It’s another Saturday, so for those who tune in, welcome to the Nuts & Bolts of a Democratic Campaign. Each week, we discuss issues that help drive successful campaigns. If you’ve missed prior diaries, please visit our group or follow Nuts & Bolts Guide. We’re discussing in-kind contributions this week, and how to stay on the right side of your state ethics reporting.
Before we start talking about in-kind, we need to make very clear we are talking about state and local races. When you talk to those who are concerned about federal races, in-kind contributions are something most campaigns will generally try to avoid. There are specific reasons for this, but most significantly is that in-kind contributions represent the quickest way to gain campaign finance infractions because of poor reporting, lack of understanding, or violation of limits.
Jessica Jones is running a state level race. And in state level races things are a bit different. Completely avoiding in-kind contributions in a state level race really isn’t practical, but making sure you follow the rules and minimize their use can save you a lot of heartache.
BEFORE WE START: IN-KIND, INDEPENDENT EXPENDITURES, AND VOLUNTEERS
Before we talk about in-kind donations, we need to separate in-kind from independent expenditures and volunteer efforts.
Volunteers are free to give time and effort to a campaign without compensation in most cases. They can walk, make phone calls, stuff envelopes, or any other volunteer effort. Volunteers, however, offer services in which they are normally paid or compensated without some valuation. If a volunteer offers to walk on your behalf, that’s fine. If the same volunteer, who works as a day job providing accounting services offers to do your books, that is an in-kind.
Independent expenditures are outside groups or PACs that expend money for your election without being part of your campaign. As long as their expenses are clearly marked “Paid for by (their group)” it is the responsibility of their group for disclosures and it is not an in-kind donation. Independent expenditures by outside organizations are frequent, but the nature of in-kind is that it must benefit directly to the campaign and be controlled by the campaign.
THE IMPORTANCE OF KEEPING TRACK
In-kind contributions come in many forms: goods, services, even housing. Whenever you accept an in-kind contribution you are obligated to make sure that you document it and make sure it appears within your state finance reporting. Campaigns are required to correctly report received in-kind contributions, values, and information in much the same way as a cash contribution.
Many campaigns, however, either forget, incorrectly report, or don’t report at all in kind contributions. Do not let that be your campaign.
Local and state races can receive numerous forms of in-kind contributions; from discounted labor and services to specific goods. No matter what it is, you need to keep records of what was offered to your campaign, the value, when it was received and by who it was offered.
Failure to keep track of in-kind contributions is a great way to get into trouble with your state ethics commission. If you are receiving unaccounted for, below market discounts on goods or services and you do not report it, prepare for your opponent or someone else to report it for you—don’t let that happen.
COMMON STATE & LOCAL IN-KIND SERVICES
Jessica Jones is in a mid-size state and her race will have some real resources behind it. That said, it isn’t as well funded as a federal race or a state race in a large state. There are some common items and services that Jessica will likely be offered as in-kind services.
The most common in-kind service that state and local candidates receive is one they often fail to report, but should: food and facilities use.
Jessica Jones has been offered an open fundraiser at a local business. The business has offered to provide food and the use of their facility for the evening. That offer constitutes an in-kind contribution in most states. For state candidates, this is the most common occurrence of an in-kind contribution. While many states provide an in-home exemption to the use of their residence to host a campaign function, there are specific rules that govern the use of a facility for your campaign. Remember: check your state ethics laws regarding what your specific rules are for reporting.
Local campaigns also frequently receive basic goods and services. This can include discounts on goods provided to the campaign, discounts on services performed, or items given to a campaign.
Remember, too, that the same rules that apply for cash contributions apply to in-kind. If your state prohibits businesses from donating to your campaign with cash, then they cannot offer in-kind. In kind contributions are the exact same as cash contributions to ethics departments around the country.
Jessica Jones campaign was offered something that seemed like a great deal for her campaign: a set of laptops to use for her campaign! Fantastic ... except ... oops ... by accepting, she will likely go over the limit of what a donor can legally give to her campaign. Remember: in-kind donations are not a loophole to break campaign finance laws. You cannot accept goods and services above the value of your campaign donor limits or services that go beyond the limits.
OK, THIS NOW SOUNDS LIKE TROUBLE
Yes. Yes it does. In-kind contributions can often not be avoided by state and local campaigns, but if they are not well managed they are the quickest way to generate problems for even a small race. Because in-kind contributions put more power in the donor than the campaign, campaigns that get into a game of bartering for services or goods can find themselves on the wrong side of reporting and ethics, and they lose track of funds actually brought into a campaign.
Many state and local campaigns will do some bartering for lower cost on goods; however, the point of this edition of Nuts & Bolts is pretty simple: free isn’t really free.
FINAL THOUGHTS
Over the last few months, one of the top questions I’ve had about Nuts & Bolts is “how do we handle in-kind contributions?” It comes up in my email pretty frequently. After all, local campaigns receive tons of offers for everything to be just given to the campaign instead of actual financial donations.
Rules surrounding state and local reporting of in-kind contributions vary in significant ways nationally, and as a result many campaigns struggle to keep track of in-kind contributions and handle their reporting correctly. Campaigns fail to report proper amount of goods or services, the date of gift correctly, and too often donors give too much by giving too large of an in-kind contribution.
In-kinds generate amended reports, potential in-kind you don’t want on your report at all, and in some cases just discourage people from giving. In summary: I’m not saying you shouldn’t take in-kind contributions, but be aware that it isn’t really a “freebie” and the complications that in-kind contributions can generate for your campaign need to be correctly managed to avoid problems.
NEXT WEEK: Don’t Hang Around Eeyore.
Nuts & Bolts: Building Democratic Campaigns
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Every Saturday this group will chronicle the ins and outs of campaigns, small and large. Issues to be covered: Campaign Staffing, Fundraising, Canvass, Field Work, Data Services, Earned Media, Spending and Budget Practices, How to Keep Your Mental Health, and on the last Saturday of the month: “Don’t Do This!” a diary on how you can learn from the mistakes of campaigns in the past.
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