Appendices

Table of Contents

Appendices

Appendices:
Include TOC

Appendix T
TRANSFER OF FUNDS

Transferring funds from one committee to another is often simply a “contribution” from one committee to another committee. If the transfer is a contribution, then the transaction must be recorded and reported as such and any limitations or prohibitions provided in the Michigan Campaign Finance Act (MCFA) apply. However, there are certain circumstances provided for in the MCFA where a “transfer” is not considered a contribution and because of this, the contribution limits do not apply. Transfers must be recorded and reported as required by the MCFA. The transfers discussed below are:

State/Local Candidate Committee to State/Local Candidate Committee of the same candidate

State/Local Candidate Committee to Federal Candidate Committee of the same candidate - Prohibited

Federal Candidate Committee to State/Local Candidate Committee of the same candidate

State/Local Candidate Committee to State/Local Candidate Committee of different candidates – Prohibited

To avoid running afoul of the MCFA it is recommended to contact the Bureau of Elections or your local filing official before completing any transfer transactions to confirm the acceptability of the transaction. Judicial candidates have additional requirements to consider under the Judicial Code of Conduct/Canons. If you encounter a transfer scenario that is not covered in this publication, please contact our office for further direction. You can email us at Disclosure@Michigan.gov or call us at 517–373–2540.

State/Local Candidate Committee to State/Local Candidate Committee of the same candidate

A committee may transfer unexpended funds from one Candidate Committee to another Candidate Committee if:

  • the contribution limits for the Candidate Committee receiving the funds are equal to or greater than the contribution limits for the Candidate Committee transferring the funds, and
  • the Candidate Committees are simultaneously held by the same person.

A transfer of this type can be made anytime and can be completed as a single transaction or multiple smaller transactions.

Care must be taken to determine if funds can be transferred and to properly report such transfers. The following provisions apply to transferred funds:

  • If the candidate is not a term-limited officeholder and the transferring committee raises the funds after the candidate has formed (or was required to have formed) a new candidate committee to run for a different office, an acceptable accounting method must be used to identify the persons who contributed the transferred funds and the amount of each person’s contribution. The amount attributed to each person must be counted towards that person’s contribution limit to the Candidate Committee receiving the transferred funds. The preferred accounting method to be used is Last-In-First-Out (LIFO). Any other proposed accounting method to be used must be submitted to the Bureau of Elections for approval.
  • If the candidate is a term-limited officeholder and the transferring committee raises funds after the General Election at which the officeholder was elected to his or her final term of office, an acceptable accounting method must be used to identify the persons who contributed the transferred funds and the amount of each person’s contribution. The amount attributed to each person must be counted towards that person’s contribution limit to the Candidate Committee receiving the transferred funds. The preferred accounting method to be used is Last-In-First-Out (LIFO). Any other proposed accounting method to be used must be submitted to the Bureau of Elections for approval.
  • Contributions received by a committee during a previous election cycle do not have to be itemized and may be transferred as a lump sum.
  • Contributions that appear eligible to be transferred, but are required to be itemized may not qualify (in full or in part) to be transferred. The most common reason a contribution would not qualify to be transferred is that the transfer would result in an excess contribution to the receiving committee. Before any transfer transaction is completed, the committee must review and verify that the funds are qualified to be transferred and would not result in any violation of the MCFA.

Transfer of Other Assets: The remaining value of any transferred assets should be reported as an in-kind expenditure on the In-Kind Expenditure Schedule 1B-IK by the transferring committee. The recipient committee reports the receipt of the transferred assets as an in-kind contribution on its Itemized Contribution Schedule 1-IK as “Goods or Services donated” with a description indicating, “Transferred assets.”

Determining Which Funds Can be Transferred: A worksheet has been developed to assist with determining which funds can be transferred and what disclosure is required. The decision tree provided below can be used in conjunction with the worksheet to fully grasp the transfer process.

1. Are the committees both held by the same person simultaneously?

	If yes, proceed to question 2.
	If no, stop.  The funds cannot be transferred.

2. Are the contribution limits the same or higher for the committee receiving the funds?

	If yes, proceed to question 3.
	If no, stop.  The funds cannot be transferred.

3. Is the Candidate barred from seeking re-election (i.e., term-limited)?

	If yes, proceed to question #4.
	If no, proceed to question #5.  

4. Is the date of the contribution on or before the last General Election for that office?

	If yes, the funds can be transferred as a lump sum amount.  
	If no, the funds can be transferred provided the contributor has not 
already contributed the maximum amount allowed for that office. All contributions
must be itemized and reported on the Itemized Direct Contribution Schedule 1A.

5. Is the date of the contribution on or before the candidate formed (or was required to have formed) a new committee to run for a different office?

	If yes, the funds can be transferred as a lump sum amount.  
	If no, the funds can be transferred provided the contributor has not already
contributed the maximum amount allowed for that office. All contributions must
be itemized and reported on the Itemized Direct Contribution Schedule 1A.

Reporting Transfers: The transferring Candidate Committee will report the transfer of funds on the Itemized Expenditures Schedule 1B and note “transfer of unexpended funds” in the purpose/description field.

The recipient Candidate Committee must report the transferred funds on its campaign statement as follows:

  • If the funds must be itemized as described above the committee will report receipt of the transferred funds by attributing each of the original contributors, the amount from each person, and the date of the transfer as the date of the contribution on the Itemized Contributions Schedule 1A. The preferred accounting method to be used is Last-In-First-Out (LIFO). Any other proposed accounting method to be used must be submitted to the Bureau of Elections for approval. A letter must be submitted with the campaign statement detailing which contributions have been transferred showing the original contribution dates reported in the transferring committee’s campaign statements. An attached document or file such as an Excel spreadsheet can be used to provide this information. In this way, the contributions can be traced back to the originating committee.
  • If the transferred funds are not required to be itemized and attributed to a specific contributor, the Candidate Committee reports receipt of the transferred amount as a lump sum on the Itemized Other Receipts Schedule 1A-1. The source of the other receipt is reported as the transferring committee, the type of receipt is indicated as “Other: transfer of unexpended funds” with the date and amount of the transfer.

Transfer of Debt Prohibited: Outstanding debt may not be transferred from one Candidate Committee to another Candidate Committee. Debt must be paid or (if it qualifies) forgiven prior to dissolution of a committee.

State/Local Candidate Committee to Federal Candidate Committee of the same candidate - Prohibited

A state/local candidate committee cannot transfer funds to a federal candidate committee of the same person. Section 45 stipulates that a candidate committee may transfer unexpended funds to another candidate committee. However, a federal candidate committee is not considered a candidate committee under the MCFA for this purpose, therefore the funds may not be transferred from the state/local candidate committee to a federal candidate committee. Any funds used by the state/local candidate committee must be to further the nomination or election of the candidate to that office under Section 6, meet the requirements as an incidental office expense under Section 9, or meet the requirements set out in Section 45 for dissolving the committee.

Federal Candidate Committee to State/Local Candidate Committee of the same candidate

A federal candidate committee may transfer funds to a state or local committee of the same person when all of the following conditions are met:

1. Federal laws and rules allow for the transfer.

2. The contribution limits for the state/local candidate committee receiving the funds are equal to or greater than the contribution limits for the federal candidate committee transferring the funds. A federal candidate committee cannot transfer funds to a Michigan State House, State Senate, local or judicial office whose contribution limit is below $6,800.00 per cycle because the federal contribution limits are higher. A federal candidate committee may transfer funds to a state/local candidate committee if the contribution limit is $6,800.00. To confirm the federal contribution limits visit www.fec.gov.

3. The funds coming from the federal candidate committee have been raised in compliance with the MCFA. This means that if the federal committee has received prohibited funds such as non-affirmative consent funds, corporate funds, etc. those contributions must be segregated by a reasonable accounting method and are not eligible to be transferred to the state/local Candidate Committee.

Reporting Transfers: The transferring federal candidate committee will report the transfer of funds as required by federal law.

The recipient state/local Candidate Committee must report the transferred funds on its campaign statement as follows:

  • If the funds were raised by the federal candidate committee after the candidate formed (or was required to have formed) a new candidate committee to run for state or local office and therefore required to be itemized, the committee will report receipt of the transferred funds by attributing each of the original contributors, the amount from each person, and the date of the transfer as the date of the contribution on the Itemized Contributions Schedule 1A. A letter must be submitted with the campaign statement detailing which contributions have been transferred showing the original contribution dates reported in the transferring committee’s campaign statements. An attached document or file such as an Excel spreadsheet can be used to provide this information. In this way, the contributions can be traced back to the originating committee.
  • If the transferred funds are not required to be itemized and attributed to a specific contributor, the state/local Candidate Committee reports receipt of the transferred amount as a lump sum on the Itemized Other Receipts Schedule 1A-1. The source of the other receipt is reported as the transferring committee, the type of receipt is indicated as “Other: transfer of unexpended funds” with the date and amount of the transfer.

State/Local Candidate Committee to State/Local Candidate Committee of different candidates – Prohibited

A state or local candidate committee cannot transfer funds from to a state or local candidate committee of another person. The MCFA strictly prohibit the candidate committee to candidate committee contributions. A candidate committee is allowed to purchase tickets to a fundraising event up to $100.00 per candidate committee per calendar year. The committee must report purchase of the tickets on the corresponding campaign statement and attend the fundraiser to qualify for the exemption. The purchase of the ticket is a contribution to the committee hosting the fundraiser and must be reported on the Itemized Contribution Schedule 1A.

Further, a PAC or other person cannot be used as a vehicle to make a prohibited contribution. A transfer or contribution to a PAC or other person with the understanding that it will be transferred to a specific candidate committee is considered earmarking and is prohibited by Section 44.

The MCFA allows for the reimbursement of expenses by committees for joint fundraiser expenses or joint expenditures made by committees. However, care must be taken to ensure that no unintentional contribution is received by any of the committees in the transaction. Reimbursements received by a candidate committee must be reported on the Itemized Other Receipts Schedule 1A-1 and not on the Itemized Contribution Schedule 1A.

Allowable Transfers - Visual Representation

State Representative and committees with a contribution limit of $1000.00 per election cycle can transfer the funds to any other candidate committee of the same person.

State Senate and committees with a contribution limit of $2,000.00 per election cycle can transfer to other offices with this limit and those with a limit of $6800.00. These committees cannot transfer funds to a committee with a limit of $1,000.00 per election cycle.

Statewide Offices and committee with a contribution limit of $6,800.00 can transfer fund only to other committees with this same limit. These committee cannot transfer funds to a committee with a limit of $2,000.00 or $1,000.00 per election cycle.

Transfer Scenario Example - State Representative to State Senate Committee Transfer

Following the last election, a term-limited incumbent state representative decides to run for state senate and files a new state senate candidate committee.

  • $50,000.00 was the ending balance listed on the Post-General Campaign Statement of the last election for state representative. This is the amount eligible to be transferred as a lump sum. Any amount over $50,000.00 must be itemized by the committee using the LIFO accounting method.
  • $100,000.00 is the current available funds in the committee account

On January 1, the state representative committee (rep. committee) transfers $25,000.00 to the newly filed state senate committee (senate committee).

Since the rep. committee had $50,000.00 available to transfer as a lump sum, the entire amount can be transferred without itemization of the original contributors. The rep. committee reports the transfer as an expenditure to the new senate committee and indicates transfer in the description/purpose field.

Disclosure Example #1

The senate committee receiving the transferred funds reports a single transaction from the rep. committee on the Itemized Other Receipts Schedule 1A-1 and indicates it is a transfer in the description/purpose field.

Disclosure Example #2

On February 1, the committee transfers an additional $50,000.00 for a total of $75,000.00.

The rep. committee now has only $25,000.00 in remaining funds that can be transferred as a lump sum. The remaining $25,000.00 of this transfer must be itemized. The transfer from the rep. committee is again shown as an expenditure to the new senate committee and indicates it is a transfer in description/purpose field.

Disclosure Example #3

However, the senate committee receiving the transferred funds must report multiple transactions. The first $25,000.00 is shown exactly as the first transaction on the Itemized Other Receipts Schedule 1A-1 from the rep. committee and indicates it is a transfer in the description/purpose field.

Disclosure Example #4

The remaining $25,000.00 must be itemized using the LIFO method of accounting. The committee takes the last contributions received that total $25,000.00 and enters each contribution on the Itemized Direct Contribution Schedule 1A using the date of the transfer as the new transaction date. The committee must first verify that the contribution intended to be transferred does not cause the contributor to exceed the contribution limit of the senate committee. If the limit has been reached, the committee must not transfer that contribution since it is ineligible to be transferred and must move to the next contribution to verify. Once the committee has determined which contributions can be transferred, the committee sends a letter to the filing official documenting the transfer and outlining the transactions that make up the itemized transactions.

NOTE: The process for determining and verifying that contributions are eligible for transfer must be done prior to the actual transfer transaction. Some contributions may not be eligible for transfer and some funds may remain in the original committee.

Disclosure Example #5

On March 1, the rep. committee transfers the remaining $25,000.00 in the committee account.

The final remaining $25,000.00 must be itemized using the Last in, First out (LIFO) method of accounting. Exactly as outlined above, the rep. committee takes the last contributions received that total $25,000.00 and enters each contribution on the Itemized Direct Contribution Schedule 1A using the date of the transfer as the new transaction date. The contributions are identified as separate from the contributions that were previously transferred. The same contribution can only be transferred once. The committee must continue to verify that the contribution intended to be transferred does not cause the contributor to exceed the contribution limit of the senate committee. If the limit has been reached, the committee must not transfer that contribution since it is ineligible to be transferred and must move to the next contribution to verify. Once the committee has determined which contributions can be transferred, the committee also sends a letter to the filing official documenting the transfer and outlining the transactions that make up the itemized transactions.

NOTE: The process for determining and verifying that contributions are eligible for transfer must be done prior to the actual transfer transaction. Some contributions may not be eligible for transfer and some funds may remain in the original committee.

See Examples #3 and #5 above.

Any funds that remain in the state rep. account and are not eligible for transfer must be disposed of according to the provisions set out in Section 45. See Appendix W for information on dissolving a committee.

FAQs

How is a transfer different from a contribution?

Transfers are allowed by the MCFA and are different from contributions in that they are specifically allowed from one candidate committee (as defined by the MCFA) to another candidate committee of the same person. Because of this, they are not considered contributions and are not subject to contribution limits.

What section of the MCFA allows for transfers?

Section 45(1) of the MCFA allows for transfers and reads in part:

A person may transfer any unexpended funds from 1 candidate committee to another candidate committee of that person if the contribution limits prescribed in section 52 or 69 for the candidate committee receiving the funds are equal to or greater than the contribution limits for the candidate committee transferring the funds and if the candidate committees are simultaneously held by the same person. The funds being transferred shall not be considered a qualifying contribution regardless of the amount of the individual contribution being transferred.

Can transferred funds be matched for gubernatorial public funding purposes?

No. Section 45 specifically excludes transferred funds for matching purposes.

Can a state/local Candidate Committee transfer unexpended funds to another state/local Candidate Committee of the same person?

Maybe, see the above section and complete the worksheet to help you determine what can be transferred. Before transferring any funds, contact your filing official for assistance.

Can a federal candidate committee transfer unexpended funds to a state/local Candidate Committee of the same person?

Maybe, see the above section and complete the worksheet to help you determine what can be transferred. Before transferring any funds, contact your filing official for assistance.

Can a state/local Candidate Committee transfer unexpended funds to a federal candidate committee of the same person?

No, because a federal candidate committee is not a candidate committee as defined in the MCFA, the funds cannot be transferred.

Can a state/local Candidate Committee transfer unexpended funds to another state/local Candidate Committee of a different person such as a spouse or child?

No, because the committees are not held by the same person the funds cannot be transferred.

How are transfers reported?

The reporting of transfers can be tricky and is specific to each transfer situation. The example above describes the most common situation we encounter, but we highly recommend that the committee contact the filing official before making transfer transactions.

Is there a worksheet available for determining what funds can be transferred and how?

Yes. The worksheet is designed to assist with the most common transfer scenario and may not cover all situations. We highly recommend that the committee contact the filing official before making transfer transactions.

Is there a difference between transferring funds from a term-limited committee to a non-term-limited committee?

Maybe; the transfer of funds is very situational. If the funds are transferrable, the only question that remains is how the transfer is reported. See the above example to help understand how a term-limited committee determines what funds are transferable and how the transfers are reported.

Can interest or other receipts be transferred to another committee?

Yes, if the interest or other receipt is a portion of the allowed lump sum transfer, it is not required to be itemized. However, if it must be itemized, the committee receiving the funds must itemize the source of the funds. Documentation, such as bank statements, may be requested to substantiate the transfer.

Can assets be transferred?

Maybe; if the committee is allowed to transfer funds to another candidate committee, then assets purchased by the committee can be transferred as well.

Can debts be transferred?

No, debts of a committee must be resolved by that committee and cannot be transferred to another committee.

Where can funds of a State Representative committee be transferred?

A committee for State Representative can transfer fund to any other committee registered under the MCFA. This is because the contribution limit for State Representative is contribution limit for this office would be the same or less than every other state or local office.

Where can funds of a State Senate committee be transferred?

A committee for State Senate can transfer funds to a committee with the same or higher limit. Offices with the same or higher contribution limits include statewide offices and certain local offices. See the Contribution Limits Chart for more details.

Where can funds from a statewide committee be transferred?

A committee for a statewide office can transfer funds to a committee with the same limit. Offices with the same contribution limit include other statewide offices and certain local offices. See the Contribution Limits Chart for more details.

Why are the transfers restricted from committees?

The MCFA requires that each committee maintain the contribution limits as required by the MCFA. To ensure that the contribution limits are maintained, restrictions are placed on the transfers.

Can in-kind contributions be transferred?

Maybe; if the committee maintains an asset that was donated, the transfer of the asset can be done. The contributor of the asset may be required to be itemized and the value of the asset count toward the contribution limit of the new committee for that contributor.

Why is a letter and list of contributors required for the transfer?

To ensure that the transfer is tracked, transparent, and all of the contributions accounted for accurately, the committee is required to provide a letter describing the transfer and attach a list of the itemized contributions.

Can all contributions/funds be transferred?

Maybe, the MCFA anticipates that not all contributions will be transferrable. For example, a contributor’s contribution in the transferring committee may cause the limit to be exceeded in the receiving committee. In this case, the funds are not transferrable and must remain in the original committee’s account and disposed of in an appropriate manner.

Can a PAC or Political Party Committee transfer funds to a Candidate Committee?

No, this would always be a contribution and be attributed to the contribution limit or a refund or return of funds to the candidate committee.

RULINGS ON SECTION 45 OF THE MCFA - TRANSFER OF UNEXPENDED FUNDS

5/17/2002NickelhoffIS Transfer of funds from a Federal PAC to Candidate Committee…. Complete text
10/22/1992WolpeDR12(1), 45(1),66(1)The contribution limits for a gubernatorial committee are greater than the contribution limits prescribed in the Federal Election Campaign Act for federal committees. Therefore, the Act does not preclude transferring funds raised by a congressional committee to a gubernatorial candidate committee. Contributions made to a congressional committee are transferred to a gubernatorial candidate committee are not considered qualifying contributions and cannot be matched with public funds the from the state campaign account. If a candidate chooses to accept public funds, the candidate’s expenditures for each election are limited to those stated in section 67 of the Act. The definition of “expenditure” in section 6 is broad enough to include testing the water expenditures. Therefore, if public funds are accepted, money spent before formally declaring candidacy that assists the nomination or election to the office of governor will be included when calculating the expenditure limitation…. Complete text
4/8/1983PlaweckiIS44(2 )A loan is a “contribution” and, therefore, may not be made between two Candidate Committees, even when both committees are Candidate Committees held by the same individual. Any left over funds or funds, which are not consumed or used up by the candidate’s first committee, may be transferred to his or her second committee when the second committee has a higher contribution limit. These transfers are not contributions. In addition, since a loan is a contribution, candidate committee to candidate committee loans are prohibited. If a candidate has transferred left over funds or funds which were not consumed or used up by the candidate’s first committee to his or her second committee, it would be inconsistent to allow any funds to be returned to the dissolving committee….Complete text
3/31/1982WelbornIS3(1),3(4),45(1)A person may be a “candidate” for one seat while still an incumbent, and therefore, also a “candidate” for another seat. The Candidate Committee for the office for which the person is an incumbent must be maintained until the deadline for filing for reelection to the incumbent seat has passed. An officeholder may not dissolve his or her Candidate Committee for that office until becoming “constitutionally or legally barred from seeking reelection or fails to file for reelection to that office by the applicable filing deadline”, even though the officeholder has announced his or her candidacy for another office. If a candidate simultaneously holds two Candidate Committees, and if one of the committees has a higher contribution limit than the other, and if funds are transferred from the committee having the lower limits to the committee having the higher limits, then the funds so transferred may not be transferred back…. Complete text
2/6/1980AltmanIS45(1)An individual may transfer funds from the state elective committee to the local committee, but may not transfer funds from the local committee to the state elective committee. [Amended PA 590, 1996 to add contribution limits for all committees]…. Complete text
11/2/1978ArthurhultzIS45(1),52(1)A candidate may not transfer funds from a Congressional Candidate Committee to his State Senate Committee because the contribution limits for the congressional office are greater than the limitation for the state office…. Complete text

ADDITIONAL RESOURCES

RULINGS AND INTERPRETIVE STATEMENTS

QUESTIONS?

Contact Us




Page last modified on May 14, 2018, at 12:42 PM