DELAWARE CAMPAIGN FINANCE

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1 DELAWARE CAMPAIGN FINANCE These resources are current as of 2/16/2018: We do our best to periodically update these resources and welcome any comments or questions regarding new developments in the law. Please us at This guide summarizes key aspects of laws and regulations governing lobbying on the state level. It is not intended to provide legal advice or to serve as a substitute for legal advice In some jurisdictions, city and/or county regulations may also apply to certain political activities. Check with the appropriate local jurisdiction before undertaking any activity. CONTRIBUTION LIMITS What is a Political Committee and when is one needed? Political Committees include political parties, candidates committees, and, except for independent expenditures, any organization or association created to politically campaign that accepts contributions or spends more than $500 during an election. (15 Del.Code 8002(19)) Filing a Committee is achieved through a Statement of Organization which includes: The full name and mailing address of the committee; The full name and mailing address of each of the officers of the committee, 1 of whom shall be an individual named as its treasurer; A concise statement of the committee's purposes or goals; The name, office sought, and party affiliation of any candidate whom the committee is supporting or opposing, to the extent such information is known as of the date of filing; and, if the committee is supporting the entire ticket of any party, the name of the party; and If the committee files reports with the Federal Elections Commission or any out-of-state agency, a statement to that effect including the name of the agency. (15 Del.Code 8005) A committee must be formed by filing a Statement of Organization with the Department of Elections within 24 hours of receiving any contribution or making expenditures over $500. (15 Del. Admin. C. 5.1)

2 Sitting elected officials seeking a different office must file a committees or subcommittee with the Department of Elections within 24 hours of receiving any contribution or making expenditures over $500. (15 Del. Admin. C ) School board candidates and public office that pays less than $1,000 need not file a campaign committee if they instead file a Certificate of Intention Form prepared by the Department of Elections and certify they do not intent to receive nor spend more than $2,000. (15 Del. Admin. C. 4.1) Statements of Organization and any amendments for Political Action Committees must be filed under signature of a treasurer. (15 Del. Admin. C. 5.3) What is a Contribution? (15 Del.Code 8002(8)) Contribution is defined broadly to not only include money contributions to a campaign or expenditures on a campaign s behalf, but also: a. Gift, subscription, advance, deposit, expenditure or transfer of any thing of value; b. Discount or rebate not available to the general public; c. Loan (except a loan of money by a national or state bank, building and loan association or licensed lender made in the ordinary course of business); d. Purchase of tickets, goods or services sold to raise funds for a campaign, whether or not the tickets, goods or services are used by the buyer; e. Forgiveness of indebtedness or payment of indebtedness by another person; f. Service or use of property without full payment therefor (except the contribution of services by an individual, the use of an individual's residence, the contribution of such items as invitations, food and beverages by an individual volunteering personal services or the individual's residence, or the use of the telephone equipment of any person); or g. Any other thing of value (except an independent expenditure). Contribution limits also extend to retiring campaign debt. (15 Del. Admin. C. 3.0) How Often Can a Contribution be Made? To the maximum aggregated per Election Period (15 Del.Code 8002(11)) New Candidate Committee - The day of first contribution until December 31 following the General Election. Reelection Candidate Committee - January 1 after election to December 31 following the next General Election. Political Party & PAC January 1 after the General election to December 31 following the next General Election Independent Expenditures & Third-Party Advertisers While no limit exist, as discussed below, the Election Period for reporting purposes begins and ends at the same time as the candidate for which the expenditure was made. Effect of a Primary?

3 The Election period for Candidates Committees runs to the primary election. A new Election Period runs the day after the primary. 15 Del.Code 8002(11)(a)(4)) Therefore, a maximum contribution can be made to a candidate in a primary and, if that candidate is successful, give another maximum contribution towards the candidate s general election. Importantly, there is no provision in Delaware law for accepting contributions for the general election in advance of the primary. That is, contributions for the general election may only be received after the primary. If a candidate is unsuccessful in a primary, their candidates committee may not accept new contributions above the maximum as a new election period did not start for them. (Delaware Department of Elections Advisory Opinion ). Under Flowers-Barney Advisory Opinion , the Department states that a late withdrawal (less than two weeks from the election) of a primary candidate, even though an actual primary election does not take place, will allow for a new Election Period for purposes of campaign contributions. Individual Contribution Limits (15 Del.Code 8010(a)) Statewide election maximum contribution: $1200 Non-Statewide election maximum contribution: $600 Political Party: $20,000 (15 Del.Code 8011) The Political Party contribution limit does not limit contributions from a national politics party of national political organization established to support elections. There is no limit to what a candidate can spend on his or her own election, so long as the money in and out is recorded in the campaign committee (15 Del.Code 8003(b)) Contributions by Persons not an Individual or Political Committee The most common example is a corporation or other similar entity such as an LLC. Such entities may make contributions to so long as the full names and addresses of (1) all persons who own more than 50%, and (2) responsible parties whose contribution would be more than $100 in the aggregate. (15 Del.Code 8012(e)) A responsible party is a person who shares or exercises discretion or control over the entity s activities and includes any officer, director, partner, proprietor. (15 Del.Code 8002(23)) Contributions by Political Parties (15 Del.Code 8010(b)) Governor: $75,000; All other State-wide offices: $25,000; New Castle County Executive: $25,000;

4 New Castle County President: $15,000; All other county offices: $5,000; State Senate: $5,000; State House of Representatives: $3,000; and All other offices: $3,000. Parties may not give to political action committees. (15 Del.Code 8012) Expenditures made by a party to hire people to work on behalf of all candidates (often known as a coordinated campaign ) do not count towards the limit. This includes getout-the-vote efforts. (15 Del.Code 8012(g)(1), (g)(4)) In Commissioner of Elections Opinion , the Department clarified that inclusion of a candidate on a party s get-out-the-vote literature in a special election with only one candidate also does not constitute a contribution to the candidate. Contributions by Political Action Committees A Political Action Committee (or PAC) is a political committee which is neither a political party nor a candidate committee. (15 Del.Code 8002(18)). Contributions made by PACs can only be made by check and that check must disclose the name and address of the PAC. (15 Del.Code 8012(c)). Independent Expenditures & Third-Party Advertisements (a.k.a. SuperPAC or IEOC ) No contribution or spending limit towards expenditures made not by a Candidate Committee or a Political Party that expressly call for the election or defeat of an unambiguous candidate, that are not made at the direction of or in consultation with a candidate or someone working on behalf of the candidate. (15 Del.Code 8002(13), 8031) IRS Code 501(c)(4) Social Welfare Group & 501(c)(6) Trade Association Election activities must not be the primary activity of the organization. Generally, that is measured by a fifty percent threshold. They may accept unlimited contributes and may not contribute to a candidate, but may spend unlimited amounts, subject to the general fifty percent measure, on elections of candidates. Issue Advocacy spending is unlimited, but subject to the reporting requirements of third-party advertisements. Contribution Restrictions & Requirements No contributions over $50 may be made in cash, which also includes money order or other negotiable instrument that does not disclose the name of the contributor on its face. (15 Del.Code 8012(a)) Contributions from a joint account be it check, debit card, or other means are allocated to the person who authorized the payment unless it is also signed or authorized by the other person on the account. In which case it is

5 split equally unless written directions divide the amount otherwise. (15 Del.Code 8012A(a)) The date a check is received, including the date received in the mail, by a campaign or a representative of the campaign must be written on the face of the check by the person who receives the check. (15 Del. Admin. C ) Contributions may not be made in exchange for promises of contracts, votes, employment, action or lack of action. (15 Del.Code 8006(a)) Contributions may not be made anonymously, through an alias, or through a third party. (15 Del.Code 8006(b)) Host Exception Delaware does recognize a host exception whereby a supporter of a political committee may host an event in their home and provide refreshments without counting towards the contribution maximum. (15 Del.Code 8002(8)(f)) Contributions Over the Limit Prohibited contributions may be returned and expenditures reimbursed within seven (7) days of learning it was prohibited. (15 Del.Code 8043(h)) From a Joint Account The excess must be returned or reattributed if the contributor is told of the excess, that they can ask for a return of the excess, and the contributor gives a writing to the campaign treasurer allowing reattributing within sixty (60) days. (15 Del.Code 8012A(b)) EXPENDITURES What can a political committee spend on? (15 Del.Code 8020) (1) Wages of full-time or part-time campaign staff (but no salary nor wage for a candidate or a candidate's spouse); (2) Travel expenses of the candidate and campaign staff; (3) Payment of fees or charges for placing the name of the candidate on the ballot, and for collecting the returns of the election; (4) Costs of telephone and other communications services; (5) Costs of postage and other delivery services; (6) Printing and stationery; (7) Food, refreshments and related supplies; (8) Purchase and preparation of lists of voters; (9) Taking polls and making canvasses of voters; (10) Payment for election watchers; (11) Rental of office and rental and purchase of equipment; (12) Advertising and publicity; (13) In the case of a candidate committee, purchase of tickets to permit the candidate's attendance at civic or political events; and in the case of a political

6 action committee, contributions within authorized limits, to any other political committee; (14) Holding, promoting and furnishing meetings, demonstrations, conventions, and paying musicians and others rendering services thereto; (15) Employing attorneys, accountants and other professional advisors; (16) In the case of a candidate committee, contributions, within the limits set forth in 8010(a) of this title, to another candidate committee, or as otherwise provided in 8022 of this title; (17) In the case of a political party or a political action committee, contributions, within authorized limits, to a candidate committee; (18) In the case of any political action committee, in addition to any other expenditure authorized by this chapter, contributions to a political party within the limits set forth in 8011 of this title; (19) Returning any donor's contribution up to the amount donated. Payments towards the purchase or lease of a vehicle do not fall under travel expenses and instead must be counted under equipment, as discussed below. (15 Del. Admin. C ) Any payments to candidates and their spouses are considered wages and are prohibited. (15 Del. Admin. C. 6.3) Candidates contributions and expenditures on behalf of a candidates have to be made through the candidate committee. (15 Del.Code 8003(b)) Valuation Arm s Length If a committee makes an expenditure to a person associated with the committee for goods or services, the committee must show it is a legitimate business transaction. Any deviation above fair market value is an illegal expenditure and below is a campaign contribution in the amount of the difference. (15 Del. Admin. C ) Expenditures Between Candidate Committees Multiple candidate committees may share expenditures so long as it is attributed to each campaign in a reasonable fashion based upon the amount of use of the goods or services to that campaign. (15 Del.Code 8012(g)(3)) Similarly, if an expenditure from a political committee benefits more than one candidate, the expenditure is shared between the candidates. The example given is a billboard depicting two candidates. (15 Del.Code 8012(f)) Leftover Funds & Equipment After a political committee has completed its activities and settled any debts, the balance of the funds may be rolled into the candidate s next campaign for another office or donated to a tax-exempt entity. (15 Del.Code 8022)

7 Equipment may be disposed of in a similar manner. (15 Del. Admin. C ) However, if sold or transferred for personal use, fair market value must be paid. (15 Del. Admin. C ) REPORTS The Delaware Department of Elections has a robust online reporting system that serves as an excellent guide for campaign treasurers and candidates for when it comes times to make a report. It also serves as a repository for access to reports by the public. How often are reports made? Delaware has three reporting periods under 15 Del.Code 8030(b): An annual report which runs to December 31 of every year starting the first time a contribution is made to or expenditure made from the committee until the committee terminates; Thirty (30) days before an election, except for candidates not appearing on the ballot; and Eight (8) days before an election, except for candidates not appearing on the ballot. Note that an election is both a primary and general election. Campaigns that are successful in a primary with have two thirty day and eight day reports for a total of five reports including the annual. These reports are cumulative such that only new information, such as donors and expenditures, need to be added to the latest report. The old report carries forward. 15 Del.Code 8030(e).

8 The reporting period for a first-time independent expenditure runs from the date the first contribution is received or expenditure made and ends on the day of the expenditure, reporting due forty-eight (48) hours after the expenditure. However, if the expenditure is thirty (30) days before a primary or special election or sixty (60) before a general, the report must be filed twenty-four (24) hours after the expenditure. When are they made? Reports are made electronically and under electronic signature provided by the Department of Elections: Twenty (2) days after the close of the annual reporting period; Two (2) days after the close of the Thirty Day reporting period; Two (2) days after the close of the Eight Day reporting period. 15 Del.Code 8012 & 15 Del. Admin. C. 8.0 What is Reported? Total amount raised; Total expenditures, including names and addresses of expenditures over $100; Total amount of money and assets on hand; Total proceeds from collections and sales of tickets and items made at events; Name and address of each contributor who gives money or other goods or services of value in excess of $100 in the aggregate during the period; Name and address of each contributor who purchases tickets or items in the aggregate over $50; Aggregate sum of all contributions under $100; Any amount contributed by another political committee; Debts in excess of $50, including the name of any lender and any interest and security; Total proceeds from ticket sales at events, collections at events, sales of items 15 Del.Code 8030 Campaign items include but are not limited to campaign pins, buttons, badges, and other similar materials. 15 Del.Code 8030(d)(6)(c)) Also reported is the value of any sale of equipment. (15 Del. Admin. C ) The candidate or treasurer, whomever files, must also submit an affidavit to the filing s truthfulness. 15 Del.Code 8030(f). Are Reports Public? Yes, they are made public immediately upon filing with the Department of Elections. (15 Del.Code 8032)

9 Law-enforcement may request, and others may apply to the Department upon good cause, that their address be removed before public disclosure. (15 Del.Code 8032) How Long Do I Keep Records? Records must be kept for three (3) years by political committees. (15 Del.Code 8005(3)) However, candidates need not keep the names of addresses of contributions less than $100 in an election period (15 Del.Code 8003(c)). Delaware code is inconsistent in this retention requirement, a suggested best practice is to retain all records. Third-Party Advertisements (Independent Expenditures) Any expenditures over $500 on third-party advertisements, further discussed below, must: They must file a political committee through a Statement of Organization; Report the aggregate contributions; Track all contributions over $100 and name and address of each contributor; o For contributions from non-persons, the name and address of any person who owns 50% or more of the entity and a responsible party if the contribution is over $1,200. Name and address of all expenditures over $100, the exact amount, the purpose, and each candidate and which office the money was spent on behalf. 15 Del.Code 8031 Subsequent filings need only report changes in information, additional contributions and additional expenditures. (15 Del. Admin. C. 9.0 et seq.) COMMUNICATIONS & COORDINATION, CONSULATION, OR CONCERT Third-Party Advertisements (Independent Expenditures) Delaware considers communications in coordination, consultation or concert to include: Direction to the person making the expenditure from a candidate or a candidate s agent (such as an officer or employee); Arrangement or coordination between the person making the expenditure and a candidate or candidate s agent; The person making the expenditure, or their agent, has advised or counseled the candidate or their team on plans, projects, or needs relating to the election this election period; o This also includes advice relating to the decision to seek office in the first place Expenditures made based on information provided directly or indirectly by the candidate or the candidate s agents about their plans, projects, or needs knowing that the person making the expenditure is planning on doing so. (15 Del.Code 8002(13))

10 Campaign Advertising Disclosures Campaign Committee advertisements valued at over $500, but larger than nine (9) square inches must include clearly and conspicuously in a printed box Paid for by [committee name]. Dimensions and specifications are further delineated in regulation including type font and color contrast. (15 Del.Code 8021(a) & 15 Del. Admin. C. 7.0) Third-party advertisements must also include with the Paid for by, Learn more about [Committee] at elections.delaware.gov. 15 Del. Admin. C If the communication is on television, the statement must be written and spoken if the writing appears for four seconds. Writings need to be clear. If for five or ten seconds depending on if the ad is thirty or sixty seconds, it need not also be spoken. (15 Del. Admin. C. 7.5) Radio and telephone communications must have the disclosure spoken clearly for at least three seconds. (15 Del. Admin. C. 7.6, 7.7) PENALTIES & FINES Who is a Reporting Party? Reporting Parties are candidates, treasurer, or others required to file reports. Criminal Penalties Failure to file or a committee or fulfilling reporting requirements is a class B misdemeanor. Knowingly accepts or knowingly makes an unlawful contribution is guilty of a class A misdemeanor. Any candidate, treasurer or other person required to file reports who knowingly files a report or fails to file any such report is guilty of a class A misdemeanor. Any person who knowingly makes a contribution in the name of another person is guilty of a class G felony. Report of Independent Counsel on Investigation of Violations of Delaware Campaign Finance and Related State Laws, Hon. E. Norman Veasey, Dec. 28, 2013 outlined various ways the campaign finance laws have been run afoul. Specifically, the report on pages describe situation of illegal straw donors whereby donors were being reimbursed by campaign supporters in violation of Delaware law. Safe Harbor (15 Del.Code 8043(e)) A reporting party who reasonably relies upon information provided by another person which is inaccurate, false or misleading and who has no reason to know that such information was inaccurate, false or misleading, shall not be liable for any report filed by such reporting party which is

11 inaccurate, false or misleading as a result of such information, if such reporting party, within 30 days after learning that such information was inaccurate, false or misleading, files an amended report with the Commissioner that corrects the inaccurate, false or misleading aspects of the report. Where a reporting party files an amended report later than 30 days after learning that such information was inaccurate, false or misleading, the reporting party shall not be liable if the reporting party shows good cause for filing the amended report beyond the 30-day period. Mandatory Reporting Candidates, treasurer, or others required to file reports must immediately to the Commissioner and the Attorney General any attempt to make a prohibited contribution, or to demand a prohibited expenditure. Late Reports Any reporting party who fails to file or deliver a complete report to the Commissioner any report required under this chapter shall be assessed a fine by the Commissioner of $50 per day. A one-day extension may be granted upon request. (15 Del.Code 8044) Failure to Identify Purchaser The Commissioner must assess a fine of $500 or 25% of the cost of the campaign advertisement, whichever is greater, for failure to comply with campaign advertisement disclosure requirements. (15 Del.Code 8043(i)) Delaware s Election Laws Construed in Fairness Generally, Delaware Courts and the Department of Elections apply the law strictly, unless a situation arises that the statute did not expressly contemplate. In those instances the Department of Elections through advisory opinions and the Courts will attempt to give a reasonable interpretation based upon the laws intent. See, e.g., Sussex County Dept. of Elections v. Sussex County Republican Committee, 58 A.3d 418, 423 (Del. 2013). CONTACT INFORMATION FOR STATE AND LOCAL AGENCIES Department of Elections 905 S. Governors Ave Suite 170 Dover, DE (302) elections.delaware.gov/ Campaign Finance Tutorial Videos Delaware Campaign Finance Reporting System

12 FOR FURTHER ASSISTANCE For assistance regarding these resources or for more information about federal law, please contact our attorney one-on-one counseling service: Telephone: NPLOBBY ( ) Written by Andrew B. Wilson, Esq.; Morris James LLP, 500 Delaware Ave, Ste 1500, Wilmington, DE For assistance regarding state law in Delaware, please contact: Andrew B. Wilson Morris James LLP 500 Delaware Ave Ste 1500 Wilmington, DE (phone) Copyright These materials are copyrighted and may not be reproduced without permission.