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  • Go back to Tracker -- Winter 1998

    Checking for Unreported Gifts
    Margaret Murphy
    NICAR Staff

    In-kind contributions are contributions of goods or services, as opposed to monetary contributions, to a political committee. An in-kind contribution can take many forms; it can be of nominal or considerable value to the campaign. Examples of in-kind contributions are an old typewriter worth $15, a newspaper ad bought with the campaign's consent worth $100 or a co-signed loan worth thousands of dollars. (It is important to note that in-kind contributions do not include volunteer personal services.)

    In-kind contributions must be reported, and they count toward a personšs campaign contribution limit. A person who has reached the contribution limit and then donates computer equipment, for example, is violating campaign law. Even if there is no contribution limit in a particular race, a campaign must report the contribution.

    Thousands of dollars worth of expenses can be hidden by failing to report in-kind contributions. Candidates in races with legal limits on contributions and candidates in tight races are those most motivated to hide expenditures and contributions. But don't overlook small campaigns, which might have a few generous donors who have already contributed the maximum but are willing to pay for occasional miscellaneous expenditures or lend the campaign office equipment.

    These types of unreported contributions are hard to trace and harder to prove, but the committee's financial disclosure reports should still be scrutinized. One place to look for gaps is in the operating expenses to run the campaign's headquarters. Campaigns, like all offices, have standard office expenses. When youšre paging through a campaign's financial disclosure reports, keep an eye out for missing expenditures or those that seem too low for the office being sought. Questionable expenses in this area can be a clue that the campaign is cutting corners. Even if you don't find or cannot prove violations, the reports still show a pattern of spending and priorities.

    Postage Expenses

    Postage is a good example of an in-kind contribution and expense that can be easily hidden. One presidential campaign several years ago that was very close to reaching its spending limit during the Iowa caucuses had a generous supporter routinely put dozens of rolls of stamps in the receptionist's drawer, thus saving the campaign thousands of dollars.

    Almost all campaigns mail thank-you letters to their donors, and many mail flyers of big campaign events such as the candidate's formal announcement, rallies or debate-watch parties. Ask the campaign manager how many volunteers the campaign has. He or she will probably tell you an inflated number. Then ask how the campaign keeps in touch with these people. Some may have newsletters periodically updating supporters on the candidatešs progress.

    Ask for a copy of the newsletter or to be put on the mailing list, or find one of their old newsletters. Does it have a bulk mail permit number on it? Call the post office and ask how much is in the account, when the account was set up (also look for a check cut to the postmaster for this purpose) and when the last mailing was.

    Rather than stamps, the campaign may use a postage meter. Look for an expenditure to a mail house, or a company like Pitney Bowes. If there is none, there should be checks cut to the U.S. Postmaster, or, if it is a small campaign, petty cash expenditures for stamps.

    Try to get copies of invitations to private fundraisers. Often the hosts will send these out themselves. Is there a stamp on it or did they use a postage meter? Call the post office with the postage meter number to find out whose it is. Is it an incorporated business or law firm? In some states, corporate contributions are illegal. Even if they are permitted in your state, the postage should be declared as an in-kind contribution.

    Looking at the Office

    Where is the campaign's office? Conveniently in the same building as the candidate's law firm? Such a location certainly isn't illegal, but it makes it easier for the campaign to use the law firm's resources. Are there checks for utilities and rent? Call the utility company and ask what the utility expenses have been for the last several months at the campaign's headquarters. Utilities may or may not be included in the price of the lease. Find out who the leasing company is. If the building's owner is a supporter of the candidate, is the campaign paying "fair market value" on the rent?

    Expenses to Consider

    Page through the old press releases sent by the campaign to your news organization. Were they faxed? Whose fax number is on the top? If the campaign doesn't have its own fax (sometimes the number will be listed on the letterhead, or you can call the campaign and ask) whose are they using? Do phone expenses match the size of the campaign and the district? Could the campaign possibly be using someone's phone or credit card? If the campaign has a phone number different from the candidate's personal home number then it should have phone bills.

    Take a look around the campaign office. How is it furnished? With fancy office furniture or second-hand desks from the Salvation Army? How many computers and printers are there? How big is the copier? If it's too small to make more than 100 copies at a time, the campaign should have an account set up with a local printer. If it has letterhead, check for that expense.

    Look for reimbursement checks made payable to campaign workers. If the district is large, the candidate and staff will have to put a lot of mileage on their cars. Are they being reimbursed? Is the staff being paid on a regular basis? Are FICA taxes being paid? Most candidates would rather accept a monetary contribution than an in-kind one, so that they can control the way the money is spent. But few campaigns have the luxury of being able to refuse such a donation. Thoroughly checking and questioning a campaign's in-kind contributions and day-to-day office expenses can give you added insight into the campaignšs financial situation and priorities. It is a mandatory step in investigating any campaign.

    Margaret Murphy can be reached by e-mail at margaret@nicar.org.