With a number of high profile investigations and arrests of leading elected officials occurring in Albany, attention has turned to prevention of these problems. A bill signed by Governor Andrew Cuomo in August 2016 aims to increase transparency in relation to the actions of non-governmental actors who engage in lobbying and electoral activities. Unfortunately, the bill did not directly address the activities of government officials.
Independent expenditure committees, also commonly referred to as a super PAC, have received increased scrutiny in recent years. Under Citizens United v. FEC, these committees are entitled to spend an unlimited amount of money in support or opposition of a candidate if they do not “coordinate” with that candidate. The definition of “coordination” has not been particularly clear in New York State. Under this new legislation, “coordination” is defined as contact between an independent expenditure committee and a candidate, their authorized committee, an agent of the candidate or their authorized committee, or an immediate family member of the candidate. This prohibited contact can include requesting the independent committee’s action, requesting All independent expenditure committees are required to register and file reports with the New York State Board of Elections. These reporting requirements were recently enhanced to include information regarding anyone who has acted as a campaign consultant in the two years prior to the formation of the independent expenditure committee and is involved with this committee. Independent expenditure committees that spend money on candidates in New York City elections must also register with the New York City Campaign Finance Board.
Currently, those organizations or individuals that are a client of a lobbyist must disclose their source of funding on client semi-annual reports. Currently, where a client spends $50,000 in reportable compensation or expenses and lobbying is 3% of the total budget of the organization, they had to report any funder that contributed $5,000 or more for lobbying activities. Recent legislation aims to increase transparency by decreasing the threshold at which a client must report source of funding information. Going forward, when a client spends $15,000 in reportable compensation or expenses and lobbying is 3% of the total budget of the organization, they will now have to report any funder that contributes $2,500 or more for lobbying activities. The lowering of this threshold will mean that more funders will be disclosed. Tax exempt organizations, which are those organizations with a designation of 501(c)(3) by the Department of the Treasury, are generally exempt from this source of funding disclosure. Under this new law however, they will be required to disclose any in-kind donations including office supplies and staff time, when that amount exceeds $2,500.
In addition to these additional requirements for disclosure of funding for lobbying activities, 501(c)(3) tax exempt non-profit organizations have expanded reporting requirements under this new law. Disclosure of non-monetary contributions must be reported by the 501(c)(3) when $2,500 worth of services is received. Regulations outlining the process for this disclosure will be forthcoming.
Regulation on several of these requirements is necessary to outline the responsibilities of those regulated and the process of compliance with disclosure requirements. These regulations will be forthcoming. If you are interested in engaging in any of these activities, it is advisable to review the status of current law and development of regulation. Meyer, Suozzi, English and Klein, P.C., with offices in New York and Washington D.C., can assist you with compliance with the new law and regulations.