It is that time of year when newly elected public officials are busy planning swearing-in ceremonies, luncheons, parades and galas to celebrate their upcoming inaugurations. As a result, it is also the time of year when individuals and companies are being asked to contribute to the inaugural committees of federal, state and local public officials. However, not all inaugural committees or events are created equal. It is critical to research the type of committee and the rules in each jurisdiction before contributing to the inaugural festivities.
The president-elect designates an inaugural committee to oversee the presidential inaugural ceremony and related activities. The inaugural committee plans and finances all inaugural events, other than the swearing-in ceremony at the Capitol and the luncheon honoring the President and Vice President. This includes funding opening ceremonies, the parade, galas and balls. There are no limits as to how much an individual, corporation or labor union may contribute to the inaugural committee. All contributions will be itemized and reported to the Federal Election Commission (FEC) by the inaugural committee. The Joint Congressional Committee on Inaugural Ceremonies, which is formed by a congressional resolution every four years, independently coordinates and funds the presidential inaugural events held at the Capitol, including the swearing-in and the congressional luncheon.
Corporations, including lobbying firms, are not permitted to contribute to the inaugural or swearing-in ceremonies of a US Representative under the House Ethics Rules. These entities should also not contribute to the inaugural festivities for a member of the US Senate, as those funds could run afoul of the restrictions on gifts.
The regulations surrounding state and local public official's inaugural events will vary. Some state and local inaugural committees are governed specifically by the jurisdiction's campaign finance laws. This can include set contribution limits and/or reporting requirements. For example, in Ohio, New Jersey and Louisiana, inaugural contributions are limited in how much one can contribute, but are not reportable by the contributor. Inaugural contributions in Illinois and Indiana are unlimited and not reportable. In Maine, contributions are unlimited but prohibited during the legislative session. Other states follow various models for both limits and reporting.
Other state and local inaugural committees are formed as separate, nonprofit entities. In this case, corporate contributions can be solicited and accepted in unlimited amounts. A contribution to a 501(c)(3) organization will be reported by the recipient committee to the IRS and may be reportable under campaign finance laws. Contributions to 501(c)(4) organizations are not reportable to the IRS but may be reportable under campaign finance laws in a given jurisdiction. Examples of jurisdictions that permit contributions to inaugural committees that are organized as separate nonprofits include Vermont and Rhode Island.
Corporations and individuals in the financial sector that are governed by federal Municipal Securities Rulemaking Board (MSRB), US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) pay-to-play rules may face additional limitations. Contributions to inaugural committees are considered impermissible political contributions that may trigger a two-year ban on doing business in that state or locality under these regulations. State and local pay-to-play regulations may also apply.
If you are considering hosting a public official for an inaugural celebration instead of contributing to the inaugural committee directly, keep in mind that gift rules may still apply to anything of value provided to a public official in attendance at the event, including the honoree. It is important to verify the limitations, prohibitions and reporting requirements for holding such an event in advance. For example, in a particular jurisdiction, you may want to structure the event as a widely-attended gathering to conform to ethics rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
