Corporations can engage in political activity. But they must be careful how they do so; corporations still face restrictions, such as the prohibition on making contributions to federal candidates. As we have seen, following a line of cases culminating in Citizens United, corporations may give unlimited sums to Super PACs. They may also contribute to 501(c)(4) social welfare organizations. However, even when corporations are permitted to contribute, how they contribute matters.
One of the more common mistakes made by politically active businesses is to reimburse employees for political contributions. Making a federal political contribution with someone else’s money is known as a conduit contribution and it is a federal criminal offense, though in practice the severity of the crime is highly dependent upon the amount involved and the nature of the conduct. Many prosecutions of conduit contribution violations also involve other crimes, such as prohibited contributions from corporations or contributions in excess of individual contribution limits.
A recent article illustrates a twist on the problem: A Georgia accountant made a $1 million contribution to a Super PAC. Super PACs are required to disclose their donors and it appears that a campaign watchdog group, Citizens for Responsibility and Ethics in Washington (“CREW”) noticed the contribution and examined further. A contribution of that size to a Republican Super PAC would not, by itself, violate any law. However, apparently because the accountant’s home is valued at about $50,000, CREW could not find evidence that the accountant had previously made political contributions, and because the accountant’s employer is a significant supporter of Republican causes, CREW filed complaints with the Federal Election Commission and U.S. Department of Justice. In the complaints, CREW alleges that that the accountant’s political contribution was made using either the employer’s personal assets or the business assets of a number of listed companies.
It is clearly not the case that someone with a $50,000 home cannot contribute $1 million toward political causes. Or that a person cannot make his or her first political contribution a big one. Nor have CREW’s allegations in this case been substantiated. The lessons to be learned from the recent complaints are twofold. First, large contributions invite scrutiny, particularly if the contributions are not part of an established pattern of giving. Second, when employees make large, out-of-the-ordinary donations, their employer may be faced with allegations of having made conduit contributions.