The Election Cometh
On the local, state, and
national levels, PACs provide
the chamber with greater
government relations
opportunities.
by Mary Kay Minaghan
ost people equate the First
Amendment with freedom
of the press. But the First
Amendment is much more
than that; it contains one of the most fundamental protections, the “right of people
to peaceably assemble and to petition the
Government for a redress of grievances”.
This right to petition government is
most often exercised through the creation
of an organization of individuals who share
similar views, like a chamber of commerce.
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But we all know that petitioning government can often be a daunting task. To make
this task more manageable, some chambers
choose to retain professional lobbyists to
carry their message to Washington D.C.,
the State House or a local city council.
Another effective tool in helping a chamber
exercise its right to petition its government
is the creation of a grassroots mobilization
program. This allows your chamber to
match your member companies with the
local, state and federal officials in whose districts these companies operate. By making
these critical connections, your chamber
is able to put a face on the issue and bring
a more personal message about how a bill
will affect the business community.
One of the newer tools of an effective
program to petition government comes in
the form of a political action committee or
Chamber Executive September/October 2005
“PAC.” The days of the political soapbox—
when candidates would stand in a town
square espousing their political beliefs—are
long gone. Today, people are too busy to
take the time to hear what a candidate has
to say about an issue. There are a multitude
of media options and candidates must bring
their message to the voters via television,
radio and direct mail. All of these options
are extremely expensive, placing PACs in
an increasingly important position in the
political arena at every level of government.
To increase your chamber’s effectiveness in
the legislative process, creation of a PAC
can be hugely beneficial.
Getting started
So how does a local or state chamber get
this important tool to work for its members? Before you start, it is important to
note that most states and even some municipalities have very specific regulations governing PACs. Additionally, there are federal
regulations imposed by the Internal Revenue
Service, which also govern state and local
PACs, particularly when those PACs are associated with not-for-profit organizations.
Many state laws governing PACs require
contributions to be disclosed within a certain
amount of time. Fines can run as high as
$500 a day for late filings; in one PAC’s case,
it resulted in a $30,000 fine. So be sure to
consult your local and state laws governing
PACs and talk with your accountant to be
sure your chamber files the necessary forms
with the IRS to ensure your PAC is not subject to taxes.
Organization
Once you’ve determined the laws that
govern PACs, you are ready to get started
putting your PAC together. Start by approving a set of by-laws. Similar to the by-laws for
your chamber, PAC by-laws help determine
how your PAC is organized, who can serve,
member duties, required meetings, and how
the PAC raises and spends money. This exercise can present several questions, such as:
Spending decisions – Some would argue
that the chamber’s board of directors should
have final say over all PAC decisions, particularly when it comes to expenditure decisions.
While a chamber PAC should work very
closely with the board of directors, it is not
necessary for its spending decisions to be
approved by the board of directors. In fact,
many believe that keeping the PAC decision
making process separate from the chamber’s
board gives the chamber plausible deniability, particularly when the PAC must make a
difficult political decision.
Candidate support – In many states, PACs
can be organized to support candidates,
issues, or both. When we think of PACs, we
generally think about support for candidates,
but in this increasingly competitive legislative process, using these monies to support
ballot initiatives can also be helpful, particularly to a local chamber.
Funding
Before you establish a funding mechanism, it is important to develop a budget
based on the election cycles and number of
races in which your PAC is likely to become
involved. During a non-election year, most
PACs contribute at a maintenance level,
which is relatively easy to identify. However,
in an election year, contributions can be
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much higher depending on the number of
competitive races. Once you’ve developed
your budget you can craft a funding mechanism to ensure you raise enough money
to meet your budget and sustain your PAC
going forward. It is important to note that
when soliciting PAC contributions, some
states have very specific language that must
be included on all fundraising solicitations.
So be sure to check state and local laws to
ensure your PAC is in compliance. Below
are some funding options that your chamber might consider.
Dues check off – The dues check off method offers the most consistent funding for a
PAC and provides a vehicle for every chamber member to participate in the PAC. To
implement this method, the chamber board
should set the contribution level(s) based on
a recommendation of its PAC. This can be
done in the form of a set level for every member or a graduated level based on a member’s
size (i.e. revenues or employees). The PAC
line item amount would then be included
on the member’s dues bill and factored into
the total dues owed. It is important to notify
members that contributions to a PAC are
voluntary and do not affect membership
rights. The dues check off method generally
increases member participation.
Events – Another way to raise money for
your chamber’s PAC is to through events.
You can look to the usual fundraising events
to fund your PAC, such as a golf outing,
silent/live auction, or baseball game. These
events are not usually as financially lucrative
as the dues check off, but they bring members together to hear your PAC’s message.
One variation on the fundraising event
that has met with success is the creation
of a “legislative club,” which invites key
elected officials to a meeting of the Club.
Club members would commit to a large
dollar contribution (i.e. $1,000, $5,000,
etc.) per event for the privilege of attending these events. This variation garners
high-level contributors and incorporates
the PAC’s message into each event. The
event method gets the most politically
active within your chamber involved in
contributing to the PAC. But, unfortunately, it does not reach the masses quite
like the dues check off method.
Direct solicitation – This method would
send a separate PAC solicitation to every
chamber member outlining what legislative accomplishments your chamber has
achieved for its members and asking members to make a contribution to the PAC.
When compiling your accomplishments,
remember that what didn’t pass is often
as important as what did pass. The direct
solicitation, like the event method, communicates the chamber’s legislative agenda
to its members. Another distinct advantage
is it allows members to give more than the
pre-set amount generally used with the dues
check off method. This method typically has
a far lower participation rate than the dues
check off method.
Which funding mechanism is right for
your chamber depends heavily on the size of
your PAC’s budget, how frequently your PAC
is engaged in election giving and the size of
your membership. Generally, most chambers
will find that a combination of these methods is the most effective way to raise money
for their PAC. By combining these methods
your chamber will not only reach the masses
but also be able to tap those members who
have a greater interest in the legislative process to give more to your cause.
Spending
Now that you have organized your PAC and
established a funding mechanism that works
for your chamber, you need to determine
how to best spend that valuable PAC money.
Before you can do that effectively, your PAC
Board should establish a set of guidelines
to help direct its spending decisions. These
guidelines should identify those races in
which a PAC intends to become involved,
whether a PAC will become involved in
primary elections, and if there are any types
of committees to which a PAC will not contribute (e.g. political parties). The election
process changes more often than you think
so it’s important these spending guidelines
are flexible to permit your PAC to adjust as
needed. PAC guidelines should also weigh
key factors of each candidate, including:
Position on issues – Your PAC should
evaluate a candidate’s stance on issues of
interest to the chamber. One way to determine how a candidate might vote on an
issue, if elected, is to require them to complete a candidate questionnaire. This is a
document created by the chamber that seeks
a candidate’s views on specific issues. The
answers provided could be used to help your
PAC better understand a candidate’s views on
Chamber Executive September/October 2005
13
key issue for your chamber, then your PAC
would want to put more weight on those
candidates holding a position on the committee that decides such tax issues.
Voting record – The voting record of a
candidate is another tool available to your
PAC. While the candidate questionnaire
defines what a candidate will do if elected,
their voting record tells you what a candidate has done. All PACs should use caution
when factoring in the voting record, as a
candidate’s vote may have been very specific
to district concerns that may or may not
factor the same in a citywide or statewide
race. Nonetheless, the voting record is a
great place to start the discussion with a
candidate.
critical issues. Some PACs require a candidate to complete the questionnaire before
any PAC donation will even be considered.
Many PACs retain these questionnaires and
should an elected official forget their stated
position on a critical issue, the chamber
can use the questionnaire to refresh their
memory down the line.
Electability – Your PAC should evaluate
a candidate’s electability based on voter
demographics and ability to raise money.
Votes and money are what win elections and
if your PAC is going to make wise spending
choices, it must consider these two factors, which make up a candidate’s electablity. Reviewing recent election totals and
comparing them to the current candidates
vying for a seat is a good way to determine
a candidate’s ability to secure the necessary
number of votes to win. Your PAC should
also consider a candidate’s fundraising ability, as well as the fundraising ability of their
opponents. This review will also help your
PAC gain a better understanding of who
is contributing to a particular candidate,
which may affect spending decisions.
Incumbency & position – The overwhelming percentage of incumbents winning re-election at the local, state and
federal level warrants some consideration
by your PAC. At the same time, a candidate’s
position, whether in elective office or on a
key committee, should also factor into the
decision making. For example, if taxes are a
Challenges
In most states, PACs are required to file
with state and/or local agencies and the
frequency can vary, which may pose an
administrative burden on you and your
staff. For example, in Illinois, contributions over $500 must be filed within two
business days if they are received within 30
days of the election. The fine for late filing
could be the total value of the contribution
received. If you are planning to start a PAC
it is important that you and your staff who
will be responsible for completing these
filings are properly trained and have the
administrative support to meet the various
reporting deadlines.
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Chamber Executive September/October 2005
To keep your PAC from becoming a fund
that supports “friends of friends” rather
than candidates who support your local
or state chamber, you also need to meet
the challenge of providing solid research,
to your PAC decision makers. When your
PAC evaluates a candidate, if you and your
staff have done the research, the obvious
choice should be pretty clear. In the past,
conducting this critical research could
take huge amounts of time, particularly
as election time approached. Today, the
increased online availability of this information has helped many local and state
chambers overcome this challenge.
Successes
One of the most important things a
chamber can do to bolster its PAC both
among its members and among elected officials is to talk about its successes. Chamber
members are often hesitant to contribute
to a PAC because they do not always know
where their money goes or how it helps
improve their business position. To dispel
this, your PAC should promote its successes to your members frequently. These
days the contribution decisions of most
PACs are available online. Thus, there is no
reason to keep the list of recipients a secret,
particularly from your members who have
financially supported your PAC.
At the same time, spreading the message
on how your PAC has supported candidates
that support chamber issues is a great way
to get other candidates to reconsider their
position on those same issues. Sometimes
a candidate doesn’t want to hear that your
PAC is supporting their opponent. But as
long as your PAC makes its spending decisions based on the sound principles that
govern your chamber, you can simply tell
that candidate your PAC is exercising its
First Amendment right to petition government, a principle which every elected
official swears to uphold when they take
office.
Mary Kay Minaghan is the principle of
MKM Services, a Chicago-based firm specializing in legislative service, grassroots
mobilization, political action committees, and communication. Mary Kay has
over ten years of experience as an effective Chicago lobbyist and has been an
association chief executive officer and a
nationally recognized government affairs
director. She can be reached through
http://www.mkmservices.com/.
see The Election Cometh on page 40