Corporations Joint Stock Companies Labor Organization and Domestic Dependent Sovereigns Indian Tribes Separate Segregated Funds

Table of Contents

PAC Manual:
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Appendices:
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UNDER CONSTRUCTION

NOTE: On June 30, 2016, the U.S. District Court Judge Linda V. Parker issues an order which prohibits the Department from enforcing MCL 169.254(3). Section 54(3) sought to prohibit a corporation from collecting and transferring contributions to a separate segregated fund not established by that corporation or not connected to a nonprofit corporation of which the corporation is a member.

Sections 54 and 55 of the Michigan Campaign Finance Act (MCFA) set forth the requirements corporations, joint stock companies, labor organizations and domestic dependent sovereigns must meet if they wish to participate in state and local elections in Michigan through direct and in-kind contributions. Since a joint stock company is a type of corporation, its reference will be included when the word corporation is used.

Section 54 prohibits these organizations from making direct and in-kind contributions to Candidate Committees, Political Party Committees, Political Committees and Independent Committees (PACs) using their treasury funds or monies.

Section 55 allows these same organizations to participate by establishing highly regulated funds called Separate Segregated Funds (SSF)that are administered by the connected organization. Connected organization means either of the following:

  • A corporation organized on a for-profit or nonprofit basis, a joint stock company, a domestic dependent sovereign, or a labor organization formed under the laws of this or another state or foreign country.
  • A member of any entity listed above that is not an individual and that does not maintain its own separate segregated fund, unless its separate segregated fund and the separate segregated fund of the entity of which it is a member are treated as a single independent committee as provided in section 52(10).

Note: These provisions do not govern corporations formed solely for political purposes.

Forming a Separate Segregated Fund

A corporation, joint stock company, labor organization, or domestic dependent sovereign that wishes to support or oppose candidates through direct or in-kind contributions must establish a single “separate segregated fund.” This is done by registering a committee by filing a Statement of Organization as either an Independent Committee or Political Committee and indicating on the form/filing that the committee is a Separate Segregated Fund. Registration is required within 10 calendar days after $500.00 or more is received or spent in a calendar year to support or oppose candidates or ballot issues. For more information on the filing requirements see the PAC Manual.

Allowable SSF Expenditures

A Separate Segregated Fund may make the following expenditures:

  • Make direct and in-kind contributions to Candidate Committees
  • Make independent expenditures on behalf of candidates and Candidate Committees
  • Make direct and in-kind contributions to Ballot Question Committees
  • Make independent expenditures on behalf of ballot issues and Ballot Question Committees
  • Make direct and in-kind contributions to Political Party Committees
  • Make direct and in-kind contributions to Political and Independent Committees (PACs)
  • Make direct and in-kind contributions to Independent Expenditure Committees (IEC/Super PACs)
  • Make direct and in-kind contributions to other Separate Segregated Funds
  • Make any other lawful disbursement

Allowable SSF Contributions

It is important to state first that no corporate or joint stock company treasury money, labor organization treasury money or tribal money may be placed in a Separate Segregated Fund. Contributions to a Separate Segregated Fund can only be solicited and accepted from those individuals specified in section 55 of the MCFA and Rule 169.39e of the Department’s administrative rules. These individuals are described below in the following categories:

  • For Profit Corporations
  • Nonprofit Corporations
  • Domestic Dependent Sovereigns (Indian Tribes)
  • Labor Organizations

For Profit Corporations: Contributions for a fund established by a for profit corporation may be solicited and accepted from any of the following:

  • Stockholders of the corporation and their spouses
  • Officers and directors of the corporation and their spouses
  • Employees of the corporation who have policy-making, managerial, professional, supervisory or administrative, non-clerical responsibilities and their spouses
  • Employees of subsidiary corporations who have managerial, professional, supervisory, or administrative non-clerical responsibilities and their spouses

Nonprofit Corporations: Contributions for a fund established by a nonprofit corporation may be solicited and accepted from the following:

  • Stockholders of the corporation and their spouses
  • Stockholders of members of the corporation and their spouses
  • Officers and directors of the corporation and their spouses
  • Officers or directors of members of the corporation and their spouses
  • Employees of the corporation who have policy-making, managerial, professional, supervisory or administrative, non-clerical responsibilities and their spouses
  • Employees of subsidiary corporations who have managerial, professional, supervisory, or administrative non-clerical responsibilities and their spouses
  • Employees of the members of the corporation who have policy-making, managerial, professional, supervisory or administrative, non-clerical responsibilities and their spouses
  • Members of the corporations who are individuals and their spouses

Domestic Dependent Sovereigns: Contributions for a fund established by a domestic dependent sovereign may be solicited from an individual who is a member of any domestic dependent sovereign.

Labor Organizations: Rule 169.39e(2) provides that a labor organization that is comprised of member unions may solicit individuals who are members of its member unions and their spouses, as well as employees who have policy making, managerial, supervisory, or administrative non-clerical responsibilities and their spouses.

Labor organizations that are comprised of individual members are not subject to this rule. These labor organizations may accept voluntary contributions from individuals.

NOTE: Section 55(4) of the MCFA was intended to apply to the solicitation of contributions by labor organizations. However, this section was enjoined from operation by a March 31, 1995, order of the U.S. District Court. The District Court’s order was not appealed and remains in effect.

Automatic Contributions: Section 55(6) of the MCFA governs automatic contributions, such as payroll deduction. As a general rule, contributions may not be obtained on an automatic or passive basis, and a reverse check off method of obtaining contributions is strictly prohibited.

A corporation organized on a for profit or non profit basis, a joint stock company, a domestic dependent sovereign, or a labor organization may solicit or obtain contributions for a separate segregated fund from an individual on an automatic basis, including but not limited to a payroll deduction plan, only if the individual who is contributing to the fund affirmatively consents to the contribution. The consent is effective until the contributor rescinds the consent. The consent is not required to be renewed annually.

Rule 169.39d provides that the affirmative consent required by Section 55(6) must be in writing and signed and dated by the contributor. The written affirmative consent shall include, at a minimum, the following information:

a.) A notice, which shall read as follows:

Affirmative Consent To Political Contribution: Section 55(6) of the MCFA provides that a for profit or non profit corporation, a joint stock company, a domestic dependent sovereign, or a labor organization may solicit or obtain contributions for a separate segregated fund on an automatic basis, including but not limited to a payroll deduction plan, only if the individual who is contributing to the fund affirmatively consents to the contribution.

(b.) The contributor’s first, middle, and last names.
(c.) The amount of money to be withheld from the contributor’s wages or the percentage of the contributor’s wages to be withheld.
(d.) The frequency with which the withholding is to be accomplished. The withholding may be per pay period, per week, per month, or per year.
(e.) The name of the committee to which the withheld earnings are to be transferred.
(f.) The calendar year for which the consent is given.

Contributions that are obtained and used to make expenditures in Michigan elections must conform to the requirements of Section 55(6). Therefore, an out-of-state PAC or a federal PAC that collects contributions through payroll deduction must comply with the affirmative consent requirement for those funds that are used to make expenditures to support or oppose state and local candidates or ballot questions in Michigan.

Affirmative Consent FAQs

  • Can consent be given for multiple years? Yes. A contributor must give affirmative written consent but the consent is not required to be renewed.
  • Is a “reverse check off” plan for automatic contributions to a separate segregated fund (SSF) allowed under the MCFA? No. A reverse check off plan is a passive consent plan. All contributions that are automatically deducted must comply with the affirmative consent rules.
  • Must the affirmative consent be signed? Yes. In order to fulfill the requirements of the MCFA, the affirmative consent must be in writing and must be signed by the contributor.
  • Can we obtain the affirmative consent with an electronic signature? Yes. While the MCFA requires a written and signed document, neither of these terms are defined. An employer may meet the requirements of the MCFA by conforming to the Uniform Electronic Signatures Act (UESA) P.A. 305 of 2000.
  • Can the affirmative consent be withdrawn or revoked? Yes. A contributor can inform the employer at any time that the affirmative consent is withdrawn or revoked.
  • Can the sponsor pay the costs of administering the payroll deduction plan? No, sponsors may not pay the cost of administering the payroll deduction plan that benefits a separate segregated fund (SSF) but may do so if the SSF reimburses the sponsor. Please note that a public body may not use public funds in any way for the establishment or maintenance of a payroll deduction plan and no reimbursement is possible without violating the MCFA.
  • What would a sample affirmative consent form look like?

Administrative and Solicitation Expenses: Corporate funds, labor organization treasury funds and tribal money may be used to pay their own separate segregated fund’s administrative and solicitation expenses. This would include such items as office space, telephones, utilities, supplies, legal and accounting services, salaries and any other expenses incurred in setting up and administering the committee.

A corporation, joint stock company, labor organization or domestic dependent sovereign may make expenditures for communications if the communications are exclusively with paid members, shareholders, or persons who can be solicited for contributions to the separate segregated fund established by the corporation, joint stock company, labor organization or domestic dependent sovereign.

Travel expenses incurred by officers or directors of a separate segregated fund established by a trade association may be paid by the officer’s or director’s corporation or by the trade association which established the separate segregated fund.

When a separate segregated fund holds fund raising events, the sponsoring organization is limited as to the expenses it can pay. Fund Raising expenses such as entertainment, premiums and prizes are not considered administrative expenses and cannot be paid for by the sponsoring organization. However, the sponsoring organization may pay the solicitation costs of its separate segregated fund’s fund raising event. Such costs would include any costs associated with licenses, advertising, printing and mailing.

Sponsoring Organization Activities: A corporation, joint stock company, labor organization or domestic dependent sovereign cannot allow employees or members to engage in candidate campaign activities in an official capacity while on the sponsoring organization’s time.

A sponsoring organization allowing yard signs on its property may be making an in-kind contribution if there is an ascertainable monetary value involved. If there is such a value, a sign that supports or opposes a candidate is prohibited.

Sponsoring organizations, which permit candidates to visit their facilities, are not making a contribution if such visits are equally available to all candidates and the organization does not communicate support of or opposition to the visiting candidate.

A sponsoring organization which is a member of a non-profit sponsoring organization which has a separate segregated fund may permit occasional, isolated, or incidental use of the organization’s facilities or personnel to establish, administer or solicit contributions for the separate segregated fund, not to exceed one hour per week or four hours per month.

Sponsoring organizations may not purchase space in “program books” of any committee other than a Ballot Question Committee.

The above restrictions do not apply to activities undertaken to support or oppose a ballot question. A corporation, joint stock company, labor organization or domestic dependent sovereign may also use its general treasury funds to contribute to a Ballot Question Committee and make independent expenditures for the qualification, passage or defeat of a ballot question. If a corporation, joint stock company, labor organization or domestic dependent sovereign makes independent expenditures, the organization must register as a Ballot Question Committee within 10 business days after spending $500.00 on that issue.

Affiliated Committees: All Political Committees and Independent Committees established, financed, maintained, or controlled by the same corporation, joint stock company, or labor organization, including a parent, subsidiary, branch, division, department, or local unit of the corporation, company, or organization, are affiliated. “Local unit” may include, in appropriate cases, a franchise, licensee, or state or regional association.

Affiliated committees sharing a single contribution limitation include all of the committees established, directed, controlled, or financially supported by one of the following entities:

  • A single for profit corporation or joint stock company, including its subsidiaries.
  • A single national or international union, including its subordinate organizations, such as local unions, branches, divisions, or departments.
  • An organization of national or international unions, including all its state and local central bodies.
  • A nonprofit corporation, including trade or professional associations and related state and local entities of the corporation.




Page last modified on November 15, 2018, at 05:27 PM