Can a PAC Accept Contributions From Foreign Citizens?
Washington, D.C. PACs must be cautious with potential foreign involvementBy Doug Mentes, Esq. | Last updated on January 26, 2023
Use these links to jump to different sections:
- How To Know the Contribution Source Is a Foreign National?
- What’s a Contribution Under the Law?
- How Is the Law Enforced?
How To Know the Contribution Source Is a Foreign National?Basically, any foreign citizen or foreign organization is considered a foreign national under federal law. The only exceptions are lawful permanent residents of the U.S. (green card holders) and U.S. subsidiaries of foreign corporations. Those subsidiaries can form a PAC called a Separate Segregated Fund (SSF) if the organization meets strict guidelines on the source of funding and citizenship of members running the PAC. The foreign parent corporation is unable to finance any of the costs of the SSF, and no foreign nationals may serve in any decision-making or operational role of the SSF. The onus is on the political committee or political action committee (PAC) to determine whether the source of a campaign contribution is foreign. The treasurer is ultimately responsible for making this call, and the law makes it clear it’s difficult to argue ignorance. A campaign organization has the requisite knowledge under the law that a source is foreign if the organization either:
- Has actual knowledge the source is foreign
- Is aware of facts that would lead a reasonable person to believe the source is foreign
- Is aware of facts that would lead a reasonable person to inquire whether the source of the contribution is foreign
What’s a Contribution Under the Law?Contributions include donations of money or other things of value—or the express or implied promise to contribute—in connection with a federal, state or local election. PAC’s can be affiliated with a particular political party. Contributions also include expenditures, independent expenditures or disbursements for election communications and political campaigns. Besides contributions, foreign nationals cannot participate—directly or indirectly—with any election-related decisions made by the committee or PAC. That means foreign nationals are prohibited from most positions within the PAC with regard to political activity. However, it’s not considered a campaign contribution for a foreign national to volunteer their personal services to a committee.
How Is the Law Enforced?Political committees and PACs are responsible for screening contributions under federal law. If the contribution is not returned to the donor, the organization must keep a written record confirming its reasons for determining the contribution is legal and report that supplemental information when reporting the contribution to the FEC. If an organization is confused whether the source of a contribution is foreign, the FEC makes clear in these cases to request an advisory opinion from the FEC to assure compliance. If an organization is caught receiving a foreign contribution for campaign funds, the FEC may pursue civil penalties. If an organization knowingly and willfully engages in these activities, it may be subject to criminal prosecution by the Department of Justice, which has pursued criminal campaign violations in the past. To avoid potential civil and criminal liability, organizations should consult with an experienced Washington, D.C. government relations attorney. That attorney can assure your organization is properly screening foreign contributions and preventing unlawful foreign participation in your organization and explain campaign finance laws. For more information on this area of law, see our overview of international law and business and corporate law.
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