2016 California State PTA Convention 1 E10 PTA & Elections

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1 Slide 1 Diane M. Fishburn, Olson, Hagel & Fishburn LLP Slide 2 GOALS FOR TODAY Understand the prohibition on political activities and limits on lobbying activities placed on PTA as a 501c3 public charity. Understand the basics of the state campaign laws and how they apply to PTA s activities around state and local ballot measure elections. Review permissible ballot measure activities. Consider next steps for ensuring compliance by your organization. Slide 3 Broad Prohibition on Political Activities and Limits on Lobbying Activities Federal tax law imposes absolute prohibition on public charity involvement in candidate or partisan elections. No endorsements, monetary or in-kind support or other involvement in candidate campaigns are permitted. Nonpartisan voter education activities are permitted such as candidate forums so long as rules are followed to ensure the activities are nonpartisan and do not favor any particular candidate or candidates. Federal tax law imposes limits on legislative lobbying by public charities. Legislative lobbying includes ballot measure advocacy activities. Lobbying and ballot measure activities are permitted within these limits. These restrictions apply to use of PTA resources and activities undertaken in PTA s name. Individuals may engage in these activities on their own without restriction or limit. ALSO NOTE RESTRICTIONS ON USE OF PUBLIC FACILITIES AND RESOURCES FOR POLITICAL OR OTHER CAMPAIGN PURPOSES. Obtain guidance from your local district California State PTA Convention 1 E10 PTA & Elections

2 Slide 4 PTA s Internal Policy To retain tax-exempt status and continue to receive tax-deductible contributions, those PTAs that are recognized as being tax exempt under Internal Revenue Code (IRC) Section 501(c)(3) may not (1) devote more than an insubstantial part of their activities to influence legislation (generally interpreted as not exceeding five percent of total expenditures); (2) participate in any political campaign on behalf of or in opposition to a candidate for national, state, or local public office. A unit s failure to comply with these restrictions may endanger council, district, State and National PTAs IRC 501(c)(3) status. Legislative activities must not exceed the limitations placed upon the California State PTA and its units under the federal tax laws. In order to ensure that the limitations are not exceeded, records should be kept with respect to the amount of time, money, and volunteer activity such efforts involve. PTA must never support or oppose political parties or candidates, including those running for school boards on nonpartisan slates. However, PTA may adopt a position expressing its support for or opposition to issues dealing with the health, safety, education or general well-being of children and youth, but only to the extent permissible with respect to the requirements of each PTA s tax-exempt status. Nothing in the law or in PTA bylaws prohibits members as individuals from exercising their civic responsibilities in personal and partisan ways, including running for offices themselves. Slide 5 COMPLIANCE REQUIREMENTS FOR BALLOT MEASURE ACTIVITIES Federal tax law limits lobbying expenditures and requires annual reporting of lobbying activities on IRS Form 990. Lobbying expenditures include those related to ballot measure campaigns. State campaign laws require public disclosure of campaign expenditures. No limits. Reporting requirements will vary by the type and amount of activity. So.., for tax purposes, we refer to ballot measure activity as lobbying and, for campaign law purposes, we refer to ballot measure activity as campaign activity. In both cases, we are talking about the use of organizational resources including staff and funds in support or opposition to the qualification or passage of a ballot measure (including a referendum). Slide 6 IMPORTANCE OF COMPLIANCE IRS Federal Tax Law Significant excise tax for violating limitations on lobbying. Possible loss of tax exempt status for excessive lobbying. Penalties for inaccurate reporting of lobbying activities. State Campaign Disclosure Laws Reports subject to audit by Franchise Tax Board for compliance. Fair Political Practices Commission (FPPC) can impose civil or administrative penalties of up to $5,000 per violation. Public scrutiny and interest California State PTA Convention 2 E10 PTA & Elections

3 Slide 7 CAMPAIGN REPORTING CATEGORIES Recipient Committee Receives contributions of $2,000 or more in a calendar year for political purposes, or qualifies as a Multi-Purpose Organization (MPO). Major Donor Makes contributions totaling $10,000 or more in a calendar year. Does not receive contributions. Independent Expenditure Committee Makes independent expenditures totaling $1,000 or more in a calendar year to support or oppose a measure. Does not receive contributions and does not work with or coordinate activities with the local or state ballot measure committee formed for the campaign. Slide 8 WHAT IS A MULTI-PURPOSE ORGANIZATION (MPO) Applies to all nonprofit organizations. Recipient committee registration required if organization solicits funds, receives funds earmarked by donor, or agrees with donor to use prior donations for campaign activities, and $2,000 is raised. Recipient committee status is also triggered if the organization: 1. Makes state or local contributions or expenditures of more than $50,000 in last 12 months. 2. Makes state or local contributions or expenditures of more than $100,000 in last four calendar years. *Exception to the last two thresholds if organization has sufficient nondonor income to make the campaign expenditures. Nondonor income includes investment income, income from sales of goods or services, etc. Slide 9 Raise funds for campaign expenditures. Receive $1,000 or more in a calendar year ($2,000 or more as of 1/1/16). Total expenditures in the calendar year under $10,000. Total expenditures in 12 months under $50,000 and under $100,000 for 4 calendar years. Register as MPO with SOS and file MPO recipient committee reports; or Set up a separate committee account and register with SOS and file reports as ballot measure committee. No reporting required. File major donor reports and only report expenditures. Total expenditures in last 12 months $50,000 or more or $100,000 or more in 4 calendar years. Register as MPO with SOS and file MPO recipient committee reports California State PTA Convention 3 E10 PTA & Elections

4 Slide 10 REPORTING OF DONORS BY MPO S Report all donations which are solicited or earmarked by donor for campaign purposes. Donors of $100 or more in a calendar year are itemized by name, address, occupation and employer. Other donors are reported on a Last In, First Out (LIFO) basis up to the amount expended for campaign purposes. Donors of $1,000 are itemized by name, address, occupation and employer. Slide 11 REPORTING DEADLINES AND COMMUNICATION DISCLAIMER REQUIREMENTS Recent legislation significantly changed reporting requirements for recipient committees. Current reporting requirements posted on FPPC s website. Recent legislation also amended communication disclaimer requirements. Revised disclaimer guidelines posted on FPPC s website. In general, all printed communications must bear at least the phrase paid for by followed by the name of the sender in at least 14 point bold sans serif type font. For mailings, name and address must appear on outside of mailer. Paid for by disclaimer also required for other forms of communication including electronic and social media. Slide 12 EXAMPLES OF REPORTABLE EXPENDITURES Monetary contributions. Compensated staff time and related expenses for staff spending more than 10% of their time in a compensated month on campaign activities. Payments to consultants or vendors in connection with campaign communications, services or events. Payments for advocacy communications which identify the measure. If communications or other activities have more than one purpose, costs may be allocated between or among the purposes on a reasonable basis California State PTA Convention 4 E10 PTA & Elections

5 Slide 13 NON-REPORTABLE EXPENDITURES Volunteer time and expenses paid by individual volunteers. 10% or less of a compensated employee s time in a calendar month spent on campaign activities. On-going office and other regular overhead. Staff time and costs related to membership communications. Small campaign or fundraiser events (total event costs are $500 or less) held in organization s office or held by an individual in his or her home. Slide 14 CAMPAIGN ACTIVITIES AND COMMUNICATIONS Includes all forms of voter contact. Development of campaign materials. Organize volunteers to make voter contacts. Local outreach to other organizations. Media contacts including press events, letters to the editor, etc. Outreach to elected officials and other decision and opinion makers. Speaking at public hearings or other public meetings. Slide 15 NON-CAMPAIGN ACTIVITIES AND COMMUNICATIONS General voter registration or GOTV activities which do not refer to any ballot measure. General public education and outreach activities relating to plastics pollution. No references to a ballot measure. Membership Communications paid for by and made by an organization only to its members and immediate families. Must be the organization s own communication. May not be made in a public forum. May include advocacy on measure California State PTA Convention 5 E10 PTA & Elections

6 Slide 16 EXAMPLES OF REPORTABLE v. NON- REPORTABLE ACTIVITIES REPORTABLE Employees attend ballot measure coalition meeting. Employee plans and conducts workshop to educate and train volunteers on campaign activities. Deposit is paid on booth for local event where Yes on Local School Measure committee materials will be distributed. Unit donates $2,000 to Yes on Local School Measure committee. NOT REPORTABLE Unit volunteers attend ballot measure coalition meeting. Postcards sent to members regarding upcoming information forum on Local School Measure. Organization registers voters at a public event. No advocacy on any measures. Organization collects contributions from its members at a meeting and sends to Yes on Local School Measure committee. Slide 17 REPORTABLE COMPENSATED STAFF TIME Calculated on a per employee, per calendar month basis. More than 10% of an employee s time is based on normal work hours for a month. Does not include benefits, taxes or related overhead. Includes any expenses paid for campaign travel such as mileage reimbursement. Includes time spent in voter contact as well as meeting, planning, preparation and travel time, and all related activities. Slide 18 Scenario 1 Unit wants to be helpful in a local parcel tax measure, but it does not want to Incur any reporting requirements. Unit only sends volunteers to campaign coalition meetings. Volunteers may appear at press or other public events sponsored by the committee. Any monetary contributions made by the Unit to the campaign committee keep the Unit below the $10,000 calendar year threshold for major donor reporting requirements. (If $10,000 or more is contributed, a Major Donor Report will be required.) Unit has general voter registration materials at any public events in which it participates and materials prepared by the campaign committee. Unit does not produce its own measure materials. Unit provides information about campaign volunteer opportunities to its members. Unit endorses the measure and includes information on the endorsement in its newsletter, but keeps all other distribution of communications to a minimum. Unit does not solicit or raise any funds for its work relating to the measure campaign. Any funds solicited are directed to the measure campaign committee California State PTA Convention 6 E10 PTA & Elections

7 Slide 19 Scenario 2 Unit participates as a sponsor of a Yes on Local School Measure Committee, attends regular campaign meetings, participates in campaign activities and also plans to make a monetary contribution. Unit plans to solicit contributions from its members and others to support its expenses and the planned monetary contribution. Unit will be required to register with SOS as an MPO Recipient Committee within 10 days of raising $2,000. If the Unit registers as a MPO Recipient Committee, it will be a general purpose committee so long as it is a sponsor of the Yes on Local School Measure Committee. Various reports will be required including semi-annual and pre-election reports (FPPC Form 460 and 497). All donors will be disclosed and itemized at $100 or more. Additional donors may need to be disclosed based on LIFO. Unit is also required to provide written notification of its in-kind contributions to the Yes on Local School Measure Committee in a timely manner. Contact Committee treasurer for more details. Unit has option of setting up a separate Yes on Local School Measure Committee with a separate bank account and registering that account with SOS as a Primarily Formed ballot measure committee and filing reports of all of its funds raised and expenses paid through that account. Slide 20 DISCUSSION AND NEXT STEPS Understand the importance of reviewing your organization s role in any ballot measure campaign at the outset. Review any proposed campaign activities and estimated budget to determine potential reporting obligations. Ensure that any solicitations for your organization do not reference the ballot measure campaign. Direct ballot measure contributions directly to the Local School Measure Committee. Institute internal policies and tracking process for ensuring compliance with the determined reporting obligations. Obtain any necessary assistance in complying with any reporting obligations. Track campaign reporting deadlines, and establish contact with Local School Measure Committee treasurer for in-kind contribution notification procedures and deadlines. If not raising funds for the campaign, review all solicitations for organization and all communications from donors carefully. Slide California State PTA Convention 7 E10 PTA & Elections

8 2016 California State PTA Convention 8 E10 PTA & Elections