June 4, 2020

Candidates and committees should prepare for a new requirement taking effect June 11 that will affect the receipt, reporting and handling of contributions as well as the reporting of certain expenditure activity.

What has happened?

The change stems from the Legislature's passage of Substitute Senate Bill 6152 dealing with foreign involvement and financing in campaign activities. The new law prohibits foreign national financing or involvement in campaign-related contribution or expenditure activity. The law also requires entities to certify that any contributions they make do not include any foreign national funding or involvement. 

To assist candidates and committees with compliance, the Commission adopted emergency rules after considering comments received during a brief window for submission in May. 

The emergency rules will apply through the 2020 election cycle as state law prohibits the PDC from implementing new rules from June 30 through the November election. The PDC anticipates opening permanent rulemaking, to include additional opportunities for public comment, this fall. 

What does the new law say?

No contribution, expenditure, political advertising, or electioneering communication may be made or sponsored by a foreign national, financed in any part by a foreign national, or have a foreign national involved in the decision-making in any way. 

What does that mean?

In short, foreign nationals cannot be involved in financing or making decisions about financing electoral activities.

A contribution, expenditure, political advertising, or electioneering communication is "financed in any part by a foreign national" if the person making the contribution or expenditure, or sponsoring the advertisement or communication, uses a funding source that includes, in whole or in part, anything of value received from a foreign national for less than full consideration. Such value may include, but is not limited to, a loan, gift, deposit, subscription, forgiveness of indebtedness, donation, advance, pledge, payment, transfer of funds, or goods and services.

A foreign national is "involved in making decisions regarding the contribution, expenditure, political advertising, or electioneering communication in any way" if the foreign national directs, dictates, controls, or directly or indirectly participates in the decision-making process regarding any such contribution, expenditure, advertisement, or communication.

A foreign national is defined as any foreign citizen (not including those with permanent resident status in the U.S.), a foreign government or political party, or any entity, such as a partnership, association, corporation,  organization, or combination of persons, organized or having its principal place of business in a foreign country. 

What will change regarding contributions?

Candidates and committees will be required to collect a statement (known as the "certification") from certain contributors confirming that:

  1. They are not organized under the laws of or headquartered in a foreign country, and
  2. That the contribution is not financed in any part by a foreign national, and foreign nationals were not involved in making decisions regarding the contribution in any way.

The Commission offers a sample certification in its emergency rules, but committees can design their own provided it has this information:

  • The name of the entity making the contribution and the authorized agent;
  • A statement that the entity is not a foreign national, as defined in RCW 42.17A.005(24);
  • A statement that the contribution is not financed in any part by a foreign national;
  • A statement that foreign nationals were not involved in making decisions regarding the contribution in any way;
  • The amount of the contribution and the date it was made; and
  • The date the certification was submitted.

Which contributions does the law apply to?

The law will apply to contributions made on or after June 11.

Are all contributions required to have a certification? 

No, only those that are made by non-individuals. Campaigns must collect the certifications for any contributions made by businesses, associations, organizations, unions and all other entities and groups.

What about contributors that are themselves a political committee?

A political committee receiving a contribution from another political committee is required to collect the certification.  Even if the contributing PAC’s entire funding source is made of contributions that included certifications, that PAC is also certifying that no foreign national was involved in the decision-making regarding the contribution it makes to another PAC.  

How much time does a candidate or committee have to collect the certification from the contributor?

The PDC strongly encourages candidates and committees to collect the certifications at the time contributions are made, and to work with online payment vendors to incorporate this new process into contribution processing.

Deadlines for collecting the certification after receipt vary depending on reporting deadlines and how the contribution is handled.

All contributions must be deposited within five business days of receipt, even if that is prior to the candidate or committee receiving the contributor's certification attesting to no foreign ownership or involvement.

Under the emergency rules, the candidate or committee that is waiting for the contributor's certification can either:

  1. Hold the contribution in its regular bank account until the next PDC report is due, or for 10 days, whichever is later, or
  2. It can segregate the contribution to prevent it from commingling with other contributions for up to 30 days. 

Who should certify on behalf of the contributor or IE sponsor? 

The person authorized to make the contribution or expense.

What date should be on the certification?

The "date of contribution" is the postmark date for mailed contributions, the delivery date for hand-delivered contributions, and the transmittal date for digital contributions.

What do I do with the certifications once I receive them?

Candidates and committees should retain them for three years from the date of the general election in the year it was made. They will attest when submitting C-3s, C-4s and C-5s that they have received the certifications from contributors where required.  

Users of the PDC's Online Reporting of Campaign Activity (ORCA) system will agree to the attestation when they submit reports. Users of third-party campaign finance reporting systems should check with their providers to make sure they are meeting the requirements of the law.

What happens if I don't get a certification from a contributor even after the allowable waiting period?

If the contributor's certification is not received within the timelines above, the contribution should be returned to avoid being in violation of the law. 

ORCA users will follow the instructions on how to refund a contribution after the C-3 has been filed. 

What if our committee receives monthly contributions from the same entities? Do we need to collect a certification each time?

The law requires a committee to collect a certification for each contribution received. If an entity schedules a regularly recurring contribution using the same source of funding, it can provide a single certification to apply to each recurring payment, so long as there are no changes to the amount or timing of the recurring contribution.  A new certification will be required if there are any changes to the funding source or decision-making regarding the recurring payments. Committees should obtain a new certification for recurring contributions at least annually.  

How does this apply to out-of-state committee that make contributions to a Washington state candidate or political committee?

Such committees file C-5 reports disclosing the name and address of Washington state contributors giving more than $25 as well as the name and address of contributors residing outside of Washington state who made contributions of more than $2,680 in the aggregate during the current calendar year. Those committees will have to collect certifications from any of those contributors who are not individuals.

How does this apply to sponsors of independent expenditures and electioneering communications?

They will have to attest on a C-6 report that the expenditure was not financed by a foreign national and that foreign nationals were not involved in making decisions regarding the expenditure.

What counts when determining whether a contribution or expenditure is financed or influenced by a foreign national? What about a company with foreign shareholders?

The shareholder interest in a company or source(s) of revenue are not elements of the definition of a "foreign national" under the new law. Furthermore, the rules do not contemplate that general investment or revenue collected by an organization alone constitutes financing for purposes of political spending. However, any foreign ownership interest or business relationship may not become involved in the decision-making of any political spending by the entity, and any payments received for less than full consideration from foreign nationals must be segregated from any political funding source.    

What about an association with foreign members?

An organization with members who are foreign nationals would have to separate those members from the decision-making of any political spending or the financing of any segregated political funding source.  

Or a foreign company with a domestic subsidiary?

A domestic subsidiary of a foreign national parent may make contributions or expenditures in state or local elections provided the contributions or expenditures are not derived from the foreign parent's funding of the subsidiary and no foreign national has any decision-making authority or involvement concerning the contribution or expenditure. 

How does this new law affect existing federal law?

The enactment of this new state law will have no effect on the longstanding federal prohibition on foreign national spending in federal, state, or local elections. Committees and candidates should continue to monitor and consult with the Federal Elections Commission for compliance with federal law. The FEC provides helpful guidance on federal regulation of foreign national participation in elections available at www.fec.gov/updates/foreign-nationals.

Can I get help?

The PDC will continue to update this guidance as necessary. Got a question that isn't answered here? Send it to pdc@pdc.wa.gov.