With no fanfare, President Bush signed the Bipartisan Campaign Reform Act into law on March 27. Opponents filed suit within minutes, challenging its constitutionality. The new law will take effect on November 6, 2002. A sweeping change to the existing campaign finance regime, this new law will impact trade and professional associations in several key areas.
One of the biggest impacts on associations results from what the law does not do – raise contribution limits to and from PACs. Although it raises contribution limits for individuals to $2,000 per election to candidates, $25,000 per year to national parties, and raises an individual's annual limit to $37,500, it leaves the $5,000 annual limit to and from PACs untouched. With these higher individual limits ($4,000 total for an election cycle), association PACs may consider bundling individual contributions to candidates for greater impact.
As was widely reported, the law prohibits the use of so-called "soft money" in federal elections. Thus, trade and professional associations will no longer be allowed to donate money from their general funds to the national parties.
Trade and professional associations that support "issue ads" (ads that do not expressly advocate the election or defeat of candidates, but that mention candidates by name) will not be allowed to pay for these ads with general funds if they air 30 days before a primary or 60 days before a general election. Associations will have to pay for these types of advertisements out of PAC money; but even these PAC expenditures are significantly limited under the new law.
Finally, the law expands what is known as coordination. A trade or professional association may spend as much of its PAC money as it chooses for independent expenditures or electioneering communications. But, if it "coordinates" with a candidate or party, the expenditure is treated as a contribution to the candidate subject to the PAC's $5,000 limit. Coordination is loosely defined and does not require actual "collaboration or agreement." If associations pay for such ads, then virtually any contact between the candidate and an association (e.g., lobbying) could be considered to be coordination—or at the very least could subject the association to investigation to establish whether there was coordination. Associations will have to be careful to avoid any such implication to the extent possible and design a rigorous compliance plan.
There are many more changes to the campaign finance laws in this sweeping legislation. A more complete summary can be found in the article Changing the Way the Message Gets Out: House Passes Campaign Finance Reform and Senate Looks Likely from February 2002.
One of the biggest impacts on associations results from what the law does not do – raise contribution limits to and from PACs. Although it raises contribution limits for individuals to $2,000 per election to candidates, $25,000 per year to national parties, and raises an individual's annual limit to $37,500, it leaves the $5,000 annual limit to and from PACs untouched. With these higher individual limits ($4,000 total for an election cycle), association PACs may consider bundling individual contributions to candidates for greater impact.
As was widely reported, the law prohibits the use of so-called "soft money" in federal elections. Thus, trade and professional associations will no longer be allowed to donate money from their general funds to the national parties.
Trade and professional associations that support "issue ads" (ads that do not expressly advocate the election or defeat of candidates, but that mention candidates by name) will not be allowed to pay for these ads with general funds if they air 30 days before a primary or 60 days before a general election. Associations will have to pay for these types of advertisements out of PAC money; but even these PAC expenditures are significantly limited under the new law.
Finally, the law expands what is known as coordination. A trade or professional association may spend as much of its PAC money as it chooses for independent expenditures or electioneering communications. But, if it "coordinates" with a candidate or party, the expenditure is treated as a contribution to the candidate subject to the PAC's $5,000 limit. Coordination is loosely defined and does not require actual "collaboration or agreement." If associations pay for such ads, then virtually any contact between the candidate and an association (e.g., lobbying) could be considered to be coordination—or at the very least could subject the association to investigation to establish whether there was coordination. Associations will have to be careful to avoid any such implication to the extent possible and design a rigorous compliance plan.
There are many more changes to the campaign finance laws in this sweeping legislation. A more complete summary can be found in the article Changing the Way the Message Gets Out: House Passes Campaign Finance Reform and Senate Looks Likely from February 2002.