Reporting of State Campaign Contributions

STATE ELECTION FINANCE LAWS:

There are two provisions of state law that require business entities, including nonprofit organizations, to file reports of campaign contributions by organization officials under certain circumstances.   When required, these reports must be filed with the State Board of Elections, and the State Board has produced one form to be used for both reports.   The two situations involve organizations that “do public business” and organizations that pay lobbyists.   While these situations may overlap, each requirement has its own reporting thresholds and limited, distinct exceptions for nonprofits.

REPORTING BY ENTITIES “DOING PUBLIC BUSINESS”

Subtitle 14 of the Election Law Article of Maryland's Annotated Code requires reports of certain contributions by officials of entities, including nonprofits, doing business with the state or a political subdivision.   This provision applies to organizations that enter into “one or more contracts with one or more governmental entities involving cumulative consideration of at least $100,000” in any 12-month period.   A provision of this type has existed in Maryland law for over 20 years.

The general rule under this requirement is that contributions by officers, directors, or partners of an entity “doing public business” are “attributable” to the entity itself.    Contributions by employees, agents, or other persons made at the suggestion of the organization are also “attributable” to it.

“Contribution” means a single contribution or series of contributions to a candidate for state or local office, totaling in excess of $500 in a six-month reporting period.   The reporting periods end on January 31 and July 31 of each year.

Any official, employee or agent who has made a reportable contribution is required to report the contribution to the chief executive officer of the organization, and the organization must file a report with the State Board of Elections within 5 days of the close of the reporting period.

Note that the term “officer” under this subtitle has been interpreted very broadly by the Attorney General, and may include any position in an organization with a title implying some degree of authority or control over aspects of the organization.  

EXCEPTION FOR NONPROFITS --- contributions by individuals who serve as trustees or as members of the board of directors of a nonprofit organization are not attributable to the nonprofit, and not reportable if the following two conditions are met: the contribution was not made at the suggestion of the organization, and the individual is not paid by the organization.

But this exception applies only to their service as a member of the board or as a trustee – if they also serve in the capacity of an officer of the organization (e.g. president, chairman, secretary or treasurer) the exception does not apply, and in effect their service as an officer brings them back under the reporting requirement.

REPORTING BY ENTITIES COMPENSATING LOBBYISTS

In 2001 a new provision was added to the State Ethics Law requiring reports of certain contributions by entities paying lobbyists. This provision, Section 15-715 of the State Government Article, was amended in 2002, to more closely parallel the “doing public business” reporting requirement.

Any person or entity that spends $500 or more to provide compensation to one or more regulated lobbyists during a reporting period is subject to this requirement.   The reporting periods are the same as those above (six-month periods ending January 31 and July 31).  

Under this provision, reportable contributions are limited to those made to or for candidates for the following offices: Governor; Lt. Governor; Attorney General; Comptroller; or members of the General Assembly.  

As in the “doing public business” requirement, the general rule is that contributions by officers, directors, and partners of business entities, including nonprofits, are “attributable” to the organization. Once again this applies to contributions exceeding $500 in cumulative amount to a candidate in a reporting period, and the individual is supposed to report these contributions to the chief executive officer of the entity.

However, the rule governing contributions “made at the suggestion” of the entity is broader in this case.   Contributions of any amount made by an officer, director, partner, employee or agent at the suggestion of an entity subject to this section are reportable to the chief executive officer and attributable to the organization.

The organization must report any applicable contributions to the State Board of Elections on the same form and schedule as used by organizations "doing public business." 

EXCEPTION FOR NONPROFITS --- the nonprofit exception under this section is broader than for those “doing public business.”   Contributions by trustees, board members and officers are exempted if the individual is not paid by the nonprofit and the contribution was not made at the suggestion of the organization.  

Further, this section required the State Board to provide by regulation a definition of the term “officer.”   As defined in COMAR 33.01.01.02, the term “officer” as applied to nonprofits under this section:

1. “Includes the organization's president or chairman, vice-president or vice-chairman, secretary, treasurer, executive director, and any individual exercising duties comparable to those typically exercised by an individual holding one of those titles; and
2. Does not include an individual holding a title but not exercising substantial independent responsibility on behalf of the organization similar to the responsibility typically exercised by an individual holding one of the titles listed in A. of this regulation….”

FOR MORE INFORMATION

A general description of these requirements, and the reporting form with instructions, can be found at http://www.elections.state.md.us/campaign_finance/summary_guide/sg_07.html#6 on the State Board of Elections web site (scroll down to Section 7.6).   The State Board's phone number is 410-269-2840.

You can also contact Henry Bogdan, Public Policy Director at Maryland Nonprofits, for further information at 410-727-6367, ext. 18, or at hbogdan@mdnonprofit.org.