Re: Administrative Code of the City of New York §§ 3-702(8), 3-716(1); Rules 1-02, 1-04(g)(1), 1-08(f), 4-01(c), 13-01, 13-05; Advisory Opinion No. 2009-7 (August 6, 2009); Op No. 2012-1.
The New York City Campaign Finance Board (the "Board") has received a request for an advisory opinion1 from SEIU Local 32BJ ("32BJ") inquiring whether the Board considers any of the following communications to be an in-kind contribution from the union to the candidates, where the candidates have "fostered or cooperated in the content and distribution" of the communication:
- A non-independent electioneering communication;
- A mass mailing to the general public by a union of a flyer mentioning the candidates' position on union-related issues;
- A mass mailing to the general public by a union of a flyer advertising the appearance of the candidates at a union rally.
The request further inquires whether the creation and distribution of such flyers would trigger any obligation on the part of the union under Chapter 13 of the Rules, which governs the disclosure of independent expenditures.
A campaign that engages in campaign-related activity with another party (i.e., receives goods or services from that party, excluding the work of volunteers) must compensate that party for the non-independent activity it performs on the campaign's behalf, or the campaign will have received an "in-kind" contribution equal to the other party's share of the costs of the activity. See Rules 1-02, 1-04(g). All contributions, including "in-kind" contributions, are subject to the applicable contribution and expenditure limits for the election. See Rules 1-02, 1-04(g), 1-08(a); Advisory Opinion No. 2009-7. Campaigns must fully report all in-kind contributions and provide documentation of the source and value of each contribution. See Rule 4-01(c). A campaign may respond to an alleged violation related to receipt of an in-kind contribution by submitting documentation and/or explanations to the Board during the post-election enforcement process.
Applicable Statutes, Board Rules, and Advisory Opinions
Section 3-702(8) of the Administrative Code of the City of New York (the "Administrative Code") provides that the term "contribution" includes:
any payment, by any person other than a candidate . . . made in connection with the nomination for election, or election, of any candidate, including but not limited to compensation for the personal services of any individual which are rendered in connection with a candidate's election or nomination without charge; provided however, that none of the foregoing shall be deemed a contribution if it is made, taken or performed by a person or a political committee independent of the candidate or his or her agents or political committees authorized by such candidate pursuant to section 14-112 of the New York state election law.
Section 3-716(1) of the Administrative Code provides:
nothing in this chapter shall be construed to restrict candidates or their agents from making appearances at events sponsored or paid for by persons, political committees, or other entities that are not in any way affiliated with such candidate or any agent of such candidate. The costs of such events shall not be considered contributions to or expenditures by such a candidate pursuant to this chapter solely because such an appearance is made; provided that this subdivision shall not apply to any event in relation to which contributions are solicited on behalf of such candidate.
Rule 1-02 defines "in-kind contribution" as "a gift, subscription, loan, advance of, or payment for, any thing of value (other than money) made to or for any candidate or authorized committee."
Rule 1-04(g)(1) provides that "an in-kind contribution to a candidate is also an expenditure made by the candidate."
Rule 1-08(f)(1) provides that the "factors for determining whether an expenditure is independent of a candidate include, but are not limited to:
(i) whether the person, political committee, or other entity making the expenditure is also an agent of a candidate;
(ii) whether the treasurer of, or other person authorized to accept receipts or make expenditures for, the person, political committee, or other entity making the expenditure is also an agent of a candidate;
(iii) whether a candidate has authorized, requested, suggested, fostered, or otherwise cooperated in any way in the formation or operation of the person, political committee, or other entity making the expenditure;
(iv) whether the person, political committee, or other entity making the expenditure has been established, financed, maintained, or controlled by any of the same persons, political committees, or other entities as those which have established, financed, maintained, or controlled a political committee authorized by the candidate;
(v) whether the person, political committee, or other entity making the expenditure and the candidates have each retained, consulted, or otherwise been in communication with the same third party or parties, if the candidate knew or should have known that the candidate's communication or relationship to the third party or parties would inform or result in expenditures to benefit the candidate; and
(vi) whether the candidate, any agent of the candidate, or any political committee authorized by the candidate shares or rents space for a campaign-related purpose with or from the person, political committee, or other entity making the expenditure."
Rule 1-08(f)(2) provides that "financing the dissemination, distribution, or republication of any broadcast or any written, graphic, or other form of campaign materials prepared by a candidate is a contribution to, and an expenditure by, the candidate, unless this activity was not in any way undertaken, authorized, requested, suggested, fostered, or otherwise cooperated in by the candidate."
Rule 1-08(f)(3) provides that "an expenditure for the purpose of promoting or facilitating the nomination or election of a candidate, which is determined not to be an independent expenditure, is a contribution to, and an expenditure by, the campaign."
Rule 4-01(c) provides that "for each in-kind contribution, candidates shall maintain a receipt or other written record that provides the date(s) the in-kind contribution was made, the name and address of the contributor, a detailed description of the goods or services provided, and such further information and/or documentation necessary to show how the value of the contribution was determined."
Rule 13-01 defines "mass mailing" as "a mailing by United States mail, common carrier, or facsimile of more than 500 pieces of mail matter of an identical or substantially similar nature within any 30-day period" and "electioneering communication" as "a communication that: (1) is disseminated by means of a radio, television, cable, or satellite broadcast, a paid advertisement such as in a periodical or on a billboard, or a mass mailing; (2) is disseminated within 30 days of a covered primary or special election, or within 60 days of a covered general election; and (3) refers to one or more clearly identified ballot proposals and/or candidates for a covered election."
Rule 13-05 provides: "An expenditure by an individual or entity referring to a candidate, that was authorized, requested, suggested, fostered by, or cooperated in by such candidate or the opponent of such candidate, or their agents, is not an independent expenditure and is not governed by this Chapter. Factors used by the Board to determine whether an expenditure is independent or non-independent are referenced in Rule 1-08(f)."
In Advisory Opinion No. 2009-7, the Board provided guidance as to how it interpreted the Administrative Code and the Rules with respect to third party expenditures. Regarding the determination whether a particular expenditure is non-independent or independent, the Board stated that "the critical question in every case is whether, in light of the facts and indicia of non-independent activity, the campaign authorized, requested, suggested, fostered or otherwise cooperated in a third party's activity on the campaign's behalf, and if so, whether such activity was properly accounted for." The Board further noted that "the determination of whether a particular expenditure is independent or non-independent is necessarily fact-specific." The Board declined to opine on the particular examples described in the request, "which contained limited facts and vague descriptions," choosing instead to "provide examples of the indicia of non-independent activity which underlay several recent Board determinations." These examples included Board determinations involving the campaigns of Pamela Junior (2005)2, Fernando Ferrer (2005)3, Annabel Palma (2003)4, and Mark Green (2001)5.
In its request for an advisory opinion, 32BJ asked generally whether "an ‘electioneering communication,' as defined in Rule 13-01, constitutes an in-kind contribution to a campaign if it was a ‘non-independent expenditure' within the meaning of Rule 13-05." 32BJ posed a hypothetical scenario in which, two weeks before a general election, a flyer is distributed by a union to the general public via a "mass mailing" as defined in Rule 13-01, advertising a union rally to support a strike at which two candidates for different city offices will speak at the union's invitation; one candidate is an incumbent New York City officeholder who is running for reelection, and the other is not an incumbent. The request stated that, in the hypothetical scenario, the candidates have "‘fostered or cooperated in' the content and distribution of the flyer within the meaning of Rule 13-05," that the flyer is an "electioneering communication" as defined in Rule 13-01, and that the costs of the flyer allocable to each candidate exceed $1,000, and inquired whether, under those circumstances, the flyer would constitute an in-kind contribution from the union to the candidates. Next, 32BJ inquired whether "any disclosure or other obligation by the Union under Chapter 13 or otherwise under the Board's rules" would arise from the flyer. Finally, 32BJ inquired whether the analysis would change if the flyer, distributed in the same manner as described above, were sent not to advertise a rally, but rather to build public support for the union's bargaining position by noting the two candidates' support for the strike and asking that people contact the mayor to express their support.6
This analysis focuses in particular on the timing and content of the activities described in the request, and makes assumptions about certain facts not presented. The conclusions herein are limited to those facts and assumptions.
We first address the general question: whether a non-independent electioneering communication constitutes an in-kind contribution. Under Rule 13-05, non-independent expenditures are not subject to Chapter 13 (the independent expenditure rules); thus, those rules have no bearing on this analysis. Therefore, the general question cannot be answered as posed, as the definition of "electioneering communication" exists only for communications covered by Chapter 13. The fact that a communication would be considered an "electioneering communication" pursuant to Chapter 13 is not central to whether any related expenditures would constitute an in-kind contribution.
In assessing whether an expenditure constitutes an in-kind contribution, the Board must determine whether the candidate has "undertaken, authorized, requested, suggested, fostered, or otherwise cooperated in" the expenditure, as well as whether the expenditure was made "for the purpose of promoting or facilitating" the candidate's nomination or election. Rule 1-08(f)(2); see Admin. Code § 3-702(8). If it is determined that the candidate has cooperated in the expenditure, the Board will consider several non-exhaustive factors in determining whether the purpose was to promote or facilitate the candidate's campaign. These include:
- whether the materials or communications contain language that mentions the candidate's accomplishments, attests to the candidate's high character or fitness to hold office, criticizes the candidate's opponent, or solicits contributions to the candidate;
- the temporal proximity of the expenditure to the election;
- whether the distribution of materials is targeted to a particular audience;
- the number of candidates whose names and/or images appear on such materials, and the prominence with which the name and/or image of the candidate in question appears relative to other candidates;
- whether any or all candidates referenced in the materials are seeking the same office; and
- whether the entity making the expenditure has endorsed or participated in joint campaign-related work with the candidate.
Here, the advisory opinion request states that the candidates fostered or cooperated in the content and distribution of the flyers.7 Accordingly, for each flyer, the question is whether the purpose of the flyer was to promote or facilitate the candidates' campaigns.
Flyer to build support for union cause
Communications that advertise candidate appearances at events are subject to a slightly different and more complex analysis than those that are not related to candidate appearances. Therefore, we will first address the flyer that is unrelated to a union rally. The advisory opinion request states that this flyer was "mailed in order to build public support and pressure for the Union's bargaining position, . . . notes the two candidates' support for the strike, and . . . asks the public to contact the Mayor (who is not a candidate) and express their support for the Union's bargaining position." Weighing against the flyer being an in-kind contribution is the fact that the flyer mentions the names of more than one candidate, and that the flyer was mailed to the general public, rather than to a targeted audience. For purposes of this analysis, we assume that the names of the candidates are given equal prominence. The request does not specify whether the union has endorsed or participated in joint campaign-related work with the candidates, or whether any other candidates' names or images appear on the flyer; accordingly, those factors cannot be weighed. However, because the flyer commenting on the candidates' character or fitness by articulating the candidates' support for a position the union is advocating comes in a mailing sent two weeks before an election, it is likely that the Board would find this flyer to be an in-kind contribution from the union to the candidates.
As noted above, because the other flyer advertises the candidates' appearance at a rally, it is subject to a different analysis. Pursuant to section 3-716(1) of the Administrative Code, the costs related to a non-fundraising event "sponsored or paid for by persons, political committees, or other entities that are not in any way affiliated with the candidate or any agent of such candidate" are not considered an in-kind contribution to a candidate solely because the candidate makes an appearance at the event. In determining whether an in-kind contribution has been made, the Board must assess whether the sponsoring entity is "affiliated with" the candidate under section 3-716, and whether the purpose of the event is to promote or facilitate the candidate's campaign. If a candidate and an entity cooperate beyond the level of communication necessary for scheduling an appearance, then they are considered "affiliated"; thus, section 3-716(1) does not apply, and the costs related to the event may be an in-kind contribution to the candidate.8 However, an event at which a candidate appears may constitute an in-kind contribution to that candidate if the event promotes or facilitates the candidate's campaign. In determining whether the event promotes or facilitates the candidate's campaign, the Board will consider several non-exhaustive factors. These include:
- the temporal proximity of the event to the election;
- the number of speakers scheduled to appear at the event, and how many of those speakers are other candidates;
- whether any or all of the candidates scheduled to appear are seeking the same office;
- whether the sponsoring entity has endorsed or participated in joint campaign-related work with the candidate;
- whether the event is a recurring event held on a regular basis; and
- the focus of the event.
In this case, weighing in favor of the rally being an in-kind contribution is the fact that the event is not held on a regular basis, and that it occurs two weeks before an election. The request does not specify whether the union has endorsed or participated in joint campaign-related work with the candidates, how many speakers are scheduled for the rally, or how many of those speakers are candidates; accordingly, those factors cannot be weighed. However, because the focus of the rally described in the request is an issue unrelated to the promotion of the candidates' nomination or election, it is likely that the Board would not find the rally to be an in-kind contribution to the candidates.
Flyer advertising union rally
If an event is itself an in-kind contribution under the above analysis, and the candidate has fostered or cooperated in the creation and/or distribution of any materials or communications publicizing that event, then the expenses related to those materials or communications will likewise be considered in-kind contributions. However, materials or communications advertising an event may be in-kind contributions even if the related event is not considered an in-kind contribution. The analysis regarding whether such materials or communications constitute an in-kind contribution is the same as the standard for expenditures generally, described earlier in this Opinion.9
To enable the Board to opine pursuant to the above standards, the CFB requested that 32BJ provide more information regarding the nature of the candidates' participation in the creation and distribution of the flyer, as well as the content of the flyer itself. The former was needed to confirm that the candidates had "fostered or cooperated in" the expenditure beyond the level of communication necessary to schedule the candidates' appearances; the latter was needed to assess whether the flyer was "for the purpose of promoting or facilitating" the candidates' campaigns. In response, 32BJ stated that in its hypothetical, the candidates have requested that the union distribute the flyer via a mass mailing and have reviewed and approved the flyer prior to its distribution, and that the flyer states: "Come to a rally to support the name of company workers who are fighting for a fair contract. Speakers will include names of candidates. date, time and place."10
Because, as stated above, the rally itself is not an in-kind contribution, whether the expenditures related to the materials are an in-kind contribution turns on whether the flyer is for the purpose of promoting or facilitating the candidates' campaigns. The fact that the flyer was distributed two weeks before the election weighs in favor of it being considered an in-kind contribution. The request does not specify whether the union has endorsed or participated in joint campaign-related work with the candidates, or whether any other candidates' names or images appear on the flyer; accordingly, those factors cannot be weighed. However, based on the information provided in the advisory opinion request and subsequent letter, the content of the flyer is unrelated to the candidates' campaigns; the language of the flyer does not advocate for either candidate or criticize their opponents; the flyers were distributed to the general public rather than to a targeted audience; and the flyer mentions the names of more than one candidate, which, we assume, are given equal prominence. Accordingly, it is likely that the Board would not find the expenses related to this flyer to be an in-kind contribution.
Finally, we address whether, in the above hypothetical situations, the union would have any disclosure or other obligation under Chapter 13 of the Rules, which governs the disclosure of independent expenditures. As noted above, because the candidates have "fostered and cooperated in" the design, production, and distribution of the flyer, the expenditures related to the flyer do not constitute independent expenditures, but rather ones that were made in cooperation with the candidates. As such, the expenditures related to the flyer would not be covered by Chapter 13 pursuant to Rule 13-05, "Non-Independent Expenditures." Accordingly, the flyer would not create any disclosure obligation on the part of the union.
NEW YORK CITY CAMPAIGN FINANCE BOARD
6 For purposes of this Opinion, neither the fact that the distribution of the flyers was by mass mailing, nor that one candidate is an incumbent and the other is a challenger, has any bearing on our analysis.
7 For further guidance as to the criteria considered by the Board in the fact-specific analysis regarding whether cooperation has occurred, candidates should consult Rule 1-08(f), Advisory Opinion No. 2009-7, and the final audits and final board determinations concerning the campaigns discussed in that Opinion.
8 Generally, any communication between an entity and a candidate would suffice to make an expenditure by that entity non-independent and thus a potential in-kind contribution, but the Board acknowledges that in scheduling a candidate to appear at an event, some communication may be necessary. Such communication is limited to discussions of logistics such as date, time, and location required to arrange the candidate's appearance.