Number: AO 05-02-CD
Requested by: Kevin T. Van Nortwick
On behalf of the Alaska State Society of CPA’s
Political Action Committee
Prepared by: Christina L. Ellingson, Assistant Director
Date Issued: February 18, 2005
Subject: Disbursement of surplus campaign funds from a disbanded Political Action Committee
If the PAC disbands, it may disburse its excess campaign contributions to the ASCPA Hagelbarger Scholarship Fund because this use of the money is similar to the uses authorized in 2 AAC 50.384.
Campaign Disclosure Law
AS 15.13.112(a), (b)
Uses of campaign contributions held by candidate or group.
(a) Except as otherwise provided, campaign contributions held by a candidate or group may be used only to pay the expenses of the candidate or group, and the campaign expenses incurred by the candidate or group, that reasonably relate to election campaign activities, and in those cases only as authorized by this chapter.
(b) Campaign contributions held by a candidate or group may not be
(1) used to give a personal benefit to the candidate or to another person;
(2) converted to personal income of the candidate;
(3) loaned to a person;
(4) knowingly used to pay more than the fair market value for goods or services purchased for the campaign;
(5) used to pay a criminal fine;
(6) used to pay civil penalties; however, campaign contributions held by a candidate or group may be used to pay a civil penalty assessed under this chapter if authorized by the commission or a court after it first determines that
(A) the candidate, campaign treasurer, and deputy campaign treasurer did not cause or participate in the violation for which the civil penalty is imposed and exercised a reasonable level of oversight over the campaign; and
(B) the candidate, campaign treasurer, and deputy campaign treasurer cooperated in the revelation of the violation and in its immediate correction; or
(7) used to make contributions to another candidate or to a group.
2 AAC 50.384. Disbursement of group campaign assets.
(a) Following the election, a group may
(1) leave its money in a campaign account until the following election if the group plans to remain active;
(2) contribute the money to another candidate or group subject to the contribution limitations and other requirements of AS 15.13;
(3) donate the money to qualified charitable organizations under 26 U.S.C. 501(c)(3);
(4) repay its contributors; or
(5) pay for a victory or thank you party.
(b) A group may not disburse funds in a manner other than
that set out in (a) of this section except if approved by
advisory opinion under 2 AAC 50.450.
The PAC was established prior to 1994.
- Since 1998, PAC activities have been limited to administrative costs such as interest earned on the balance and expenditures for administrative fees, such as corporate filings and business license renewals.
- PAC currently has a surplus balance of approximately $10,000.
- The PAC wishes to disband and disburse the surplus funds to an established scholarship fund (the ASCPA Hagelbarger Scholarship Fund) for college students pursuing a career in the accounting field.
- The scholarship fund is established as a trust administered by three appointed trustees.
- The three-member board of trustees for the scholarship fund is elected from members of the Independent Society of Certified Public Accounts. These members are elected to serve for three years, with one being replaced each year.
- The fund is not a 26 U.S.C. 501 (c)(3) nonprofit corporation.
- The trust is set up with specific directions and rules regarding the use of its funds. The exclusive use of the money is to fund academic scholarships for college students studying accounting.
Prior to the 1996-campaign finance reform act, PAC’s were free to disband and disburse surplus contributions in any manner that they saw fit. When the legislature passed campaign finance reform in 1996, the rules changed regarding the use of PAC funds. The campaign law did not specifically address the disbursement of surplus funds held by PAC’s. The subject is addressed in regulation, however—2 AAC 50.384. That regulation authorizes several methods to disburse surplus funds appropriately. In addition, it states that a PAC may request an advisory opinion if it wants to use a method that is not listed. 2 AAC 50.384(b). A donation to an organization is authorized only if the organization is another registered political group or a 42 U.S.C. sec. 501(c)(3) charitable organization. 2 AAC 50.384(a)(2), (3). Because disbursal to a scholarship fund is not listed, the PAC has requested that the Commission approve the disbursal.
The PAC was formed in 1992 and was funded by a check-off mechanism to allow its members to contribute to the fund. The PAC has had minimal activity over the years other than collecting funds. The reason the PAC was never very active politically was that the members could not reach agreement regarding which candidate or issue they wished to support. The group has not used the PAC funds for anything other than to pay for required licensing and corporate filings.
Although the scholarship fund is not a charitable organization under 42 U.S.C. sec. 501(c)(3), it shares two important features with such an organization. It has a charitable purpose—education—and trust terms that restrict the use of the funds to the charitable purpose. We therefore believe that disbursing the PAC funds in the manner proposed is consistent with 2 AAC 50.384 and approve the proposed disbursal.
The Alaska Society of Certified Public Accountants PAC is disbanding. Donating its surplus funds to the Hagelbarger Scholarship Fund to be used for academic scholarships is consistent with the campaign disclosure law and its administrative regulations.
The Commission approved the advice in this letter by an affirmative vote of 5-0 on March 1, 2005. The advice in this opinion applies only to the specific activity for which the advice was requested.
A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. 907/276-4176.