March 20, 2018
By Lindsay Fountain
Every campaign is looking to save money. You may have a friend who will cater your events for free. Perhaps a supporter who wants to donate t-shirts for all of your volunteers. Maybe a local car dealer wants to lend you a car for use on the campaign trail.
These are all wonderful, but each is an in-kind contribution and can be a fundraising pitfall if not handled correctly. When someone gives you a contribution (something of value) that isn’t cash, or sells your campaign something for less than market value, it’s an in-kind contribution.
You might’ve heard of in-kind contributions for the first time while reading our Political Dictionary. If you’ve done your own research into in-kind contributions (and by ‘“research,” we mean a brief Google search), most of what you found probably told you to beware. Maybe what you read told you to avoid them entirely.
While it’s good to be cautious and careful when accepting in-kind contributions, you shouldn’t be afraid of them. What’s important is to know is: what an in-kind contribution is, how it gets triggered, and what you have to do to report it in order to keep things kosher with your election authority.
What Exactly Is an In-Kind Contribution?
Here’s how the Federal Election Commission defines an in-kind contribution:
A non-monetary contribution. Goods or services offered free or at less than the usual charge result in an in-kind contribution. Similarly, when a person or entity pays on the committee’s behalf, the payment is an in-kind contribution. An expenditure made by any person or entity in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate is also considered an in-kind contribution to the candidate.
Okay. That’s a lot. But really, in-kind contributions are simple.
How Is an In-Kind Contribution Triggered?
Anything given or sold for less than market value to your campaign to help you get elected is an in-kind contribution. Here are some examples:
- Goods: office equipment, computers, software, furniture, commercial food or drinks
- Services: meeting or event space, catering
- Cash equivalents: stocks, bonds, mutual funds
- Discounts: good or services offered to you at a lower rate than the normal charge
These are just a few examples. There are a large variety of possibilities of items that would qualify as in-kind contributions when donated to your campaign.
Generally, one thing that does NOT qualify as an in-kind contribution is volunteer time. When your PR guru friend writes your press release off the clock, she’s volunteering for your campaign, not making an in-kind contribution. As long as no one else is paying a volunteer for the work they’re doing for your campaign, it’s volunteering and you don’t have to worry about reporting it.
However, if the PR firm she works for says they’ll handle your media relations for free, then the firm might be making an in-kind contribution. However, in most places, legal and accounting services can be provided in-kind without limit. For the specifics of what counts as an in-kind contribution for your campaign, check with your election authority.
What Are the Limits of an In-Kind Contribution?
The important thing to remember is that any in-kind contribution given to your campaign is subject to the same laws and limits as monetary contributions. You have to file reports on them just like you do for donations.
This means if you cannot accept corporate contributions, you cannot accept an in-kind from a corporation. It also means that the value of the in-kind cannot exceed the contribution limit for your race.
Here’s an example.
Let’s say you’re running for city council in Pawnee and by law there is a $2,000 contribution limit. Let’s also say you have a friend who charges $500 for catering events in your district. They want to cater your event for free and do so. Wonderful! You would report a $500 in-kind contribution from the individual on your next campaign finance report.
Let’s keep the same example and say your friend caters 4 more events for you. That’s $2,500 in total in-kind contributions. Now we have a problem. Your friend is over the legal contribution limit. You must pay (actually refund) $500. It would be no different than trying to accept a check for $2,500.
How do I Report In-Kind Contributions?
The biggest piece of information you need to know is the market value of the contribution you’re receiving. The in-kind contribution you receive has to match up with its fair market value, which must be a real amount, and not some value that you’ve arbitrarily assigned to it:
- Goods have to valued at the normal purchase or rental price.
- Services are valued at the commercial rate at the time the service is rendered (basically, the amount you would’ve had to pay for the service if you hadn’t received it as a contribution).
- Discounts that you might receive on goods or services are also considered in-kind contributions and have to be reported: the contribution to report would be the difference between the normal charge for the product and the amount you actually paid for it.
The specific forms you’re going to use to report in-kind contributions are going to vary depending on the state you’re running in and likely the office you’re running for. You can take a look at the FEC’s guide on how to report in-kind contributions to get a sense of what you’ll likely be dealing with.
In-Kind Contributions are Election-Specific
One other very important thing to be aware of: you can only take the contribution in the election it’s going to be used for.
This is straightforward — in most places, the things you receive during the primary election can only be used in the primary. The things you receive in the general election can only be used in the general.
With traditional contributions, a donor can write a check for the primary and general election maximums at the same time. Not so for in-kinds.
Let’s go back to our previous example. If your contribution limit is $2,000 per election ($2,000 for the primary and $2,000 for the general), an individual can only give you up to $2,000 in in-kind contributions in the primary. There’s no giving in advance, like with regular contributions.
This rule prevents people from running campaigns in the primary and stockpiling goods and services. Then they could use them for their own personal use even if they don’t run in the general election.
Exceptions to the Rules
Federal and many state laws provides for certain exceptions from the general rule of treating anything of value as an in-kind contribution.
Legal and Accounting Expenses: Most jurisdictions allow for unlimited accounting and legal assistance.
Volunteer Assistance: An individual may volunteer unlimited amounts of unpaid time on a campaign.
Personal Hospitality: Some jurisdictions may also allow certain exemptions for personal hospitality. This means if someone hosts an event for the candidate in their own home, they don’t have report the food, drink, etc. This is usually capped at $1,000.
As always, be certain to know the laws governing your own election and how they apply to your own in-kind contributions.
In-Kind Contributions are Part of the Larger Financial Picture
The financial aspect of campaigns can be daunting, but fret not! NDTC has your back.
Also make sure you check out our live training calendar, to see if we are hosting a live training near you anytime soon.