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Club Manual

Finance and Legal Compliance

Political activity is regulated at the federal, state, and local levels. Clubs that spend funds on campaign efforts, including financial contributions, must do their due diligence to ensure compliance with all applicable laws. Clubs are responsible for filing any required financial reports.

Filing as a State Political Committee

Under California law, any organization that receives contributions totaling $2,000 or more in a calendar year to spend in connection with state or local elections must file as a “general purpose recipient committee” with Secretary of State. This includes monetary or in-kind contributions to state or local candidates or ballot measures, public communications supporting or opposing campaigns, or any other expenditures made for political purposes, including voter registration. A club must file a Statement of Organization (FPPC Form 410) with the Secretary of State within ten days of reaching $2,000 in political fundraising or spending in a calendar year.

For most clubs that spend their funds on organizational expenses (room rentals, refreshments, postage, technology, etc.) rather than political expenses (campaign mailers, candidate contributions, voter registration), it is easy to avoid reaching that threshold.

For those that do file with the state, a Recipient Committee Campaign Statement (FPPC Form 460) must be filed periodically listing contributions, expenditures, and cash on hand for each reporting period. A Late Contribution Report (FPPC Form 497) must be made within 24 hours of an aggregate $1,000 contribution to a state/local candidate or a party committee within 90 days of a state election. A fine may be imposed for each day a report is late past the deadline.

Here are some additional state campaign-finance requirements:

Public communications for or against state/local candidates must include the legible name and address of the committee.

Fundraising solicitations (including for dues) must request the donor’s name, physical address, occupation, and employer.

Anonymous contributions of $100 or more are prohibited.

Individual contributions aggregating to $100 or more in a year must include occupation/employer or else be returned in 60 days.

A committee may not accept cash contributions or make cash payments of $100 or more.

A committee may not keep cash assets of $100 or more.

Copies of all payments, receipts, and documents related to contributions must be kept for four years.

For more information, go to

www.fppc.ca.gov⁠

or call (866) 275-3772.

Filing as a Federal Political Committee

Any organization that receives or spends $1,000 in a calendar year to influence federal elections must register as a federal committee through the Federal Election Commission (FEC). This includes expenditures that support or oppose the election of any candidate for federal office. (Federal campaigns can accept direct contributions only from individuals and other federal committees.)

Within 10 days of reaching the $1,000 federal threshold, a committee must file a Statement of Organization (FEC Form 1); an FEC ID number will be issued. A bank account must be set up to hold the federally qualified funds. Quarterly or monthly reports on receipts and disbursements (FEC Form 3) must be filed electronically or by mail, and fines may be imposed for reports filed late.

Federal election regulations are exceedingly stringent and complex. For example, within 90 days of a federal election, federal committees must pay certain generic voter registration and GOTV expenses with federal funds. Federal and non-federal funds must be strictly segregated. For more information, go to

www.fec.gov⁠

or call (800) 424-9530.

Local Requirements

Some local jurisdictions (cities, school districts, the County of San Diego) have additional regulations on contributions and or political communications. Contribution limits may apply to amounts and/or sources. For example candidates in the City of San Diego cannot accept a contribution from a club (or any entity other than an individual). Clubs should consult the appropriate authorities whenever considering activities that may fall under local political laws.

Financial Best Practices

There are several financial procedures that, while they or may not be legally required, can help ensure fiscal responsibility, accountability, and transparency for clubs. The SDCDP recommends the following:

Always deposit cash in the bank before spending it.

Count cash at the immediate end of any fundraising event, preferably by two people.

Review bank statements for unauthorized transactions, and reconcile statements with accounting records each month.

Reconcile bank records with disclosure reports prior to filing (if applicable).

Reconciliations should be done by someone other than a check signer.

Limit the number of people who can sign checks.

Checks over a certain amount ($1,000) may be required to have the signatures of two signers.

Individuals who authorize disbursements or sign checks should be identified in writing in the club’s internal policies.

Get invoices and/or receipts for all payments.

Club bylaws should clearly specify what expenditures need approval, and by what entity (e.g., expenses below a certain amount may be approved by the President or Board).

The Treasurer should keep copies of received checks and disbursement forms for reconciliation.

The Board should regularly see bank statements, with income reports included.

If using a petty cash system, keep the allocation less than $100, put one person in charge of distributing the funds, and balance the funds with a written form.

Record receipts as mail is opened, and deposit all contributions within 30 days of receipt (or return, if necessary).

Filing and Reporting is an important requirement for Democratic Clubs.

⁠

2021 Presentation

In May 2021, San Diego County Democratic Party Executive Director, Ryan Hurd, presented about finance fundamentals for Democratic clubs in an updated version of his 2019 presentation. Slides available at link below.

⁠

https://docs.google.com/presentation/d/1wI6RKexdS5m48PKH75520jzVbuN8TnSHwi4WPXT5Luk/edit?usp=sharing⁠

⁠

2019 Presentation

Ryan Hurd’s presentation (June 2019) covers the accounting and compliance considerations for Democratic clubs: whether to open a committee, duties of a treasurer, financial best practices, and common pitfalls to avoid. Club leaders will get a broad overview of their options and obligations in raising and spending money to advance their political goals.

Click to download the slides (PDF)⁠

⁠

2017 Presentation

Xavier Martinez’s (August 2017) presentation explains what’s required for different types of organizations, but doesn’t get into the actual weeds of filing. This explanatory overview should be particularly useful to new clubs and officers not aware of State and Federal filing requirements.

Click to download the slides (PDF)⁠

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