NJ’s Gubernatorial Election – Public Matching Funds and the Role of Outside Money

On the same day that it was announced that Kim Guadagno and Phil Murphy both qualified for public matching funds in New Jersey’s 2017 gubernatorial election, the New Jersey Election Law Enforcement Commission issued a News Release reporting that independent spending reached an all-time high in New Jersey’s 2017 primary election. This means that, as we look toward the general election, our gubernatorial candidates will be limited in what they can spend in the general election ($13.8 million to be precise) while independent groups will not be subject to contribution or expenditure limits—this type of “outside spending,” which arises from sources other than candidates, is likely to become increasingly important in the 2017 gubernatorial election.

Under the First Amendment, independent groups are permitted to spend unlimited amounts of money in connection with an election provided they do not coordinate their activities with a candidate, his or her agents, or his or her campaign. Many think that Super PACs and independent-expenditure only committees are the only outside groups that play a role in elections; however, individuals, corporations, labor organizations and trade associations are also free to engage in the process and spend unlimited funds in New Jersey elections so long as there is no coordination with the candidate, his or her agents, or his or her campaign. Especially in New Jersey, home to strict pay-to-play restrictions that limit contributions to no more than $300 per election to a gubernatorial candidate and no more than $300 per calendar year to a party committee by a government contractor (and certain individuals associated with that contractor), independent spending is likely to play a big role in the upcoming general election.

For more information on how you or your company may participate in the political process, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at rfreed@genovaburns.com or 973-230-2075.

Candidates, Contributions & Compliance in Connection with New Jersey’s 2017 Gubernatorial Election

On Tuesday, June 6th, New Jersey held its 2017 gubernatorial primary election. Voters went to the polls to choose the Republican and Democratic candidates for Governor. Now that we know that the general election will feature a race between Phil Murphy and Kim Guadagno, here are a few campaign-finance and pay-to-play reminders to keep in mind as you decide how you would like to participate:

  • If your company holds New Jersey State government contracts or would like to remain eligible for New Jersey State government contracts in the future, you should limit your corporate contribution to a gubernatorial candidate to no more than $300 per election per candidate.
    • Compliance Tip – Regardless of how your company is organized, contributions by your company’s shareholders, officers, equity partners, equity members and the spouses, resident children and civil union partners of these individuals may impact your company’s eligibility for State government contracts.
  • If remaining eligible for New Jersey State government contracts is not a concern, and your company is organized as a corporation, your company may contribute up to $4,300 per election per candidate.
    • Compliance Tip – Please note that affiliated corporations may share a contribution limit.
  • If your company is organized as a corporation, shareholders, officers and directors enjoy individual contribution limits that are separate from the limit enjoyed by the company.
    • Compliance Tip – Please note that certain regulated-industry companies may not contribute with corporate funds, but individual officers and directors may participate individually.
  • If your company is organized as a partnership or limited liability company, your company may not contribute as an entity, but each partner or member is entitled to his or her own limit.
    • Compliance Tip – If your contribution is drawn upon a partnership or limited liability company check, be sure to follow the allocation rules set forth under NJ campaign finance law.
  • Even though the primary election was held two days ago, any contribution received thru June 23rd counts toward your 2017 primary election limit. So, if you already maxed out in connection with the primary, you should wait until June 24th to write your next check. On the flip side, if you have yet to contribute (and would like to), you still have time!
    • Compliance Tip – To help properly track your contribution with the relevant election cycle, use the memo line of  your check and review relevant ELEC reports to make sure your contribution was reported in connection with the appropriate election.

Tuesday’s primary made it clear that New Jersey’s 2017 election season is now in high-gear! As we head into the summer months, it is the perfect time to focus on political-activity compliance.

Corporate Political Activity, Reputational Risk Management and the 2016 Federal Election

As the 2016 presidential primary season concludes, we are quickly approaching the summer conventions and the November presidential election. With the political contests becoming more heated, this post is part of a new series on what different entities and groups need to know about their political activity as the 2016 election approaches.

The 2016 presidential election poses unique challenges for companies and organizations. As we discussed here and here, both for-profit and not-for-profit corporations need to be mindful of their involvement in the electoral process. Corporations also need to make sure that their employees are not improperly using corporate resources for individual political activity. While it is easy to develop a policy prohibiting employees from using copy machines, conference rooms and other organizational resources in connection with federal political activity, it is not as easy to measure the potential reputational risk associated with their activity.

What if the CEO of the company decides to hold a political fundraiser for one candidate over the other?

The CEO of Intel “took heat” over an event that he was planning to host for Donald Trump. The event ultimately got canceled because customers were questioning whether the event signaled that Intel supported Donald Trump.

What if your organization decides to support one candidate over another by participating in independent expenditure activity?

Target faced backlash in 2011 when it supported an organization that in turn supported a candidate that many considered a bigot. The support drew criticism from customers, celebrities with products in Target stores and shareholders alike.

What if your connected federal PAC fails to get shareholder approval before making political contributions?

Corporations need to determine whether their company will suffer negative consequences if their connected federal PAC makes contributions to candidates that do not support the corporation’s overall goals and mission.

Many of these consequences are difficult to predict – it is not always clear at the outset how a decision to participate in an election as an individual, through independent expenditures or through a connected  corporate PAC will ultimately impact your organization and its reputation. Although hindsight is always 20/20, corporations need to be forward thinking so they do not find themselves at the center of political controversy.