TEXAS ETHICS COMMISSION
June 29, 2007
Whether an incorporated local organization that is a member of an incorporated statewide organization may make donations to charities that match the amount of political contributions made by individual members of the local organization to the statewide organization’s general-purpose political committee. (AOR – 537)
The Texas Ethics Commission has been asked whether an incorporated trade association (“association”) and its corporate members may undertake a particular “charitable match solicitation program.” The requestor states that the association is exempt from taxation under section 501(c)(6) of the Internal Revenue Code, has a membership consisting of federal and state-chartered dues-paying corporations throughout the state of Texas, and represents the interests of seven million individuals who are members of the association’s corporate members.
Under Texas law, corporations are generally prohibited from making political expenditures. See Elec. Code § 253.094. Costs incurred in generating contributions to a political committee are political expenditures. Ethics Advisory Opinion No. 362 (1997). A corporation may, however, make political expenditures to finance the costs of soliciting political contributions to a general-purpose political committee assisted by the corporation from the members, employees, and stockholders of the corporation, and from the families of members, employees, and stockholders of the corporation. Elec. Code § 253.100(b). An incorporated member of a nonprofit trade association who pays membership dues to the association may also finance the solicitation of contributions to the association’s general-purpose political committee from its members, stockholders, and employees, and from the families of their members, stockholders, and employees. Ethics Advisory Opinion Nos. 217 (1994), 163 (1993). In the case at hand, the “solicitable class” is at least seven million individuals. The legal issue in this opinion is whether making the charitable contributions according to the proposed solicitation program constitutes payment of a “solicitation cost” for purposes of section 253.100(b) of the Election Code.
Previous advisory opinions have not considered a program of the sort proposed by the requestor. We have determined that costs of food, beverages, invitations, and green fees for a fundraising event, as well as “small token prizes” for winning a skill contest at the event, are permissible solicitation costs. Ethics Advisory Opinion No. 280 (1995). Expenses to set up a payroll deduction plan also constitute permissible solicitation costs. Ethics Advisory Opinion No. 217 (1994). We must recognize, however, that not all inducements to contribute to a political committee are permissible solicitation costs for purposes of this exception.
We have previously stated that, in considering whether a prize or award to a corporate employee or group of corporate employees is a permissible solicitation cost, it is important to consider whether the award is tantamount to a reimbursement to the employees for their contributions. Ethics Advisory Opinion No. 362 (1997). If the award is, in essence, reimbursement for contributions, payment of the award would not be a permissible solicitation cost but would instead be a prohibited contribution to the political committee from the corporation. Id. An additional, but no less important, consideration is whether a particular expenditure is likely to lead to abuse of the “solicitation costs” exception. Ethics Advisory Opinion No. 280 (1995).
The requestor also asks whether a program that uses a match less than “dollar-for-dollar” would be permissible. The basis of our opinion is not the amount spent by a corporation in relation to the amount spent by an individual member, but rather the likelihood of abuse that such a program would allow. A corporation may not solicit contributions to a political committee by making a charitable contribution in any amount.
The making of charitable contributions according to the proposed solicitation program is not a permissible solicitation expense for purposes of section 253.100(b) of the Election Code.
1 We are aware that we have consulted federal law for guidance regarding campaign finance issues that arise under Texas law; however, federal law does not compel a particular conclusion in this case.
2 The requestor states that such a program is permissible under Texas law based upon the Federal Election Commission’s approval of similar programs. We note that although federal law may be consulted for guidance regarding campaign finance issues that arise under Texas law and that we are aware that we have consulted federal law for guidance in the past, federal law does not compel a particular conclusion in this case.