Starting a Nonprofit PAC

For good or for ill, political action committees influence the highest levels of government.

An offspring from the union of money and politics is the political action committee. Largely a response to U.S. government restrictions on corporate and individual campaign donations, PACs serve to procure large amounts of money and direct such funds to favored political campaigns. The advantages PACs carry lie in their legal and financial separation from the candidates and parties to which they give support. Some of these organizations are affiliated with corporations, trade associations or labor unions; others are freestanding. The first type is also known as a separate segregated fund (SSF) or connected PAC. The independent PACs are often called non-connected.

Things You'll Need

• Federal Election Commission Form 1
• Internal Revenue Service Form SS-4

Instructions

1. 

   Political fund-raising is heavily regulated. Learn the ropes before plunging in.

   Learn the regulations governing fund-raising, contributing and reporting. Go to the Federal Election Commission website at fec.gov as a first stop for a PAC raising money nationally. For a state PAC, refer to the Secretary of State for the jurisdiction in question.

2. 

   Forming a nonprofit organization requires accountability from all members. Get it in writing.

   Establish an organizational structure such as a board of directors. Select executive officers; the offices of treasurer and assistant treasurer are of prime importance for filing purposes. Prepare a written set of bylaws or articles of incorporation that outline the aims of the PAC, the duties of its officers, the fund-raising mechanisms and the targeted constituencies. A PAC is, in fact, a nonprofit business.

3. 

   Money is at the heart of a PAC's mission. Manage it with care.

   Open two business checking accounts in the name of the PAC, one for operating expenditures, the other for collections and contributions. Make the treasurer the primary authorized user. Limit the number of additional users to one or two other officers.

4. 

   Make sure to file the right documents with the right agency.

   Gather the correct forms and supporting documentation to file with the appropriate regulator. For federal elections, the FEC Form 1 is the operational document, seeking information on the responsible officers and the applicable bank accounts. For an SSF, file within 10 days after the first expenditure. For a non-connected PAC, file within 10 days after raising the first $1,000. For a state PAC, obtain the corresponding forms through the Secretary of State or the state election commission.

5. 

   Tax-exempt status requires responsibility. Let the IRS know when the PAC is in business.

   Although a PAC is tax-exempt, file the IRS Form SS-4 to obtain a federal tax ID number. It is always better to be aboveboard when raising large sums of money.

6. 

   When you raise cash, web presence is essential.

   Set up a website with a secure link for making donations. This is the PAC's business card.

Tips & Warnings

• When you raise money for U.S. senators or representatives, remember that these are federal offices despite their local constituencies. These PACs require FEC filings.

• The documentation and regulations covering political action committees are complex and subject to continuing litigation and court rulings. A competent attorney who is thoroughly schooled in election law is a PAC's best investment.

References

• Local Victory: "Pros and Cons of Starting Your Own PAC"
• Federal Election Commission: PAC Q&A
• "Inside the World of Political Action Committees"; Larry J. Sabato; 1984

Resources

• National Association of Secretaries of State: Contacts