Headed to Milwaukee or Chicago this Summer? Political and Governmental Ethics Rules at the 2024 National Party Conventions

Headed to Milwaukee or Chicago this Summer? Political and Governmental Ethics Rules at the 2024 National Party Conventions

May 21, 2024, Covington Alert

The Democratic and Republican National Party Conventions are a premiere forum for businesses and trade groups to elevate their priorities to candidates, elected officials, and staff. However, thanks to a complex regulatory regime, participation in convention events can invite scrutiny and legal trouble. The Republican Convention is scheduled to take place in Milwaukee from July 15 to 18 and the Democratic Convention will be held in Chicago from August 19 to 22. As convention planning kicks into full swing, this advisory summarizes key contribution, gift, and ethics rules to consider when sponsoring convention events and interacting with both federal and state officials, employees, and political organizations at or around the conventions.

Funding the Convention and Delegates

In 2014, Congress eliminated public funding for the national party conventions. Today, convention costs are mostly paid for by the Republican and Democratic National Committees, along with nonprofit “host committees.” Both types of organizations depend on donors to support their efforts. The “hard money” parties cannot accept corporate funds, but the “soft money” convention host committees can receive corporate donations.

Hard Money Contributions to the Parties

The major national political party committees (the Democratic National Committee and Republican National Committee) have both set up specialized accounts to pay expenses related to the presidential nominating conventions. These accounts may receive contributions from individuals and PACs (including corporate and labor PACs). These committees disclose their donors in public filings with the Federal Election Commission (“FEC”). The filings are largely due before the conventions.

The limits for contributions by individuals to the specialized convention funds are triple the amount that can be given to the main party account. Currently, individuals can donate up to $41,300 per year to these main accounts, meaning the contribution limit for the Republican National Committee’s or Democratic National Committee’s specialized convention account is $123,900 per year. A multicandidate PAC can contribute $15,000 per year to a national party committee’s general fund plus $45,000 per year to a national party committee’s convention fund.

Corporate Contributions

For purposes of corporate contributions, direct corporate contributions to the party convention accounts are prohibited. However, nonprofit convention “host committees” may accept contributions from corporations and may also accept goods or services in-kind or in exchange for promotion at the convention. The host committees encourage commerce in cities hosting the national convention and defray many of the costs of hosting the convention that otherwise might fall to the host city, including:

• preparing the convention center, offices, and other physical plant for the convention;
• procuring and paying for local transportation in the host city;
• paying for convention security; and
• subsidizing hotel rooms.

The host committees at the 2024 national party conventions will sponsor many different events, presenting sponsorship opportunities for corporations. Additionally, other nonprofit entities will host their own events on the periphery of the conventions.

Public Disclosure of Corporate Contributions and Other Considerations

Corporate donors should keep in mind that their host committee contributions will be publicly disclosed by the host committees after the conventions. The structure of these host committees can vary. For instance, in 2024, the host committee for the Republican National Convention, 170 Freedom Milwaukee 2024 Host Committee Inc., is a 501(c)(3) charity, while the Democratic National Convention’s host committee, Development Now For Chicago, is a 501(c)(6) trade association. While IRS regulations do not generally require charities and trade associations to disclose their donors, applicable FEC regulations still require all host committees, regardless of their tax status, to disclose all receipts, reporting the same information disclosed by political committees when they file FEC reports.

Corporate contributors to any of the host committees, events, or other periphery nonprofits should pay careful attention to the exact status of the entity they are supporting, the types of activities in which these organizations engage, and the nature of the events hosted by these organizations. In particular, appearances by state and federal candidates and officeholders at convention events could present legal compliance risks for donors. Costs associated with events coordinated with or held for the purpose of benefiting a candidate or political committee may be treated as an in-kind contribution. And because corporations are prohibited from making direct or in-kind contributions to federal candidates and some state candidates, corporate sponsorships of such events may violate campaign finance laws.

Companies that employ lobbyists should also consider whether their sponsorship of certain convention events should be reported on their semiannual “LD-203” reports.

Delegate Funding

In general, any funds used to further an individual’s selection and activities as a delegate, including for their “travel and subsistence,” are subject to the source limits applicable to federal candidates. This means corporations, foreign nationals, national banks, and government contractors generally cannot provide support to delegates.

Despite the prohibition on corporations funding the “subsistence” of delegates, the FEC has allowed corporations to host receptions for delegates under certain circumstances. Structuring an event so that delegates may legally participate is possible but should be done with guidance of counsel to ensure compliance.

Federal Gift and Ethics Rules

Various gift and ethics rules may also be implicated by the attendance of federal, state, and local officials or candidates at various convention events where free food or promotional items may be available.

In general, federal legislative and executive branch employees may not solicit or accept any gifts, defined as “anything of value,” from outside sources. However, several exceptions may allow corporations and other donors to provide certain unsolicited meals and other gifts to federal officials at convention events.

Common Exceptions for Accepting Gifts

More than 20 exceptions apply to the general prohibition on giving gifts to Members of Congress and their staff. Similar, though not identical, exceptions also apply to executive branch officials and employees. Key exceptions include the following:

• Blanket Exception. Executive branch officials may accept gifts up to $20 per occasion and $50 in the aggregate per source per year. This exception, however, is not available to Biden Administration appointees where the source of the gift is a lobbyist or organization employing lobbyists. On the legislative branch side, donors who are not lobbyists and who do not employ or retain lobbyists may give a legislative branch recipient a gift up to $49.99 per occasion, subject to an annual $99.99 aggregate cap. Lobbyists and organizations that employ or retain lobbyists may not rely on this exception.
• Widely Attended Events or Gatherings. Federal legislative and executive branch officials may accept meals at certain “widely attended” events. This exception is generally available only when the invitation comes from the organizer of the event, not a mere financial sponsor. Whether an event qualifies as “widely attended” differs somewhat depending on whether the gift recipient is an executive branch or legislative branch employee. In general, a large number of persons from a diversity of backgrounds must be expected to attend and attendance must be appropriate to the individual’s performance of official duties. Biden Administration appointees generally may not rely on this exception to accept attendance at an event hosted by an organization that employs lobbyists, unless they are speaking or participating on a panel.
• Receptions. Officials may accept attendance, non-meal food, and refreshments at a reception under both legislative and executive branch rules, though the executive branch rules are more restrictive, prohibiting alcoholic beverages, among other things.
• Charitable Events. Legislative branch gift rules allow free attendance at an event that primarily aims to raise funds for charity and whose invitations are directly extended by the event organizer.
• Items of Nominal Value. Legislative branch gift rules allow officials to accept non-food items of nominal value, such as baseball hats, t-shirts, and other items of $10 or less.

Special Convention Rules for Members of Congress

A Member may not participate in or attend a convention event held in their honor, if the event is paid for by a registered federal lobbyist or organization that employs or retains a registered federal lobbyist. This restriction does not apply if the Member is a presidential or vice presidential candidate. Note that a group of House Members—such as a delegation, committee, or caucus—may still be honored if specific Members are not named. The Senate rules even prohibit Senators from participating in attending events honoring a group of unnamed Senators (such as a state or regional delegation), where the group is comprised solely of Senators.

State Gift and Ethics Rules

States and localities throughout the country have also adopted their own rules restricting the ability of state and local officials and employees to accept, and outside sources to offer or give, gifts, meals, travel, and other things of value. Wisconsin and Illinois both have statewide rules restricting the giving of things of value to state officials, and Milwaukee and Chicago each have adopted complex local rules governing the giving of gifts to local officials. Prior to providing food, drinks, meals, travel, or anything of value to state or local officials attending convention events, companies hosting or sponsoring those events should ensure that the gifts will comply with applicable state and local laws.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Election and Political Law practice.