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Joining the PAC Pack
By Mark S. Knouse
WHEN SHOULD MY COMPANY CONSIDER GETTING INVOLVED IN A POLITICAL ACTION COMMITTEE?
Now. Don't wait. There's no time like the present to boost your company's involvement in its PAC. Whether you have a PAC already or are thinking of starting one, consider this: Last year's Supreme Court ruling that upheld the Bipartisan Campaign Reform Act made hard dollars - like the ones from PACs - even more precious to candidates. That law, of course, banned the use of unregulated "soft" corporate and union dollars by the political parties. While these limitations will certainly continue to be challenged, several realities became clear. Namely, PACs will grow in power and influence. So, don't let your company miss out on the opportunity.
WHAT ABOUT TRADE ASSOCIATION PACS?
If you currently do not have a corporate PAC, you can investigate the trade associations to which your company belongs and see if they have PACs to which your company can contribute. Chances are that these groups support issues and candidates that are in line with your company's views.
The downside, however, is that a trade association PAC must gather consensus on controversial issues from its members, which often leads to supporting the lowest common denominator on issues. As a result, if you run into an issue that affects only your company, you don't have a tool to influence it. That's why it's important for your company to have its own PAC.
GREAT, HOW DO I START?
A properly administered PAC takes a lot of work. Remember: Play by the rules - or else. Campaign donations are governed by specific state and federal regulations, guidelines, and laws. Avoid a lot of headaches or worse by establishing a PAC the right way the first time.
There are reporting and solicitation requirements, events for PAC contributors to plan and oversee, and a system for deciding which candidates to support, when to support them, and how much support - that is, money - to give them. Your PAC should have a set of internal rules or guidelines that govern how it operates.
Resources available to assist you include existing PACs that may be willing to share their procedures with you. Firms with PAC experience can also counsel you at a variety of levels of service and cost. As for the selection of a PAC administrator, you want someone with a strong accounting or auditing background.
An example of a common pitfall to avoid: If your company holds or sponsors a fund-raiser for a representative, it is illegal to pay for that event with corporate dollars. Instead, the funding should come from the PAC itself or from an individual contributor.
MY COMPANY ALREADY HAS A PAC, BUT HOW CAN I INCREASE PARTICIPATION?
One problem that every corporation faces is that of participation by employees who are eligible to be solicited. Because Federal Election Commission regulations state that participation is strictly voluntary, the "sell" to these key employees has to be a soft one and can in no way appear coercive.
Make the appeal to employees to participate along with the added incentive of a dollar-for-dollar match from the corporate foundation to their favorite charity. Since almost everyone supports some charity, all the employee loses is the incremental tax deduction.
Another smart tool for growing your PAC is to allow your employees to choose an automatic payroll deduction for their participation. A deduction that is spread out over time is less painful for an employee than a one-time contribution, and statistics show that the contribution is larger if the employee can have the small amount deducted from every paycheck. In addition, your employees can be automatically renewed every year unless they otherwise indicate. This helps with the annual solicitation effort.
TO WHOM SHOULD THE PAC DONATE?
Every PAC should have an administrator and board of directors comprising a cross section of PAC contributors from the company. Naturally, the person responsible for the government relations work is a key member. Determining whom to support is a business decision more than a philosophical one. First, look over the congressional committees that regulate or influence your industry. Next, cross-reference to see if any local members of Congress serve on those committees. If they are friendly to your company, they should be the first to be supported. Then, use your PAC money to get to know the other members of those committees from other states. Finally, be sure to spread the PAC contributions as evenly as possible among Democrats and Republicans, as long as the recipients are favorable to your issues. Your employees will most likely be of both persuasions and will likely ask for an accounting of whom the PAC supported.
Mark S. Knouse is executive director of the Commission for Labor Cooperation, an international organization created under the North American Agreement on Labor Cooperation (NAALC). He has managed PAC dollars, both collections and disbursements, for more than 20 years. A version of this article first appeared in the May 2004 Influence Client's Guide to the Business of Lobbying. For more about Influence, visit www.influence.biz.
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