Silent auctions for political committees, set up in minutes

Almost nothing you know about charity auctions applies

If your experience of running an auction comes from a school, a church or a nonprofit board, the instincts you built there will produce compliance problems here. Four things change everything.

• Nothing is tax deductible. Not the bid, not any portion above fair market value, not a donated item. And saying so is a requirement rather than good manners: non-deductibility disclosure
• A bid is a contribution. It counts against whatever limit applies to that person for that committee, and a bidder who has already given the maximum cannot buy anything: auction items as contributions
• Some people may not contribute at all. Foreign nationals, and depending on jurisdiction and office, corporations, unions, government contractors and others
• Everything is reported. Purchasers above thresholds, with the information collected at the time — which is a data problem an auction platform must be set up for: reporting proceeds

None of this makes a political auction a bad idea. It makes it an activity that needs the committee's compliance person involved from the first meeting rather than after the money arrives.

Get the jurisdiction question answered first

Campaign finance is not one body of law. Federal candidates, state candidates, local offices, ballot measure committees, party committees and political action committees are each governed differently, and the differences are large.

• Limits differ by office, by donor type and by election cycle
• Which sources are prohibited differs — corporate contributions are treated very differently across jurisdictions
• Reporting thresholds, deadlines and filing systems differ
• Disclaimer requirements on communications differ
• And a single event can implicate more than one regime where committees are involved jointly

The practical instruction: find out which regulator you answer to, read that regulator's own guidance, and have the committee's counsel or compliance professional confirm the plan before anything opens.

An auction is unusually well suited to the constraints

Worth saying, because the compliance load above reads as discouraging.

• An online auction captures purchaser details at the point of sale, which is exactly what reporting needs — where a cash raffle or a bar does not
• Every transaction has a recorded amount, date and payer
• It scales down to a small committee with no event budget
• And it reaches supporters who will not attend an event, which for a local campaign is most of them

A committee that configures its platform to collect what the regulator requires has a cleaner record from an auction than from almost any other fundraiser.

Working it out from headroom, not list size

A supporter who has already given the maximum cannot bid at all, which inverts the usual targeting.

• Supporters who are eligible sources under this jurisdiction and office
• How much headroom each still has under the applicable limit
• Small-dollar supporters, who by definition have the most room

The full method: how much can a committee raise?

When an auction is the wrong instrument

If the committee has no compliance support, get it before running anything. In a blackout or reporting window where the jurisdiction restricts activity. And where the item somebody wants to donate would create a problem the campaign does not need in its final weeks — an auction is not worth a story.

The line around the office itself

The constraint that has no equivalent anywhere else in these situations, and the one where a mistake is not a compliance footnote but a serious matter.

Nothing offered may be, or appear to be, an official act, an official advantage, or a thing of value exchanged for one. That includes:

• Any official action, vote, endorsement, appointment or decision
• Access framed as influence over a pending matter, a permit, a contract or a case
• Anything a public office controls — a licence, a placement, a waiver, priority in a process
• Use of public property, staff or resources for the campaign
• Anything that would put a regulated party or a contractor in the position of paying an official

A tour of a public building, a coffee, a meal or a photograph is ordinary political fundraising. A meeting framed as a way to move a decision is not — and the framing in the listing is what a reader, a journalist and a regulator will judge.

Where an item involves an officeholder as well as a candidate, the officeholder's own ethics rules apply on top of campaign finance law, and they are frequently stricter.

Assume everything is public

Contributions are disclosed, filings are searchable, and an opponent or a reporter will read the catalogue. That is not a reason to avoid an auction — it is a reason to write every listing as though it will be quoted.

• Nothing in the catalogue you would not want printed
• No item whose donor would embarrass the campaign
• No valuation you cannot defend
• And no informal arrangement that is not on the record

Volunteers, staff and the platform

Volunteer time, discounted services, free venue use and unpaid help all raise questions about what counts as a contribution, and the answers vary: other legal requirements.

General information, not legal advice, and campaign finance law differs by jurisdiction and by office. Contribution limits, prohibited sources, disclosure and reporting are enforced with real penalties — your committee's own counsel or compliance professional decides how any of this applies before you run anything.

Twelve weeks, and counsel comes first

• Week 12 — counsel or the compliance professional reviews the plan; the jurisdiction, limits, prohibited sources and reporting thresholds established in writing
• Week 12 — platform configured for required donor fields and eligibility attestations, and the export tested against the compliance software
• Week 10 — finance committee assignments; candidate access lots agreed and capped
• Week 8 — individual supporters, with examples of what is useful
• Week 6 — permitted business and allied sources, screened before asking
• Week 4 — gap-filling; every item valued and its donor recorded at intake
• Week 2 — catalogue reviewed by counsel; disclaimers and non-deductibility statements on every page
• Close — well clear of a filing deadline, so reconciliation does not land in the same week as a report

Three jobs, and none of them optional

• Eligibility screening — before accepting a donation and before accepting a bid. A prohibited or over-limit purchase must be refunded, which is worse than never taking it
• Data capture — name, address, amount, date and (above thresholds) occupation and employer, collected at registration rather than reconstructed afterwards
• Catalogue review — counsel reads every listing, not only for eligibility but for how each reads to somebody looking for a problem

Where these auctions go wrong

• "Tax deductible" anywhere near a political fundraiser
• Treating a bid as a purchase rather than a contribution against a limit
• Accepting a donated item without screening the donor, when the item itself is a reportable in-kind contribution
• The double-count — a supporter who donates an item and also bids, with both counting toward their limit
• Occupation and employer skipped at checkout, and unobtainable afterwards
• A raffle bolted on, when charitable gaming licences are generally unavailable to political committees
• An item framed as access to a decision rather than to a person
• An export format nothing accepts, discovered at a filing deadline

What it costs, and why the format actually suits you

The compliance work is the cost, and it is front-loaded rather than ongoing.

Worth putting to a treasurer: an online auction captures purchaser identity, amount and date at the point of sale, which is precisely what reporting requires and precisely what a cash raffle or a bar does not. A committee that configures its platform properly ends up with a cleaner record from an auction than from almost any other fundraiser it runs — and the filings are the part that becomes public.

After it closes

• Reconcile against the committee's existing contribution records before filing
• Refund anything prohibited or over-limit promptly, and document it
• File on time, accurately, assuming it will be read by an opponent and a journalist
• Keep the valuation basis for every in-kind item with its donor
• Keep counsel's written answers, which are reusable next cycle