Although the weather is getting colder as winter approaches, campaign finance activity is heating up as the 2020 election gets closer. We’re officially less than a year away!
These next couple of weeks before and just after the new year are a perfect time for campaigns and PACs to set a solid foundation heading into the 2020 election and to make sure they haven’t overlooked any of the financial basics that can derail their political strategy in the heat of an election. Here are 3 steps campaigns and PACs should check off their list before the race to get more money and general chaos of Election 2020 ensues.
1. Create a budget.
One of the fundamentals for any organization is to have a budget. It doesn’t need to be overly complex or sophisticated. Laying out your expected revenue and expenses will guide your campaign and PAC by providing you benchmarks to measure success.
A campaign budget should outline:
· Quarterly fundraising revenue targets split between PAC and non-PAC donors
· Expected costs like office rent, payroll, consultants, and advertising
· Projected cash-on-hand for the year
Take a look at our sample budget here for a guide.
Corporate PACs should also budget their PAC activity. They can forecast revenue each month based off the employees that are enrolled in their payroll deduction program. That will in turn help the PAC ensure they have enough money to fund all the political contributions to candidates they support through 2020.
2. Make sure your accounts reconcile.
If you’re not sure what it means to reconcile an account, please call us immediately! This is a relatively easy two-prong process but one that surprisingly campaigns and PACs that don’t hire compliance firms like CFS fail to do regularly.
Reconciling an account means to verify your accounting records (and hopefully you are using accounting software and not a spreadsheet…) against your bank and other financial statements. Just reviewing your bank statement alone is not enough. Reconciliation should be done every month.
Second, campaigns and PACs must also then ensure those reconciliations match what is on the FEC report. A financial discrepancy between your FEC report and your accounting and banking records can be extremely difficult (AKA expensive) to identify and fix. And that’s not even accounting for any penalties the FEC may issue because you filed inaccurate reports.
3. Double check that all your taxes are paid.
While campaigns and PACs are exempt from some IRS and state taxes (i.e. income taxes), they are not exempt from everything. Political committees that have employees need to make sure:
· All quarterly payroll filings are filed and fully paid (including IRS Form 941 and 940)
· All W-2s are collected
· File 1120 POL if the campaign or PAC earns interest
· All contractors are issued a 1099
Failure to file or pay can incur serious IRS penalties and be a headache (again AKA expensive) to fix. And then you also may have to deal with the FEC who can tack on even more civil penalties or request an audit of your political committees’ records.
You’ll be busy in 2020. So, use this time to take care of these 3 steps. Need help? Then give us a call. At CFS we take great care to make sure the compliance and financial management is done right. We can independently review your accounts and records to make sure the numbers match and the compliance is right. We can also take all of this off your plate so you can focus on winning the election or executing your government affairs strategy in 2020.