Risk and Reward: Corporate Political Activity in an Election Year

After Citizens United, corporations have increased access and opportunity to engage in political activities, both in election and non-election years. While corporations are still prohibited from using corporate treasury funds to donate directly to federal political campaigns, other political activity is allowed subject to the regulations and laws promulgated by the Federal Election Commission (FEC), as well as state and local government regulators. Violating these laws can lead to legal consequences and reputational harm. As a result, political activities can bring different levels of risk: low, medium, and high.

Low Risk: Generally Permissible Activities

• A corporation may establish an SSF and solicit contributions, subject to limits, from employees. An SSF may solicit contributions from its restricted class at any time and contributions from all employees twice in a year. Individual contributions to an SSF may not exceed $5,000 in a year. The SSF may then make limited contributions to candidates and other political committees.
• A corporation may use corporate funds to make unlimited contributions to independent-expenditure-only political committees (Super PACs), 501(c)(4) social welfare organizations, and 501(c)(6) trade associations.
• A corporation may engage in nonpartisan voter participation activities including: voter registration, get-out-the-vote drives, voter guides and legislative scorecards (if inclusive, fair, and impartial), and candidate debates (if inclusive, fair, and impartial). Corporations may also give their employees time off to vote, as long as they don’t offer anything of value in exchange for a vote.
• A corporation may continue to engage in, or begin engagement of, any executive or legislative branch lobbying, subject to federal and local restrictions and reporting requirements.
• A corporation may allow its employees to volunteer their personal time and resources to a candidate, campaign, or party committee. The employee must do so on their own time, using only occasional, isolated, or limited corporate resources, if any.  

Medium Risk: Permissible Activities Subject to Certain Guidelines

• A corporation may endorse, and announce its endorsement, of a candidate to the public as long as the announcement is not coordinated with any candidate, candidate committee, or its agents. Spending on distribution for endorsements for any press release or press conference must be de minimis, which means only distributed to the organization’s usual media contacts when engaging in nonpolitical press releases or press conferences.

• Corporations may host candidates for meetings, conventions, or other corporate functions. The rules vary greatly depending on whether the event is limited to the restricted class or open generally to employees. Thus, a corporation may be subject to varying rules on coordination, express advocacy, solicitation, media coverage, reporting, and appearances by other candidates.

• Corporations may communicate with their restricted class regarding candidates, but should use caution when communicating beyond the restricted class. This is particularly important with respect to internal message boards and social media messaging. 

High Risk: Heavily Regulated or Prohibited Activities

• Corporations cannot use treasury funds to donate to federal campaigns, nor can federally chartered corporations, such as national banks, make contributions in state or local elections.

• Non-federally chartered corporations may be able to make state and local contributions depending on the type of corporation and the pertinent state and local laws.

• Corporations may not offer any information or resources to one candidate that is not available to other candidates.

• Corporations may not create new resources or conduct new research at a candidate’s request.

• Corporations may not create talking points for a candidate in preparation for the candidate’s campaign appearances.

• Employees may not use their job titles or corporate affiliation when volunteering for a candidate, campaign, or party committee. Employees may not receive reimbursement for campaign-related expenses, use their company email or internet system, or use corporate resources. Employees should not be “on the clock” or otherwise compensated for the time they spend volunteering for a campaign.

• Corporations may not ask candidates to pledge to support its position on an issue if elected, or to pledge to take specified actions during the campaign or when in office.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.