4. In-kinds are not always recognized as such.
As in the Ensign case, funds were introduced to the benefit of the committee as it functioned like an everyday-workplace, but not to its political benefit. It didn’t result in furthering the status, win-potential or financial well being of the political campaign. Treasurers must enforce internal controls at the campaign office that allow for their accounting of:
Event Dates/Location: Are the hosts U.S. Citizens, or is the free use of their home an illegal, foreign (in-kind) contribution? In 2008, the watchdog group Judicial Watch accused Hillary Clinton’s campaign of accepting an illegal, foreign in-kind when Elton John, a British citizen, performed at a fundraising event. The FEC later ruled that foreign nationals can volunteer their time; however, this is not the kind of distraction the Clinton campaign needed as it struggled against then-Sen. Obama’s surging popularity.
- Invoices paid pre-event: Facility rental and catering deposits, etc.
- Invoices post-event: Refreshments, catering staff, valet staff, entertainment, equipment, and decorations.
- Personnel records, salaries, and consultant contracts and payments: It’s especially important to structure consultant contracts so that payments are due, either:
1. On a set day of the month.
2. Once per quarter/upon receipt.
3. As indicated by due-date on each invoice
This will alleviate the concern that an unpaid vendor is making an illegal, corporate in-kind by not getting paid regularly -- the contract determines when the vendor should be paid. If payments are late, the past-due bills simply belong on Schedule D, the “Debt Schedule,” so as to not be considered service in-kinds.
Odds are no matter how much you try to avoid accepting in-kind donations, they will probably occur. Campaign staff must expect unanticipated in-kinds to occur and to be ready to account for them.
Corporate in-kinds occur most frequently because the campaign treasury does not know what is going on day-to-day in the fundraising staff’s schedule. The “lunch meetings” or “conference calls” at the candidate’s brother’s real estate company’s offices may qualify as in-kind contributions, or even worse: As illegal, corporate in-kinds.
Event staff can hardly be expected to turn away a well-intentioned gift of wine to be served at a fundraising event. The event hosts simply think they are being gracious by providing the extra beverage. However, staff must account for this as an in-kind to stay in legal compliance.
That is why in-kind reporting exists, to disclose these transactions properly, not necessarily to open a new avenue for fundraising. Even a wine gift is a minor step out of line internally for the campaign finance staff. They must try to inform in-home event hosts of the implications of such in-kinds, and the practical use of the profitable in-home exemption, which allows all adult residents of the home to contribute up to $1,000 each in event-goods and services which is not counted against their giving limits. Now that’s a win-win scenario, which avoids the common pitfalls of in-kind contributions.
Erik currently runs sales and marketing for CMDI, the largest Republican fundraising technology platform. Prior to joining CMDI, Erik founded numerous fundraising technology companies whose products have raised over $300 million for hundreds of political and cause-based organizations.