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Nonprofits May Not Be Able to Increase Dues for a Political Action Committee

Apr 6 | 2015  by

Recently, the Michigan Secretary of State Elections Division responded to the question of whether a nonprofit could specify a portion of a dues increase for members to be dedicated for a “separate segregated fund” (i.e. Political Action Committee), without violating Michigan law.

Last week, the state issued a preliminary response suggesting that if a nonprofit receives a dues increase first, any portion of it specifically dedicated to their PAC could potentially violate the Michigan Campaign Finance Act (MCFA).

Political Action Committee Regulations

That could sound a bit confusing – what does it matter whether the dues increase go to the nonprofit general treasury fund first, or to the separate segregated fund first?

Corporations setting up a separate segregated fund can only use their general treasury funds to pay for the establishment, administration, and soliciting of contributions for that fund. Therefore, if a nonprofit violates the MCFA prohibition against using treasury funds for campaign activity by transferring money directly from its general fund to its Political Action Committee for any other purpose.

The state responded that this prohibition applies. Regardless of making it clear that members voluntarily contribute from the dues increase to the Political Action Committee.

To clarify, members can donate directly to the separate segregated fund of the nonprofit, as long as it is voluntary and not a condition of membership. In addition to members, a nonprofit may also solicit and accept funds for its Political Action Committee from stockholders, employees with non-clerical responsibilities, officers and directors of the corporation, and other separate segregated funds.

For all of the above, contributions must also be voluntary, and not a condition of employment. Separate segregated funds can be great for advocating political preferences in an election – the key is staying in compliance.

Contact Fausone & Grysko, PLC Today

Nonprofits and other corporations need to keep pace with the changing landscape of campaign finance. If you want to set up a separate segregated fund/other political committee, contact Fausone & Grysko, PLC today. We can help you accomplish your goals and advise you on best practices to stay in compliance with the law. Contact us today at (248) 380-0000 or visit us online at www.fb-firm.com.