Federal Election Commission Main Page
December 12, 2003
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2003-33
Kenneth A. Gross
Ki P. Hong
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Ave.
Washington, DC 20005-2111
Dear Mr. Gross and Mr. Hong:
This refers to your letter of November 3, 2003, requesting
an advisory opinion on behalf of Anheuser-Busch Companies, Inc.
and its subsidiaries ("A-B"), concerning the application of the
Federal Election Campaign Act of 1971 ("the Act"), and Commission
regulations, to a proposed plan involving A-B's federally
registered political action committee, Anheuser-Busch Companies,
Inc. Political Action Committee ("AB-PAC").
A-B is a domestic corporation, and the AB-PAC is A-B's
separate segregated fund. Your request relates to two separate
programs currently administered by A-B: (1) the Charitable
Matching Program and (2) the United Way Program. Under the
Charitable Matching Program, which has been in effect since 1989,
if an eligible employee of A-B makes a contribution to the AB-
PAC, A-B matches that contribution, dollar-for-dollar, by making
a donation to a charity in the same amount as the contribution to
AB-PAC and in the name of the contributing employee. You state
that, other than the requirement that the charity be exempt from
federal income taxes under section 501(c)(3) of the Internal
Revenue Code, the contributing employee is free to choose the
charity to which the matching donation is to be made.
Under the United Way Program, which has been in effect for
at least 25 years, A-B provides prizes to employees who donate a
certain amount to the United Way. Specifically, you state that
if an employee donates $100 or more to the United Way, the
employee is provided with a beer ticket entitling him or her to a
free case of beer, which typically costs A-B no more than $10.
You further state that an employee who donates a certain
percentage of his or her salary to the United Way is considered a
"Fair Share" participant and receives an item such as a beer
stein, plaque or wall print, which costs A-B between $30 and $52.
You state that, prior to 2002, there was no interaction
between the Charitable Matching Program and the United Way
Program, meaning that an employee that designated the United Way
to receive his or her charitable match under the Charitable
Matching Program would not have the amount of the charitable
match counted toward the thresholds for qualifying for prizes
under the United Way Program. In 2002, however, A-B started to
count such charitable matching contributions made to the United
Way, along with the employee's direct contributions to the United
Way, toward those prize thresholds.1 Consequently, an employee
who makes a contribution to the AB-PAC and designates the United
Way under the Charitable Matching Program receives two benefits -
(1) a matching contribution in the employee's name to the United
Way and (2) a prize under the United Way Program.
The Act prohibits a corporation from making contributions or
expenditures in connection with any Federal election. 2 U.S.C.
441b(a). However, the Act excludes from the definition of
"contribution or expenditure," those costs that are paid by the
corporation for "the establishment, administration, and
solicitation of contributions to a separate segregated fund to be
utilized for political purposes" by the corporation. 2 U.S.C.
441b(b)(2)(C). Although Commission regulations provide that a
corporation may use its general treasury monies to pay the
expenses of establishing and administering such a separate
segregated fund ("SSF") and of soliciting contributions to the
SSF, the regulations also state that a corporation may not use
this process "as a means of exchanging treasury monies for
voluntary contributions." 11 CFR 114.5(b). In this respect, the
regulations specify that a contributor may not be paid for his or
her contributions through a bonus, expense account, or other form
of direct or indirect compensation.
11 CFR 114.5(b)(1). The Act and Commission regulations allow a
corporation, or an SSF established by a corporation, to solicit
voluntary contributions to the SSF from the corporation's
stockholders, its executive and administrative personnel, and
their families. 2 U.S.C. 441b(b)(4)(A)(i); 11 CFR 114.5(g)(1).
Any solicitation of these persons for contributions to the SSF
must meet certain requirements. See 11 CFR 114.5(a), and, in
particular, 11 CFR 114.5(a)(5).
The Commission has previously approved charitable
matching programs similar to the Charitable Matching Program
described in your letter. See Advisory Opinions 2003-4,
1990-6, 1989-9, 1989-7, 1988-48, 1987-18, and 1986-44. 2
These past opinions have all allowed corporations to match
contributions made to their SSFs with donations to charities
under certain conditions. The Commission has viewed the
costs of such a matching program as solicitation expenses
related to fundraising for its SSF.
2 U.S.C. 441b(a) and 441b(b)(2)(C). Given that under the
Charitable Matching Program no individual contributor to the
SSF would receive a financial, tax, or other tangible
benefit from either the corporation or the recipient
charities, the Commission concludes that there is no
exchange of corporate treasury monies for voluntary
contributions.3 Provided that A-B's charitable matching
plan is implemented so that no contributor to the PAC
receives a tangible benefit or premium from A-B, AB-PAC, or
the charity receiving the matching donation, the matching
donation to the charity will be treated as a solicitation
expense and not as an impermissible contribution from A-B.
The Commission has previously approved of providing
contributors to SSFs with prizes or tokens of appreciation
similar to the items that A-B employees receive under the
United Way Program. See Advisory Opinion 1981-40. Such
prizes have been permitted so long as they are not
disproportionately valuable in relation to the contributions
generated. The Commission's regulations provide that a
"reasonable practice to follow is for the separate
segregated fund to reimburse the corporation or labor
organization for costs which exceed one-third of the money
contributed." 11 CFR 114.5(b)(2). In your letter, you
state that under no circumstances does the portion of the
cost of any prize awarded under the United Way Program that
is attributable to the matching donations made under the
Charitable Matching Program exceed one-third of the amount
of the contribution made to AB-PAC.
Under the proposed plan described in your request,
those A-B employees who contribute to AB-PAC and designate
the United Way to receive their charitable matching donation
will, in effect, receive two benefits in return for their
contribution - (1) the charitable matching donation made in
their name under the Charitable Matching Program and (2) the
token gift they will receive under the United Way Program.4
As set forth above, if certain guidelines are followed,
providing either of these benefits separately in return for
contributions to a corporation's SSF would be permissible
under the Act. The charitable matching donation is
permissible under the Commission's advisory opinions cited
above, and the token gift is permissible under the "one-
third" rule set forth at 11 CFR 114.5(b)(2). Your request
raises the question of whether providing these two benefits
together would violate the Act.
As explained above, in permitting corporations to
implement charitable matching plans like the one at issue in
this request, the Commission has determined that the
matching donations are solicitation expenses and do not
provide any tangible benefit to the contributing employee.
The Commission does not believe that the additional benefit
to the employee represented by the token gift or prize, of
beer, a beer stein, a plaque or a wall print, which he or
she would receive under the United Way Program, alters the
nature of the charitable matching donation so as to make it
a tangible benefit to the employee. Likewise, if receipt of
a token gift or prize of less than one-third the value of
the contribution, standing alone, does not amount to the
exchange of corporate treasury money for voluntary
contributions, the Commission does not believe that such a
token gift or prize, when combined with the receipt of a
charitable matching donation, would amount to the exchange
of corporate treasury money for voluntary contributions.
Consequently, the Commission concludes that A-B may count
donations made to the United Way under the Charitable
Matching Program toward an employee's eligibility to receive
a prize under the United Way Program.
The Commission expresses no opinion regarding any
implications of the proposed matching charitable contribution
plan under the Internal Revenue Code because those issues are
outside the Commission's jurisdiction.
This response constitutes an advisory opinion concerning the
application of the Act and Commission regulations to the specific
transaction or activity set forth in your request. See 2 U.S.C.
437f. The Commission emphasizes that, if there is a change in
any of the facts or assumptions presented, and such facts or
assumptions are material to a conclusion presented in this
advisory opinion, then the requestor may not rely on that
conclusion as support for its proposed activity.
Sincerely,
(signed)
Ellen L. Weintraub
Chair
Enclosures: (AOs 2003-4, 1994-7, 1994-6, 1994-3, 1990-6,
1989-9, 1989-7, 1988-48, 1987-18, 1986-44, and 1981-40)
_______________________________
1 You state that, pending to outcome of this advisory opinion
request, A-B has ceased its practice of counting the Charitable
Matching Program donations it makes to the United Way toward the
United Way Program prize thresholds.
2 See also Advisory Opinions 1994-7, 1994-6 and 1994-3, where
the Commission considered and approved the use of matching
charitable contribution plans for employees who are only
solicitable under the twice yearly procedures, provided that all
other Commission regulations applicable to the solicitation of
these personnel (that is, employees outside the restricted class)
are followed.
3 The Commission's conclusion regarding matching charitable
contributions by separate segregated funds is consistent with the
Internal Revenue Code's treatment of the tax consequences of such
programs. The Internal Revenue Service has concluded that a
matching charitable contribution plan grant to a section
501(c)(3) organization should not be recharacterized as payment
of compensation to the employee and a subsequent payment by the
employee to the section 501(c)(3) organization. G.C.M. 39,877
(August 27, 1992); Rev. Rul. 67-137, 1967-1 C.B. 63. The
Internal Revenue Service has also concluded that the corporation
may not receive a tax deduction for matching charitable donations
it makes. G.C.M. 39,877.
4 It is not clear how many A-B employees will be entitled to
receive these combined benefits. Your letter indicates that in
2002, when A-B counted donations made to the United Way under the
Charitable Matching Program toward the thresholds for prizes
under the United Way Program, less than twenty percent of the
employees contributing to AB-PAC designated the United Way to
receive their charitable matching donation.