How to Start a PAC for Associations and Nonprofits

by Sophia Bennett // Dec 29, 2015 Digital

Money capitol

 

 

 

 

 

 

 

 

 

Political action committees (PACs) have gotten a bad rap. But PACs and Super PACs aren’t going anywhere anytime soon, so you it might need to consider having one in your toolkit. Not to mention that it can be a huge benefit to your advocacy efforts.

The Benefits of Starting a PAC

The Association of Fundraising Professionals (AFP) started a PAC in 2002 as part of an effort to expand their role in advocacy work. “Part of the reason for our existence is advocacy,” Jason Lee, general counsel for AFP says. “We’ve been fairly strong and robust over the years, but we’ve really built over the last 10 years.”

The organization’s leadership recognized that having a PAC would give them a higher profile, and access to power players that they wouldn’t have otherwise. “It allows you to go to events with members of Congress,” Lee says. “A lot of the lobbying that happens is actually on the staff level. You’ll meet with the subject matter expert in the member’s office, or the committee staff person. We also do a lot of grassroots activities with our members. The PAC gives you a third leg of the stool where you can interact with the member directly.”

That’s true even though AFP PAC has a fairly small budget. In 2014 they donated approximately $25,000 to various Congressional candidates.

Lee says having a PAC shows the association’s members they’re serious about advocacy. It communicates the same message to members of Congress, because there are so few nonprofits that start PACs. “It’s sort of new ground,” Lee says. “If a nonprofit wants to start a PAC, it will differentiate them from other nonprofits that want to ramp up their advocacy.

Getting the Structure Right

There are some challenges to starting a PAC. The reporting requirements are quite rigorous, and they have to be set up as a separate organization, which means the sponsoring organization has to deal with all the infrastructure of a new entity. “In that sense it is quite a bit of work,” Lee says. “It involves an investment of time.”

Lee says AFP PAC also has to be very mindful when they make a campaign contribution because they don’t want to offend members. While AFP members may appreciate that a particular member of Congress has a favorable position on issues important to nonprofits, they might be vehemently opposed to other things the candidate supports or opposes.

The PAC has also worked very hard to emphasize that it’s nonpartisan. “We have to be very careful about explaining the rationale for supporting different candidates,” Lee says. “We try to give to the same number of Republicans and Democrats, and provide the same amount of funding to both parties.”

Understanding the Legal Requirements of a PAC

The accounting and paperwork involved with a PAC are quite different from what most nonprofits and associations are used to.

People cannot make anonymous contributions to PACs, which means it’s essential to track every single penny that comes in. When you report contributions, you will need to include information such as each donor’s name and occupation. That means it’s vital to collect and store that information every time you receive a contribution.

State PACs will need to file reports regularly (typically quarterly) with the Secretary of State’s office. Federal PACs must do the same with the Federal Elections Commission. Every six months, PACs supporting federal candidates also have to file documents with the House and Senate.

Get Acquainted With Your Current Organization

If your nonprofit or association is a 501(c)4 or 501(c)6, your currently employees can get involved in the PAC. Bruce Hopkins with the Bruce R. Hopkins Nonprofit Law Center in Kansas City, Missouri explains that while the PAC has to be a separate legal entity, the staff of the affiliated nonprofit can provide services such as bookkeeping and data tracking.

“501(c)3s can’t manage PACs directly,” he says. But there are ways to set them up without endangering your charitable status. “The only way to do it is to have a buffer” – meaning an organization that sits between the 501(c)3 and the PAC.

“Most organizations set up an affiliated 501(c)4,” Hopkins says. “It could be a 501(c)6, but a 501(c)4 is more likely because to have a 501(c)6 you have to have a formal membership.”

Sell Your Board or Members on the Idea

“There has to be buy-in throughout the leadership of the organization for a PAC to work,” Lee says. “In our case, we had board members and leaders who supported the creation of the PAC. It was also supported by key executive leaders on the AFP staff.

“Although a PAC must be separate from a funds standpoint, for a PAC to be successful, it must be embraced by the organization and its leaders,” he continues. “It doesn’t work if it’s marginalized and shoved off to the side as a necessary evil. It has to be viewed as a valuable asset to the organization and its advocacy efforts.”

To get that buy-in, Lee recommends working closely with the communications team to inform and educate members about the value of PACs. “There’s a stigma around PACs with a lot of people,” he says. “When we initially started the PAC it was a bit of a fight. It took time to convince the membership that this was something that needed to be done. I think now the vast majority of people see the benefit of it.”

Since a nonprofit and PAC have to keep their activities completely separate, it’s important to put systems in place to do that. Lee says AFP PAC has its own bank account and checks. It also has a separate 12-member board of directors that oversees its activities. When thank you letters or materials come out, they feature the AFP PAC logo.

Brush Up on Your Fundraising 101

“When it comes down to it, a PAC is about fundraising,” Lee says. That means it’s important to follow the basic best practices of fundraising. Thank donors right away for their contributions. If people make multi-year commitments, make sure someone will follow up with them and submit invoices in a timely manner. Cultivate donors so they’ll give repeatedly, and perhaps even increase their donations in coming years.

Ready to start? Check out CQ Roll Call’s PACbuilder tool.

 

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