Can a PAC Accept Contributions From Foreign Citizens?

A quick review of federal election campaign legislation makes it clear that foreign money is generally prohibited in federal and local elections. The Federal Election Campaign Act (FECA) prohibits organizations from knowingly soliciting, accepting, or receiving contributions or donations from foreign nationals for campaign finance.

Despite the apparent clarity, the Federal Election Commission (FEC) says many of the questions it receives involve the rules governing foreign nationals’ participation in U.S. elections. For legal advice specific to your situation, speak with an experienced attorney.

How Do You Determine Whether the Contribution Source Is a Foreign National?

A foreign national generally includes an individual who is neither a U.S. citizen nor a U.S. national and is not a lawful permanent resident, as well as certain foreign entities.

Domestic subsidiaries of foreign corporations are not foreign nationals if they are organized under U.S. law or have their principal place of business in the United States. Those subsidiaries can form a PAC called a Separate Segregated Fund (SSF) if the organization meets strict guidelines on funding sources and the citizenship of members running the PAC.

The foreign parent corporation may not finance the SSF’s political activities, and foreign nationals may not participate in the SSF’s decision-making, although they may perform non-decision-making clerical or administrative tasks.

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Who Determines the Campaign Contribution Source?

The political committee or political action committee (PAC) must 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 that ignorance is hard to claim. 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

When a PAC or committee receives a contribution, for example, to support a Senate or House of Representatives candidacy, whether monetary or in-kind, it may deposit the contribution while determining its legality, but it may not use the funds.

The committee must make a reasonable inquiry within 30 days of receipt and return the contribution within that period if it cannot determine that the contribution is lawful.

What Is 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.

PACs 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, in any election-related decisions the committee or PAC makes. That means foreign nationals are prohibited from most positions within the PAC regarding political activity. However, a foreign national volunteering personal services to a committee is not considered a campaign contribution.

How Is the Law Enforced?

Political committees and PACs are responsible for screening contributions under federal law.

If the organization deposits a questionable contribution while determining its legality, it may not use the funds, must make a reasonable inquiry within 30 days of receipt, must return the contribution if it cannot determine that it is lawful, and must keep a written record of the basis for determining that a contribution is lawful.

When an organization is unsure whether a contribution is foreign, the FEC makes it clear that it can request an advisory opinion to ensure 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 face criminal prosecution by the Department of Justice, which has pursued criminal campaign violations in the past.

Find Legal Help

To avoid potential civil and criminal liability, organizations should consult with an experienced nonprofit law attorney. That attorney can ensure your organization properly screens foreign contributions, prevents unlawful foreign participation, and explains campaign finance laws.