honest Leadership and Open Government Act of 2007. Even before the HLOGA, campaign committees were required to identify people who personally made large contributions. Now, under Section 204 of the HLOGA, campaign committees must also identify lobbyists who raise contributions from other people as well. The requirements apply to federal candidate committees, leadership PACs and party committees. A committee’s disclosure requirement is triggered if, during a given six-month period, it receives more than $16,000 in contributions that were “bundled— by a lobbyist. Contributions made personally by a lobbyist do not count toward the limit.

So, what does it mean for contributions to be “bundled—? Under the rules, there are two ways that funds can qualify as being bundled. The first is when a lobbyist “forwards— contributions directly to the committee. To be forwarded means to be delivered or transmitted by the lobbyist, whether physically or electronically. Therefore, if, during a relevant period, a lobbyist delivers or transmits more than $16,000 to a committee, the committee must publicly disclose the amount and the name of the lobbyist.

The second type of bundled contribution is one that the committee “credits— to a lobbyist. This occurs when, through records, designation or some other means, the committee recognizes the lobbyist as being responsible for raising the contribution. The rules include a nonexhaustive list of ways in which a committee might recognize the lobbyist.

For example, a committee “credits— a lobbyist when it gives the lobbyist a title, such as “ranger,— corresponding to the amount of funds the lobbyist raised. Another way for a committee to credit the lobbyist is to provide access to certain exclusive events or activities as a result of the contributions.

In addition, if the committee maintains a tracking identifier or any other record tying the contribution to a particular lobbyist, this may qualify as crediting the contribution to the lobbyist. One more example of crediting described in the rules is a memento, such as a photograph or autographed book.

In all of these cases, the rules stress that the focus is on how the committee views the contributions — not how the lobbyist views them. If the committee takes some action to credit the contribution to the lobbyist, then it qualifies as being bundled.

So, how do these rules apply to your fundraisers? Most importantly, the mere fact that a lobbyist hosts a fundraiser does not mean that the committee must treat all contributions from the fundraiser as having been “bundled’ by the host lobbyist.

Rather, the rules say contributions received at the lobbyist’s fundraiser are bundled only if they fall under the circumstances described above. That is, they qualify if the lobbyist forwarded the funds or was credited for them. Therefore, at the events that you host, the funds raised do not count as bundled contributions unless you forward the funds to the committee or you are somehow credited by the committee.

Suppose, for example, you host a campaign fundraiser where the attendees donate $100,000, well above the $16,000 threshold at which disclosure is triggered. Suppose also that you do not forward the funds to the committee, but rather the attendees make the contributions personally. In this circumstance, the committee would not be required to disclose your identity unless it credited you in some way for the funds raised.

In sum, the new rules do not prohibit your fundraisers. In fact, the new rules are not a prohibition at all. Rather, they are a disclosure requirement. So, even if you were to bundle $100,000 of contributions for a committee during one of your fundraisers, this would not mean that you would be breaking the law. Rather, it would mean that the committee receiving the contributions would be required to disclose the fact that you had bundled $100,000 for the committee.

So if you don’t mind the world knowing about your fundraising efforts, fundraise away.

C. Simon Davidson is a partner with the law firm McGuireWoods LLP. Click here to submit questions. Readers should not treat his column as legal advice. Questions do not create an attorney-client relationship.