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Campaign Finance Reform & ALTA®

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May/June 2002 - Volume 81, Number 3

by Francie Burkhart

You may have heard about the campaign finance reform bill that was signed into law by the President on March 27, 2002. While supporters claim a victory, opponents question the constitutionality of some parts of the bill. Just how will campaign finance reform affect ALTA®’s political fundraising efforts?

ALTA® collects two different types of money for political activism:

  • Hard dollars are personal donations that are made by personal checks from members of ALTA® payable to ALTA®’s PAC—the Title Industry Political Action Committee—or TIPAC. These contributions are used to support the congressional campaigns of candidates for the United States Senate and U.S. House of Representatives.
  • Soft dollars are corporate donations, drawn on company checks, paid to ALTA®. These contributions from ALTA® members are used for TIPAC’s operational and administrative expenses and other political expenditures as allowed by law , but not campaign contributions to candidates.

The changes made in the campaign finance reform bill mainly affect soft dollars, it does not change the regulations of PAC fundraising and disbursement of hard dollars.

For the most part, the campaign finance reform bill eliminates soft dollar donations to political parties. ‘Soft dollars’ is the political terminology that describes contributions made to national political parties, such as the NRCC (National Republican Congressional Committee) and the DNC (Democratic National Committee) from corporations, labor unions and individuals who have already given the maximum contribution to political party federal accounts. Essentially, these national parties use soft dollar donations to fund "party building" activities, including voter registration drives and get-out-the-vote campaigns. Funds have also been used to fund television commercials on specific issues. There is nothing in the legislation that prohibits organizations other than political parties from collecting soft dollars.

Although TIPAC has raised corporate contributions from its members for a number of years, the majority of this money is used for administrative expenses incurred in running the PAC, including mailings, supplies, marketing materials, and the software accounting program used for compliance with the Federal Election Commission (FEC). Last year ALTA® collected a record high of $67,550 in member contributions to ALTA®, and $101,609.50 in donations to TIPAC. The TIPAC funds were donated directly to individual candidates who often sit on influential committees and who show an interest in learning about and protecting title industry interests in Congress.

In fact, only a very small amount of soft dollars raised are given to national parties. With such a small industry, the TIPAC Board generally believes that making soft dollar donations will not have a noticeable effect for the title industry. Title industry corporate soft dollar contributions to national parties are few and far between, usually only made for occasions such as attending special events. The TIPAC Board believes that ALTA®’s PAC soft dollars are best used to support efforts to raise TIPAC funds that can be contributed to members of Congress.

Ann vom Eigen, ALTA®’s legislative/regulatory counsel notes that, "The law will become effective in November of 2002, which means that this year’s TIPAC efforts will remain unaffected. In addition, although there will be challenges to the constitutionality of the new law, a "severability "provision included in the law provides that provisions not challenged will remain in effect. Consequently, we will see an increase in importance of hard dollars now that soft dollar expenditures are limited. In essence our hard dollars will be even more valuable to candidates "

To offset the banned soft dollar contributions to national parties, the law doubles the amount that individuals can contribute to each federal candidate from $1,000 per year in hard money to $2,000. Furthermore, this amount will subsequently be adjusted for inflation for future campaign cycles. In addition, the law increases the limits to state political parties by increasing individual contributions to a state committee of a political party from $5,000 to $10,000 per year.

The contribution limits for PACs remain the same: individuals still can contribute up to $5,000 per PAC each year and PACs are able to give up to $5,000 per candidate per election. This means $5,000 to a primary election and $5,000 to a general election, for a total of $10,000 per Federal Congressional or Senate candidate who has both a primary and a general election. What has changed is the net amount that individuals can contribute to federal campaigns, which includes individual candidates, PACs and national parties. Previously, an individual could contribute a total of $25,000 per year to political parties, PACs and federal candidates (with limits of $5,000 per year to a PAC and $20,000 per year to a political party committee). Now, individuals can contribute a total of $95,000 over a two-year election cycle to federal PACs, candidates and national parties, with the following sub-limits: $37,500 to all federal candidates, $57,500 to all PACs and parties, with no more than $37,500 of that amount to state and local parties and PACs. Individual contribution limits to federal candidates have doubled, while contribution limits to and from federal PACs remain the same. However, with the elimination of soft dollars, we expect to see an increased importance in PAC dollars in campaign fundraising. "This is great news for TIPAC," Ann vom Eigen commented. "Our TIPAC dollars will be in even greater demand than they are at present. Now that this "reform" has occurred, people may be more positive about their own ability to have an effect. We hope this will make our members more motivated to participate in TIPAC.

There are several parts of the legislation that have been challenged in federal court. For example, the prohibitions on issue advertising by citizen’s organizations as well as the increase in the contribution limits for Senate candidates whose opponent is self-financed are under review. However, even if these clauses are deemed unconstitutional other provisions may remain, depending on the outcome of the litigation, will ultimately be decided by the United States Supreme Court.

For more information on TIPAC please contact Ann vom Eigen or Francie Burkhart, ALTA®’s PAC Administrator, at 202-296-3671.

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