Ethics Rules Relating to Election Funding
Regulating Gifts to Elected Officials
The acceptance of any gift or benefit from someone seeking favor with an elected official may raise the potential for corruption.
Most jurisdictions have ethics rules limiting or prohibiting elected officials from accepting gifts, meals, travel or other “benefits” from outside sources, including lobbyists. Rules that require gifts or benefits received to be reported exist at the federal level and in many states and localities. (Political contributions are generally exempted from the definition of gift.) These laws should be regularly reviewed to ensure that they not only prevent actual corruption, but also the appearance of corruption and provide complete transparency for any favors. From the public’s perspective, the acceptance of any gift or benefit from someone seeking favor with an elected official may raise the potential for corruption. Therefore, the definition of a gift, deciding who may give a gift and the limit on what can be accepted, and ensuring transparency, will all impact the public’s confidence in their elected leaders. When setting the limit for the acceptance of gifts by elected officials, consideration should be given to whether it should ever be acceptable for an elected official to accept a gift of any value from a lobbyist or anyone seeking to influence the official. In fact, given the unique role elected officials have in our democracy, thought should be given to whether an elected official should ever accept a gift from any source other than a family member or someone with a close personal relationship unrelated to the office the elected holds.
The Ethics of Soliciting and Accepting Political Contributions While Legislating
Ethics rules for elected officials generally set the limits on gifts they can accept, but do not cover campaign contributions.
Campaign finance laws regulate the conduct of individuals, organizations, corporations, political committees and candidates in the context of elections for public office by limiting or prohibiting certain contributions to candidates. At the same time, ethics rules for elected officials generally set the limits on gifts they can accept, but do not cover campaign contributions. This means that an individual seeking influence with an elected official may be prohibited from buying the elected official a $200 gift, but can make a contribution of $200 (or more) to their political campaign. Other ethics rules that apply to candidates may include:
- Restrictions on soliciting or receiving contributions on government property;
- Prohibitions on use of government property to campaign;
- Restrictions on receipt of honoraria.
Lobbyists and Election Campaigns
Contribution restrictions and disclosure
Putting aside the practice of lobbying as it has evolved, or at least as it is perceived by the public, a lobbyist is someone who tries to influence government officials to make decisions for or against something, usually acting as a representative of a particular interest group. With that simple definition, it is fair to say that a lobbyist is exercising the First Amendment right “to petition the Government for a redress of grievances,” which is fundamental to our democracy. The problem is not that we have lobbyists; it is the tools and methods they use to persuade our elected representatives to take whatever action they are advocating.
The problem is not that we have lobbyists; it is the tools and methods they use to persuade our elected representatives to take whatever action they are advocating.
Rather than relying on the persuasiveness or soundness of the merits of their case, or even the argument that they are representing the will of the legislator’s constituents, too many lobbyists depend on the ability to make or control large political contributions, which can be used as a promise or threat. This promise of financial support or threat of financial opposition usually comes from special interests with little or no direct ties to the legislator’s real constituents. Acting in this way, lobbyists are not just “petitioning the Government for a redress of grievances.” Rather, they are undermining representative democracy by wielding disproportionate power through political contributions to try to ensure that their “petitions” are heard and their “grievances” rise above the interests of the elected official’s real constituents.
The federal government, as well as most states and many local governments, have laws regulating paid lobbyists. While the definition of lobbyist as well as the nature of the regulations varies, these laws generally require lobbyists and/or their clients to register and report certain lobbying activities, including money spent on lobbying and the issues or bills being lobbied. Some laws also require lobbyists to separately report political contributions or place additional limitations as to amount or timing of political contributions. Some states prohibit lobbyist contributions altogether. For example, in South Carolina, elected officials may not accept contributions from lobbyists registered to lobby their office. Likewise, candidates may not accept contributions from lobbyists registered to lobby the office the candidate seeks. The laws are aimed at preventing the real or apparent corruption that can arise when the special relationship lobbyists have with elected officials is combined with political contributions. Lobbying reforms directed at the potential corrupting influence of political contributions may include:
- Broad definition of lobbying activity;
- Low thresholds for triggering registration as a lobbyist or lobbying firm;
- Regular and detailed reporting of lobbying activity, affiliations and standardized descriptions of issues and bills;
- Separate reporting of direct political contributions, as well as fundraising of lobbyists, lobbying firms and those who employ lobbyists and
- Separate limits or prohibitions on lobbyist contributions.
While some jurisdictions separately limit or prohibit lobbyist contributions, there are also proposals for ethics rules that set the parameters for permissible activities of elected officials who accept political contributions or other support from those seeking influence or access. For example, reforms that have been proposed include:
- Prohibiting elected officials from fundraising from lobbyists or their paying clients;
- Prohibiting elected officials from taking actions to benefit special interests that provide them with large contributions and
- Preventing the expectation of obtaining a lobbying position from influencing an elected official’s or senior staff’s decision-making while in office by enacting stringent “revolving door” rules prohibiting employment as a lobbyist for up to five years after leaving office.
Preventing Evasion of Disclosure Rules, Contribution Limits and Source Prohibition
As discussed, the Supreme Court in Buckley and Citizens United established a constitutional framework for campaign finance reform legislation that permits limits on contributions but allows unlimited expenditures by individuals and corporations for campaign activity undertaken independently of a candidate. However, the Supreme Court has been very clear that the constitutional distinction between independent expenditures and contributions rests on the presumption that independent expenditures are truly independent of the campaign. In Buckley the Court held:
Unlike contributions, such independent expenditures may well provide little assistance to the candidate’s campaign and indeed may prove counterproductive. The absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the expenditure to the candidate, but also alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.
There is little question that the relationships that exist between many so-called independent super PACs and the candidates they support in no way comports with the Supreme Court’s understanding of what it means for an expenditure to be “independent” of a candidate.
Within this framework, money spent on activity that is “coordinated” with a candidate is considered an “in-kind” contribution to the candidate and is subject to any contribution or source prohibitions, as well as reporting requirements, applicable to contributions. For example, if coordinated with a candidate, an expenditure in excess of the contribution limits that would be legal as an independent expenditure becomes an illegal excessive contribution that is not properly reported by the candidate. If that coordinated expenditure is made with corporate funds in a jurisdiction that prohibits corporate contributions, it also violates that prohibition. Therefore, clear and effective rules ensuring that activity is truly independent of the candidate is critical to enforcement of the contribution limits. These rules should address treating expenditures made in support of a candidate as contributions if:
- Made by any committee or organization that is established, maintained, financed or controlled by the candidate, or his or her agents;
- The candidate, or his or her agents, raised funds for the committee or organization making the expenditure;
- The candidate, or his or her agents, shared the campaign’s plans, projects, strategy or needs with the individual, committee or organization making the expenditure;
- The individual, committee or organization making the expenditure employed or utilized the services of former staff of that candidate and
- Any other facts or circumstances exist that suggest “prearrangement and coordination” with the candidate.
Contributions in the Name of Another
One method used for trying to evade the contribution limits or prohibitions involves giving money to others who then make contributions in their own name. Campaign finance laws should make it illegal for a person or corporation to provide money to another person or organization with the intent that the contribution be passed on to the recipient candidate or PAC in the name of the conduit. Properly drafted, this prohibition should cover someone using an LLC or other business entity as a conduit for a contribution to a super PAC.
Doing Business with a Candidate
Any business that provides a candidate with any goods or services at less than fair market or with a discount that is not normally available to others is making a contribution to the campaign.