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1989-38: Treatment of Certain Contributions as Single Entity Contributions

Monday, July 24, 1989

An advisory opinion has been requested whether certain contributions are treated as having been made by a single entity for purposes of the contribution limit of New York City Administrative Code §3-703(1) (f). The following examples have been described:

1) A contribution made by a corporation, and a contribution made by an individual who is an officer or director of that corporation but who does not own a controlling interest in the voting stock of such corporation.

2) A contribution made by a political action committee established, maintained, and controlled by a corporation, and a contribution made by an individual who is an officer or director of that political action committee.

3) A contribution made by a political action committee established, maintained, and controlled by a corporation, and a contribution made by an officer or director of that corporation.

Section 102(a) (2) of the Campaign Finance Board Regulations provides:

Contributions...made by corporations or affiliated committees and the persons or entities who or which control such corporations or establish, maintain, or control such affiliated committees shall be deemed to be made by a single entity for purposes of the contribution limit.

An "affiliated committee" is defined as "a political committee established, maintained, or controlled by another person or entity..." Campaign Finance Board Rule 101(q). In the examples described above the relevant questions are whether the individual contributor "controls" the corporation or "establishes, maintains, or controls" the political committee.

1) Individual Control of a Corporation

Control by an individual is analogous to control by another corporation. For purposes of clarifying the ‘single source' rule that applies to contributions made by related corporations, Campaign Finance Board Rule 102(a) (1), the Board has promulgated a definition of "parent corporation" in which the element of control is described as "beneficially owning, holding, or having the power to vote stock constituting more than fifty percent of the combined voting power of all classes of stock" in another corporation. Rule 101(l). Similarly, an individual may be said to "control" a corporation, for purposes of the single source rule of Rule 102(a) (2), only when that person beneficially owns, holds, or has the power to vote stock constituting more than fifty percent of the combined voting power of all classes of stock in the corporation.

Therefore, a contribution made by an individual who is an officer or director of a corporation will fall under the single source rule of Rule 102(a) (2), only if that individual also "controls" the corporation, in the manner described.

2, 3) Establishing, Maintaining, or Controlling a Political Committee

The second and third examples posit that the political action committee is established, maintained, and controlled by a corporation. These examples do not provide sufficient facts, however, to enable the Board to conclude that the individuals described also establish, maintain, or control the committee.

The factors the Board will consider in determining whether an individual "establishes, maintains, or controls" a political action committee include, but are not limited to:

1) whether the individual makes decisions or establishes policy for the political action committee, including determinations of the recipients of committee contributions and the purposes of committee expenditures;

2) whether the individual has the authority to hire, appoint, discipline, discharge, demote, remove, or otherwise influence other persons who make decisions or establish policies for the political action committee;

3) whether contributions made by the individual and the political action committee reflect a similar pattern;

4) whether the individual knows of and has acquiesced in public representations by the political action committee that it is acting on his or her behalf or under his or her direction.

This is not intended to be an exhaustive list of factors.

 

NEW YORK CITY CAMPAIGN FINANCE BOARD