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A Closer Look at Georgia Campaign Finance Laws that Prohibit Coordination between Campaigns and Outside Organizations

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Allegations of collusion with foreign nationals. Independent expenditures by way of payments to third parties in connection with non-disclosure agreements. Campaign finance laws, or human interest stories concerning the potential violation of them, have dominated national headlines over the past year and a half.

Georgia is no exception. While the headlines are far less dramatic and tawdry, the topic of coordination and independent political expenditures have made local headlines over the weekend.

This Friday the Stacey Abrams campaign filed an ethics complaint against her opponent in the Georgia democratic gubernatorial primary, Stacey Evans. In that complaint, the Abrams campaign alleges that the Evans campaign coordinated expenditures with an outside 501(c)(4). Specifically, the complaint states that the Evans campaign “violated Georgia law by soliciting and making excessive in-kind contributions in the form of coordinated expenditures.”[1]

The complaint provides a good opportunity to explore some complex legal/compliance issues that face all candidates for office.

This article will explain how and why coordinated expenditures violate Georgia campaign finance law, then provide some tips on how your organization can stay compliant.

I am neither privy to any investigations that may or may not be ongoing, nor am I privy to the circumstances surrounding the allegations, so please do not read any opinion about guilt or innocence into this article. I’m going to stick to explaining the law and will use the allegations as a means to explore the topic of campaign coordination.

As a personal aside, I am very interested to see how the Ethics Commission will view the former staffer portion of the analysis, which is an important element in the Complaint. More on that at the end of section I below.

I. WHAT'S THE BIG DEAL? WHY ARE COORDINATED EXPENDITURES AGAINST THE LAW?

Technically, coordinated expenditures in and of themselves are not against the law. So, what’s the big deal here?

Coordinated expenditures are considered campaign contributions and must be reported as such. Strategically this means that, since direct contributions to candidates may be limited but independent expenditures cannot be capped, ensuring that expenditures are truly independent allows an outside committee to spend far more money to aid a candidate. It also means that a candidate may be sanctioned for accepting campaign contributions over the legal limit if the expenditures were coordinated.

Why? The U.S. Supreme Court held that independent expenditures will be treated as contributions to a candidate if the expenditure is prearranged or coordinated with a candidate.[2] The US Supreme Court reiterated this position in recent decisions, McConnell v. FEC in particular, where the Court held that coordinated expenditures may be treated as campaign contributions subject to contribution limits.[3]

Closer to home, recently the Georgia Government Transparency and Campaign Finance Commission (“Ethics Commission”) noted in Advisory Opinion 2017-05 that "...if a candidate coordinates with a nonprofit or other organization on campaign communications or activities, then the expenditures for the communications or activities are likely in-kind contributions to the candidate."[4] This means that a candidate can break campaign finance law by accepting contributions beyond the legal limit if those expenditures are coordinated or, if the expenditures were coordinated but not disclosed, the candidate can violate campaign finance disclosure laws.

The campaign coordination rule is in place to keep candidates from using outside organizations they control as, in essence, second (or third, or fourth…) campaigns for office. If the affiliated outside organization's expenditures were under control of the candidate, the affiliated organization could then be used as a vehicle to raise and spend money in excess of the limits provided by law, circumventing caps on contributions. Coordination rules are in place to prevent this from occurring.

But what is a coordinated expenditure? This definition can be quite complex. We can begin our analysis by looking at how Georgia law defines an independent expenditure. The Georgia Ethics Commission will look to see if:

1. an expenditure has been made,

2. containing express advocacy,

3. that was not "...made with the cooperation or consent of, or in consultation with, or at the request and suggestion of any candidate or any of his or her agents or authorized committees.”[5]

I will briefly explore these three elements below, starting with 1) an explanation of what an “expenditure” is in Georgia, followed by 2) an analysis of what regulators consider express advocacy and 3) how regulators determine if a campaign has coordinated with an outside entity.

WHAT IS CONSIDERED AN EXPENDITURE IN GEORGIA NON-FEDERAL ELECTIONS?

Georgia law provides that an expenditure is “a purchase, payment, distribution, loan, advance, deposit, or any transfer of money or anything of value made for the purpose of influencing the nomination for election or election of any person…”[6] The term specifically shall not include the value of personal services performed by persons who serve without compensation from any source and on a voluntary basis.[7] An expenditure is different from a contribution because a contribution is “conveyed or transferred” to a candidate.[8]

Also, bear in mind that if the candidate receives any item of value other than money it will be considered an in-kind contribution, and if the candidate receives the use/benefit of a good or service paid for by another it will be considered an in-kind expenditure.[9] Both in-kind contributions and in-kind expenditures are considered contributions for the purpose of the Campaign Finance Act.[10] 

Use and control over the good or service is what separates a contribution and an expenditure. A contribution is provided to a candidate and the candidate can control the object or communication, or use the good or service. An expenditure is outside the control of the candidate, meaning that it is the transfer of anything of value that is done without the candidate’s direction and the candidate cannot ultimately decide how to use the thing of value.

For example: giving computers to a campaign is an in-kind contribution. Spending money to purchase computers, then lending those computers to the candidate for the duration of the campaign is an in-kind expenditure. Contributing money that the campaign then uses to buy computers (or pay staff- whatever the candidate chooses) is a direct contribution. Spending money on advertisements that are disseminated outside the control of a candidate is an independent expenditure. (If someone purchased the computers used to make the advertisements, then provided them to the entity that made the ad, that would be a contribution to an independent committee).

WHAT IS CONSIDERED "EXPRESS ADVOCACY" IN GEORGIA?

Georgia law is not clear on what constitutes "express advocacy," in large part because Georgia does not define the term “express advocacy" in statute. Instead, the Georgia Government Transparency & Campaign Finance Commission (formerly the Georgia Ethics Commission) has provided guidance in two Advisory Opinions- Advisory Opinion 2001-32 and Advisory Opinion 2010-5.[11] These opinions applied the test provided by the United States Supreme Court in Buckley v. Valeo, which directs that express advocacy consists of “communications containing express words of advocacy of election or defeat, such as ‘vote for’, ‘elect’, ‘cast your ballot for’, ‘Smith for Congress’, ‘vote against’, ‘defeat’, ‘reject.’”[12] This test is commonly referred to as the “magic words” test.

Many states changed their laws or regulatory rules following the McConnell v. FEC decision.[13] Georgia, however, has yet to do so, and since Georgia law has not provided a definition of express advocacy, Georgia regulators continue to use the old Buckley standard set out in Advisory Opinions 2001-32 and 2010-5.

On October 5, 2017, the Georgia Government Transparency and Campaign Finance Commission approved Advisory Opinion 2017-05 during a public meeting. This Advisory Opinion directly addressed coordination and express advocacy and, of particular import, the Advisory Opinion noted that “[t]he evidence that [a communication] is an in-kind contribution to a campaign is strongest when the communication was made at the behest of or in coordination with the candidate. That is, if a candidate asks for a communication or speech of some sort, the cost of providing that speech may be an in-kind contribution to the candidate regardless of whether the speech was 'express advocacy.'”[14]

As a practical matter, this means that a communication does not have to include express advocacy to be considered an in-kind contribution, but there are also circumstances where coordinated, non-express advocacy communications that refer to a candidate would not be contributions.

COMPLAINT AGAINST THE EVANS CAMPAIGN

Of major import here, Advisory Opinion 2017-05 also addressed candidate efforts to raise money on behalf of an outside organization when that organization intends to support that same candidate.[15] Specifically - and this portion is cited in the Complaint filed by the Abrams campaign – AO 2017-05 provides that a candidate or his or her agents may not “…solicit funds for a nonprofit or other entity that will reference that candidate and/or that candidate’s opponent(s) in an election, even if the candidate has not created or is in control of the organization.”[16] For example, Governor Smith raises money for an outside organization, and then that organization then contributes money to Governor Smith’s campaign or makes independent expenditures intended to benefit Governor Smith’s campaign.

The Complaint filed by the Abrams campaign lists reasons why Hope for Georgia, Inc. should be considered an outside nonprofit that will reference the Evans campaign in an election, as well as reasons why the Ethics Commission should believe that the campaign/candidate is raising money for the nonprofit.

The role of either a current or former staffer is the principal reason the Abrams campaign believes that the Evans campaign is raising money for the outside nonprofit. This consideration is not as cut and dry as it may seem, so read on to learn more about how and why coordination with former campaign staff could be evidence of coordination.

WHAT IS CONSIDERED COORDINATION IN GEORGIA NON-FEDERAL ELECTIONS?

Georgia Ethics Commission rules provide that an independent expenditure is a communication that contains express advocacy that is not made in cooperation, consultation, or concert with, or at the request and suggestion of any candidate or any of his or her agents or authorized committees.”[17]

What does this mean? On the federal level the laws relating to coordination are clear. Georgia law is much more broad and there is little state-level case law to help guide Georgia-specific regulators and political participants. For this reason, federal law is often used as persuasive authority to fill in ambiguities, which is why federal law will be addressed below.

The Federal Election Commission (“FEC”) uses a three-part test to determine if a communication is coordinated with a candidate. What follows is an abridged version. More details may be found on the FEC’s website, as well as 11 CFR 109.21. I will note differences between Georgia law and the FEC standard below each prong of the three-part test.

1.       Payment:

Almost always satisfied – if the communication is paid for or provided in-kind by anyone. This could be by the candidate/campaign or by another person or entity.

2.     Content:

A communication that meets any one of the following five standards satisfies the content prong:

a.        A communication is an electioneering communication
b.        The communication is a public communication that republishes, disseminates or distributes candidate campaign materials, unless the activity meets one of several exceptions;[18]
c.        A public communication that expressly advocates the election or defeat of a clearly identified candidate;
d.        A public communication that is the functional equivalent of express advocacy; or
e.        A public communication that refers to a clearly identified candidate or political party.

Where Georgia differs:

-       There are timing considerations in this sub-element, but because Georgia does not consider timing as a factor these elements will not be addressed herein.
-       Electioneering communication, as it is used above, is defined in federal law. Georgia law does not provide a definition here, so substitute “electioneering communication” with “express advocacy.”
-       With respect to “express advocacy,” As noted above, Georgia is a Buckley “magic words” state. The portions above that reference functional equivalency should be disregarded. Instead, if the “magic words” are used, the content prong is satisfied.

3. Conduct:

A communication that meets any one of the following criteria satisfy the conduct prong:

a.        The communication is made at the request or suggestion of a candidate or political party.[19]
b.        The candidate or party was materially involved in decisions regarding several specific aspects of a public communication paid for by someone else.
c.        The communication was created after one or more substantial discussions between the person paying for the communication, or that person’s agents, and the candidate or party or agents thereof.
d.        The candidate or party was materially involved in decisions regarding several specific aspects of a public communication paid for by someone else.
e.        A common vendor, subject to certain requirements, is used to create or disseminate the communication.
f.         The communication is paid for, or made in consultation with, a former campaign employee or independent contractor within 120 days of the purchase or distribution of the communication.[20]

Where Georgia differs:

-       Most of these elements would show that a candidate coordinated a communication with an outside group.
-       The 120-day former employee provision is specifically provided for in federal law. Georgia does not have the equivalent law, but the Ethics Commission will view the federal statute as persuasive authority and should be observed.

o   This standard requires that the former employee or contractor use or convey information about the plans, projects, activities or needs of the candidate, candidate’s opponent, or political party committee, or information used by the former employee or contractor in serving the candidate, candidate’s opponent, or political party committee, to the person paying for the communication, and the information is material to the creation, production or distribution of the communication.

o   This former employee may be “firewalled,” or separated from strategic decisionmakers and decisions relating to independent expenditures intended to be spent in the former employer’s race.

COMPLAINT AGAINST THE EVANS CAMPAIGN

As it relates to the Complaint filed against the Stacey Evans campaign, the Abrams campaign asserts that either a current, or former, staffer created the outside organization and solicited funds for the outside organization. It will be interesting to see if the Georgia Ethics Commission uses the federal former staffer standard (120 day cooling off period) here, or another standard. If the former staffer provision is carried over into Georgia law, the solicitation would be at the request or suggestion of the Evans campaign.

Fun Fact: It should also be noted that the federal rules were promulgated subsequent to a case that has Georgia roots – FEC v. Christian Coalition.[21] The case, decided in the U.S. District Court for the District of Columbia, included a comprehensive discussion of independent expenditures and coordination with respect to electioneering communications from Georgia native (and former candidate for Lieutenant Governor) Ralph Reed.[22]

II. BRIEF TIPS TO STAY COMPLIANT

REGISTER YOUR GROUP WITH THE GEORGIA GOVERNMENT TRANSPARENCY AND ETHICS COMMISSION

In Georgia, Political Action Committees (“PACs”) and Independent Committees (“ICs”) are two distinct and separate political organizations. A Georgia PAC may make direct contributions to one or more candidates for public office, while a Georgia IC may only make independent expenditures. With this said, a political organization should consider what type of political activity it wants to engage in, separate functions according to that political activity, then follow the corresponding registration and disclosure requirements.

 If you intend to make contributions be sure to have a PAC

The Ethics Commission defines a Political Action Committee (“PAC”) as a group of individuals that receive donations aggregating in excess of $1,000 during a calendar year from persons who are members or supporters of the committee, then distributes funds as contributions to one or more candidate campaign committees or candidates for public office.[23] A PAC must register with the Ethics Commission when it makes aggregate contributions of over $25,000.00 in a calendar year.[24]

If you intend to make independent expenditures, be sure to have an Independent Committee

An independent committee is an organization, or separate account within an organization, that may only expend funds for the purpose of affecting the outcome of an election for any elected office, or to advocate the election or defeat of any particular candidate, and does so independently of a candidate.  A Georgia independent committee is analogous to a federal independent expenditure only PAC- otherwise known as a Super PAC. Independent committees must register prior to accepting contributions or making expenditures for the purpose of affecting the outcome of an election.[25]

You can have both types that share the same name, but be sure to keep separate accounts, register each separately, and keep staff separate with a firewall

Recently, the Georgia Government Transparency & Campaign Finance Commission released an Advisory Opinion that allows a single entity to have a contribution only PAC and a separate segregated fund[26] (“SSF”) specifically for independent expenditures.[27] An organization can contain these two different campaign finance entities so long as each entity has its own separate and distinct bank account and both accounts are registered separately with the Georgia Government Transparency & Campaign Finance Commission.

FILE REGULAR DISCLOSURES ON TIME

Be sure to keep up with contribution limit changes, and consult the Ethics Commission’s website for the reporting calendar that applies to your organization.

Limits: http://ethics.ga.gov/campaign-contribution-limits-increased/

Calendar: http://media.ethics.ga.gov/schedules/ReportFilingScheduleCampaign.aspx

DISCLOSE CONTRIBUTIONS AND EXPENDITURES

A PAC must disclose the amount and date of any contributions received, if in excess of $100 in aggregate. The PAC must also disclose the amount, date, and purpose of tan expenditure of over $100, along with the name and mailing address of the recipient.

Likewise, an independent committee must disclose the amount and date of any contributions received, if in excess of $100 in aggregate. The independent committee must also disclose the amount, date, and purpose of tan expenditure of over $100, along with the name and mailing address of the recipient.

CREATE A FIREWALL AND DIRECT YOUR STAFF ACCORDINGLY

Creating a firewall can be complex, so I will not delve into this matter here. If you are interested in creating a firewall for your organization I encourage you to contact me.

Thank you for reading. If you or your organization have any questions about what is written here, please feel free to contact me by clicking this link.

 

ABOUT THE AUTHOR

Andrew J. Thompson is the Principal Attorney and founder of Thompson Law, PC. Andrew brings over a decade of government, public policy, and political campaign experience to the practice of law. With this perspective, Andrew works with activists to help them achieve their organization’s goals while ensuring compliance with complex federal, state, and local laws and regulations. Andrew also advises political candidates on campaign formation and compliance with local, state, and federal laws.

Andrew currently resides in Atlanta, Georgia, with his wife Claire Hennessey. Andrew participates in several pro-bono legal and public interest organizations, and was recently selected to work with Lawyers for Equal Justice, a program sponsored by the State Bar of Georgia that recognizes entrepreneurial, public-interest minded lawyers with innovative, socially conscious, and sustainable law practices. Andrew is also a Board member at Common Cause Georgia, a non-profit, non-partisan advocacy organization focused on statewide redistricting reform, ensuring fair and accessible elections in the state of Georgia, and monitoring the role of money in politics.

Andrew J. Thompson, Esq.
Phone: (678) 263-3984
Email: Andrew@AndrewThompsonLaw.com
229 Peachtree Street NE
International Tower - Suite 450
Atlanta, Georgia 30303

*Licensed in the State of Georgia and the District of Columbia

 

[1] Complaint, filed on April 20, 2018: https://staceyabrams.com/press-releases/release-ethics-complaint-filed-evans-georgia-campaign/.

[2] Buckley v. Valeo, 424 U.S. 1, 78 (1976).

[3] McConnell v. FEC, 540 U.S. 93, 219 (2003).

[4] GA Gov’t Transparency and Campaign Finance Commission Advisory Opinion No. 2017-05.

[5] Ga. Comp. R. & Regs r. 189-3-.01(9)(f)

[6] O.C.G.A. § 21-5-3(12).

[7] Id.

[8] O.C.G.A. § 21-5-3(7).

[9] Ga. Comp. R. & Regs. r. 189-6-.07 and 189-2-.01(11).

[10] Ga. Comp. R. & Regs. r. 189-6-.07(1).

[11] State Ethics Commission of GA Advisory Opinion Nos. 2001-32 and 2010-05.

[12] Id. citing Buckley v. Valeo at 44.

[13] See GA Gov’t Transparency and Campaign Finance Commission Advisory Opinion No. 2017-05, Exhibit B; see also McConnell v. FEC, 540 U.S. 93, 189-200 (2003)(Overruled in part by Citizens United v. FEC, 558 U.S. 310 (2010)).

[14] GA Gov’t Transparency and Campaign Finance Commission Advisory Opinion No. 2017-05, citing FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 442, 446 (2001) (US Supreme Court held that the effect of coordination between candidates and outside supporters fundamentally transformed the expenditure, noting a "wink or nod" often will be "as useful to the candidate as cash.").

[15] GA Gov’t Transparency and Campaign Finance Commission Advisory Opinion No. 2017-05 at 7,10.

[16] Id. at 7.

[17]  Ga. Comp. R. & Regs. R. 189-3-.01(9)(f); Ga. Comp. R. & Regs. r. 189-2-.01(12).

[18] The list of exceptions can be found in 11 C.F.R. § 109.23(b).

[19] McConnell, 540 U.S. at 189-200; see also 11 C.F.R. § 100.22(b).

[20] 11 CFR 109.21(d)(5) et seq.

[21] FEC v Christian Coal., 52 F. Supp. 2d 45, 92 (D.D.C. 1999).

[22] Id.

[23] O.C.G.A. § 21-5-3(20)(A).

[24] O.C.G.A. § 21-5-34(e).

[25] O.C.G.A. § 21-5-34(f)(1).

[26] O.C.G.A. § 21-5-40(7).

[27] See GA Gov’t Transparency and Campaign Finance Commission Advisory Opinion No. 2015-02.

Andrew Thompson