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

September 21, 2020
Ike Devji, JD
Volume 37, Issue 9

Common legal questions about political donations are discussed.

FROM THE PAGES OF MEDICAL ECONOMICS

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.

Who can make political contributions?

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.

What is a contribution?

A contribution can take many forms:

  • 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.

Who can’t make contributions?

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.
  • Federal government contractors.
  • Foreign nationals. There is an exception for green-card holders as permanent resident aliens.
  • Contributions in the name of another.

Can I donate anonymously?

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.

How much can I contribute?

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.

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

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