Foreign Money and Political Activity - 3 Things Associations Must Know

While this article may seem a bit esoteric for the average nonprofit, I felt it important in that it highlights the kind of political activity in which a nonprofit may or may not participate.  At some point I may ask Ron Jacobs, author of this article, to provide a primer for 501 (c) (3) organizations on what kinds of activity they can participate in  during an election cycle.  Suffice it to say that if you are a nonprofit director, you need to familiarize yourself with the law regarding lobbying and campaigns, even what you might consider harmless publications, communications and internal messaging, when it comes to candidates, campaigns and elections.  Bunnie


Foreign Money and Political Activity - 3 Things Associations Must Know 
by Ron Jacobs, Venable LLP

Since the Supreme Court held earlier this year that the First Amendment allows corporations and associations to play a more direct role in the election process, attacks on such participation are on the rise. Whether an association has foreign members or affiliates has now become another front for those attacks, so associations must be prepared to defend themselves.

For example, the Obama administration and its allies recently have attacked the US Chamber for using “foreign money” in its political activities. The charge appears to be based on the premise that the Chamber raises funds from foreign affiliates. The Chamber has denied these allegations, saying that it has procedures in place to segregate funds from foreign sources and that all of its political activity is funded from domestic sources.

Associations can learn three valuable things from this experience:

1. Associations involved in political activity should be aware of the ban on foreign funds being used to influence federal, state, or local elections. Thus, even though associations may fund messages expressly advocating the election or defeat of candidates using their general funds, they may not raise such funds from foreign entities.

2. To be certain that associations are complying with these rules, they should implement accounting procedures to segregate foreign funds from those funds used for political activities. In addition, employees should be trained on the policies and procedures used to segregate the funds; records should be kept showing such training.

3. Even with such procedures in place, political adversaries may try to make an issue of an association’s foreign sources of revenue (as evidenced by the attacks on the Chamber based solely on the fact that the Chamber accepts foreign funds). Thus, associations should be ready to respond to such attacks and be prepared to defend against a complaint filed with the Federal Election Commission. Although an association’s records showing the segregation of foreign money are not public, they should be kept in an easy to understand format should the FEC launch an investigation.

It is hard to defend against spurious allegations of comingling foreign funds, but proper record-keeping and segregation procedures can blunt the attack and help the association defend a possible FEC investigation.


Ron Jacobs heads Venable’s political law practice. Contact him at RMJacobs@Venable.com or 202-344-8215.

This article originally appeared in the October 14, 2010 edition of Association TRENDS.

The Care and Feeding of New Board Members

It is harder than ever to find good board members. People are so busy and have so many obligations. The search for new board members should begin with each of the existing board members. Who do they know? Who do they do business with or with whom do they socialize? You can also go out to other nonprofits and send them a request for nominees. Club and membership associations (like Rotary, Lions, Chambers of Commerce) are particularly good for getting the word out about your board member search.

I prefer to think about the “type” of board talent that's needed and then conducting a search based on that. Do you need a business person? Or perhaps someone from the religious community? How about someone who is extremely high-tech? Or maybe you really need an attorney on the board. Deliberate planning for the type of board talent will help ensure that your board is diverse and each member brings something to the table.

Once you’ve found those potential board members, carefully and thoroughly interview them. I helped an organization conduct a start-up board search, we received many applications from some terrific candidates. One candidate looked great on paper, but when she came for the interview she was an angry, angry person. She actually tried to deliberately intimidate the other board members in an effort to show how tough she was. Once she was done with the interview and left the room, we all collectively breathed a sigh of relief. Yes, she was that scary!

The board interview process is very much like the job interview process. It's the time to determine if the potential board member is a good fit and it’s the time to make sure the nominee completely understands the duties and responsibilities of being on the board. How much time will be required of the board member? How many committees does the board member have to sit on? What is the fundraising obligation?

Here’s where I think a lot of nonprofits fall down on the job; not conducting board training for new board members at the very first opportunity. Somehow (and don’t ask me how) broad assumptions are made that the new board member just automatically understands nonprofit governance or even understands nonprofits. Just because a new board member was once president of the local PTA doesn’t mean they know the first thing about nonprofit management and the fiduciary requirements of board members.

One resource I've used for new board member training is from Dan Cain at Cain Consulting (http://www.cain-consulting.com); it is the "Board Team Handbook." It really lays out what the responsibilities of board members are, discusses ethics, provides simple to follow parliamentary procedure, advises new board members how to behave, etc. Dan Cain has a lot of products for nonprofits on his website, I highly recommend you go to it. I am one heck of a writer and have written tons and tons of training manuals on various topics, but I could never outdo what Dan Cain has done with the Board Team Handbook, it is excellent!

It's important to have one established board member as a mentor to orient a new board member. That should be a permanent position, the “New Board Member Training Coach” or whatever you choose to call it. The Coach should walk the new board member through all the important documents of the organization, such as: the bylaws; personnel manual; the strategic plan; etc. The Coach should also spend some time on the activities and programs of the organization: When is the conference? What kind of legislative activity does the organization do? How many chapters are there? Who is the chapter leadership? How often does the journal get published? What is the scholarship fund?

The more the new board member knows about the organization, the more engaged they will become. Searching for new, qualified and talented board members is labor intensive and once you’ve done that search it’s really important to make sure you give new board members every opportunity to succeed.


You can reach Bunnie Riedel at info@riedelcommunications.com