Advisory Opinion 1999-6 (May 11, 1999)

SUMMARY

A participating candidate may accept a contribution from a political committee established and funded by a corporation, without violating the ban on accepting corporate contributions, if the candidate can demonstrate that the contribution did not derive from, and was not reimbursed by, contributions made by a corporation. The Board’s political committee registration form will inquire whether the committee accepts contributions from corporations and will ask the committee to affirm that corporate funds will not be used to make contributions to participating candidates

FULL TEXT

Re: Charter §1052(a) (12); Administrative Code §3-703(1) (k), (1-a); 3-707; Campaign Finance Board Rule 1-04(h) (3), (j); Op. No. 1999-6

An advisory opinion has been requested on “whether a corporation that establishes a Political Action Committee may fund that committee with a corporate check knowing that the Political Action Committee will make contributions to candidates running for City elective office.”¹

Candidates participating in the New York City Campaign Finance Program may not accept contributions from corporations. New York City Charter §1052(a) (12); New York City Administrative Code §3-703(1-a). This prohibition applies to contributions accepted directly and indirectly. Charter §1052(a) (12); see Advisory Opinion No. 1999-3 (January 7, 1999) (footnote 5). Participating candidates may, however, accept contributions from political committees that have registered with the Campaign Finance Board. Administrative Code §3-703(1) (k); 3-707.

Neither the Campaign Finance Act nor Charter Chapter 46 prohibits the acceptance of contributions from a political committee that has been “established” by a corporation². Furthermore, a corporation’s “knowledge” that the political committee it has established and funded will make contributions to participating candidates is not, by itself, sufficient to bring these contributions within the prohibition against corporate contributions.

The law does, however, prohibit participating candidates from accepting contributions from a political committee that is simply serving as a facade for contributions actually made by a corporation. Specifically, because a participating candidate may not accept corporate contributions “indirectly”, Charter §1052(a) (12), the participating candidate would have the burden of demonstrating that a contribution received from a political committee did not derive from, and was not reimbursed by, contributions made by a corporation³.

To facilitate a participating candidate’s ability to make this demonstration, the form for registering a political committee pursuant to Administrative Code §3-707 will inquire whether the committee accepts contributions from corporations. The registration will also ask each committee to affirm that funds received from corporations, if any, will not be used to make contributions to participating candidates⁴. The Board will publish each political committee’s responses to these inquiries on its Website where the registrations are posted and in periodic mailings to candidates. Id. Thus, both participating candidates and the public will have notice of the risk that a political committee’s contribution could have been indirectly made by a corporation⁵.

NEW YORK CITY CAMPAIGN FINANCE BOARD

¹ This request was made by Arnold N. Kriss, by letter dated March 11, 1999.

² With respect to corporate contributions made prior to the adoption of the corporate contribution prohibitions, the corporation and any political committee it established are considered to be “affiliated” and subject to a single contribution limit pursuant to Campaign Finance Board Rule 1-04(h) (3). See also Advisory Opinion No. 1989-38 (July 24, 1989). The interplay between the two corporate contribution prohibitions is discussed in Advisory Opinion No. 1998-2 (October 23, 1998); see id. at footnote 2, regarding effective dates.

³ Moreover, if the corporation itself has funded the political committee for the purpose of making contributions to a particular candidate or candidates, or to a particular class of candidates, the contributions are considered to be from the political committee and also from the corporation. Campaign Finance Board Rule 1-04(j); see also New York State Board of Elections Opinion No. 1976-2 (April 23, 1976).

⁴ The registration is a written instrument filed with the Board. Knowingly filing a written instrument that contains a false statement or false information may subject the filer to penalties under New York Penal Law.

⁵ Questions whether the corporation’s and its political committee’s activities would be in compliance with the requirements of New York Election Law §§14-116 ($5,000 annual aggregate limit on contributions and other political expenditures by corporations) and 14-120 (contribution to be under true name of contributor) are beyond the scope of this advisory opinion.

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