Ike Devji, JD

Much is happening in the country this year that has inspired people to become more politically active, and physicians are no exception. What follows are basic answers to common legal questions about political donations. This summary is not specific legal advice and should be treated as a resource for your own compliance and due diligence.

Individuals and certain specific business entities, including some LLCs and partnerships depending on how those entities are taxed. (But not your “professional corporation”; details follow.) Individuals can contribute to candidates, parties, and a variety of political organizations in different amounts. Both minors and adults can give, but you are not allowed to give your minor children money specifically to make contributions that you are directing. It needs to be their own money and their choice.

Direct monetary contributions and personal loans;

In-kind contributions of goods and services offered free or below market rate; or

Funds obtained through sales, fundraisers and purchases of political items or event tickets.

The list of prohibited donors is long and detailed, so for the purposes of this discussion, some key details will be highlighted.

Campaigns are prohibited from accepting contributions from certain types of organizations and individuals:

Your “professional corporation.” Although law firms, doctors’ practices, and similar businesses are often organized as partnerships, some of these businesses may instead be professional corporations. Unlike a partnership, a professional corporation is prohibited from making any contributions because contributions from corporations are unlawful.

Corporations, including nonprofit corporations. However, contributions from a separate segregated fund are permissible.

Labor organizations. Yet, funds from a separate segregated fund are permissible.

Foreign nationals. There is an exception for green-card holders as permanent resident aliens.

Probably not, at least not directly to a specific candidate.

An anonymous contribution of cash is limited to $50, per the Federal Elections Commission (FEC). Any amount in excess of $50 must be promptly disposed of and may be used for any lawful purpose unrelated to any federal election, campaign, or candidate.

Federal law requires disclosure of most significant contributions over $200. This includes donors’ names, addresses, occupations, and employer information, which then become public record freely available and tracked by the FEC. Many organizations report all contributions to stay on the safe side of disclosure laws.

Federal law requires that all political action committees, political parties, and federal candidates disclose any and all contributions received that are more than $200. This information then becomes public record.

Many are surprised that individuals are most limited in giving money to a specific candidate directly ($2,800), but they can make very large contributions ($100,000 or more) to a national party committee account. They also can give away millions through other methods. The FEC has a very detailed chart that breaks down contribution limits based on the type of donor and the type of recipient. Cash (actual currency) contribution limits are most specifically limited by the FEC. A campaign may not accept more than $100 in cash from a particular source with respect to any campaign for nomination for election or for election to federal office.

has practiced law exclusively in the areas of asset protection, risk management, and wealth preservation for the last 16 years. ❒

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Common legal questions about political donations are discussed.

Take 5 Before You Give 5: The Dos and Don’ts of Political Contributions

Things are now much more complex and the burden on doctors and practice managers is greater than ever before. Here’s how to plan for it.

As you have seen in the wide range of topics covered as part of our exploration of asset protection over the last few months, the days of doctors simply opening an office and treating patients as a business model are long gone. Things are now much more complex and the burden on doctors and practice managers is greater than ever before.

I strive to proactively identify and eliminate as many risks as possible. The best practice of risk mitigation in all forms includes examining the fine details of essential financial and legal planning. As a beginning roadmap through this complex legal landscape I provide the following list that physicians and practice managers can use to perform a “self-exam” on these vital issues in two parts.

While the list may appear long, it is by no means complete, as new threats and solutions evolve on an almost daily basis. The good news? We can break it down into simple categories that can be addressed one issue at a time with great efficiency of scale and cost.

 Let’s make sure it’s enough, and then let’s have a back-up plan (See item #2 below). This refers to both professional (malpractice) and personal liability coverage. These days we see six and seven figure exposures from routine events like auto accidents, business disputes, and employee lawsuits, as just three examples.

 Think of it as Net Worth Insurance. Distancing you from your assets and protecting them from your personal and professional liability. This requires simple, cost effective and pro-active planning today while you still have well defined legal options. There is little or nothing to be done, except paying defense or bankruptcy attorneys, if you get caught in a suit before you do something.

Employment Practices Liability Insurance:

 What’s also know as “EPLI” coverage is more important than ever, especially given the current economic/employment climate. Your practice is five times more likely to be sued by an employee than anyone else.

 Making sure the money you make is working as hard for you as you worked for it and that the planning you have in place includes both growth and loss-prevention strategies. A plan that is all upside and has no risk tolerance is a sure loser; remember what happened in 2001 and 2008.

Protecting cash flow against injury and illness at the times you need it the most. Large amounts of coverage with lots of sophisticated bells and whistles are available. Also make sure that your cross-purchase or buy-sell agreements are properly funded. If a partner or key employee has a stroke or some other debilitating illness, how long will the practice be willing and able to make large monthly payments to a non-productive partner?

Make sure you have appropriate amounts in place to cover estate taxes, generate income for survivors and pay off debts you want settled. Also make sure that you are not paying too much and have the most flexible policy with the greatest number of benefits. Again, cross-purchase and buy-sell agreements must be carefully funded. We routinely see these agreements between our business owner clients that are either unfunded or under-funded. If a partner dies with no coverage or inadequate coverage in place you could easily find yourself across from their family in a courtroom explaining why the business should not be liquidated to pay them the deceased’s share.

 Making sure that you and your employees are protected against injuries and their rising costs.

 From basic benefits like 401K to Executive Compensation planning. There are a number of ways to provide these benefits; some are more advantageous to you, the business owner/employer than others.

 Governs their rights and your responsibilities, controls actions in the workplace and your employer policy. If you don’t define certain polices the courts (or worse, the employee’s attorneys) will define them for you. This is one of the highest ROI investments you can make in your business, in my opinion.

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