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Interpretative Opinion 08-03: Solicitation of Funds

December 29, 2008

Dawn Cromer
3330 Denver Street, S.E.
Washington, D.C. 20020

Re: Inaugural Celebration

Dear Ms. Cromer:

This responds to your request for an interpretative opinion concerning your ability “to establish an independent limited liability corporation or an incorporated company to raise money for an inaugural celebration party on behalf of At-Large Councilmember Kwame R. Brown.” You state that “[t]he proposed company will be called District Inaugural, Inc. or District Inaugural, LLC” and that “Councilmember Brown will have no interest or control of the entity but will raise money for the company to support the celebration.” In several instances, you maintain that this prospective corporate entity will follow all federal and District tax laws.

Additionally, you note that I discussed this matter with your representative. You are correct. I spoke at length on this matter with Che Brown.

Among other things, I advised him that so long as the entity is one which is outside of the jurisdiction of the Office of Campaign Finance (OCF), “the entity would not be required to report to OCF any monies raised or expenditures.” According to your letter, I further advised that “Councilmember Brown would be able to raise money for the entity to put on the inaugural celebration on behalf of the citizens of the District of Columbia.”

D.C. Official Code §1-1106(c) (2001 Edition) states, “No person shall offer or give to a public official or a member of a public official’s household, and no public official shall solicit or receive anything of value, including a gift, favor, service, loan gratuity, discount, hospitality, political contribution, or promise of future employment, based on any understanding that such public official’s official actions or judgment or vote would be influenced thereby, or where it could reasonably be inferred that the thing of value would influence the public official in the discharge of his or her duties, or as a reward, except for political contributions publicly reported pursuant to [the Campaign Finance Act] and transactions made in the ordinary course of business of the person offering or giving the thing of value.”

Pursuant to 18 DPM §1803.2 of the Standards, “[a] District employee shall not solicit or accept, either directly or through the intercession of others, any gift from a prohibited source [which is] any person or entity that: (1) [h]as or is seeking to obtain contractual or other business or financial relations with the District government; (2) [c]onducts operations or activities that are subject to regulation by the District government; or (3) [h]as an interest that may be favorably affected by the performance or non-performance of the employee’s official responsibilities.”

The Standards also provide at §1804.1 that “[a]n employee may not engage in any outside employment or other activity which is not compatible with the full and proper discharge of his or her duties and responsibility as a government employee. Activities or actions which are not compatible with government employment include, but are not limited to, the following: (a) [e]ngaging in any. . .interest which may interfere with the employee’s ability to perform his or her job, or which may impair the efficient operation of the District of Columbia government; (b) [u]sing government time or resources for other than official business, or government approved or sponsored activities[.]”

The inaugural events are designed to memorialize the installation of the nation’s President and other District public officials elected to office. Because OCF views these inaugural events as government-sponsored events, the prohibitions within the Standards, as applied to Councilmember Kwame R. Brown (Councilmember Brown) and any other participating District government officials, would not apply. These events are a part of the D.C. Council’s governmental responsibilities and therefore fall outside of the Standards. Accordingly, OCF has no jurisdiction over the scope, content or site of any inaugural events.

However, based upon the nature of the entity, Councilmember Brown may be constrained from raising money for the proposed company because it will be a corporation which could be operated at the direction of Councilmember Brown. If that becomes the case, the corporation is placed in the position of circumventing the citizen-service program established by Councilmember Brown.

Under D.C. Official Code §1-1104.03, “The Mayor, the Chairman of the Council, and each member of the Council may establish citizen-service programs[.]” Pursuant to 3 D.C.M.R. §3014.1, “A citizen-service program shall encompass any activity or program which provides services to the resident of the District of Columbia; and promotes their general welfare, including, but not limited to, charitable, scientific, educational, medical or recreational purposes.” The only stated restriction is that participation in any type of campaign activity or distribution of campaign literature and related items is prohibited.

Since an “expenditure,” pursuant to D.C. Official Code §1-1101(7), is defined, among other things, as “made for the purpose of financing, directly or indirectly, the election campaign of a candidate or any operations of a political committee involved in such a campaign. . .”, for your information, citizen-service funds may be used to pay for

inaugural activities. Specifically, an inauguration occurs after the campaign and the election.

You should be mindful that if the corporation is created for the sole purpose of providing an inaugural celebration for Councilmember Brown and the corporation takes direction from Councilmember Brown, then the corporation runs afoul of the Campaign Finance Act, with regard to the citizen-service program. This occurrence may be precipitated because, as stated, only certain public officials may establish citizen-service programs to house discretionary funds for each public official to use for the general welfare of the constituency; and, each citizen-service program is wholly operated by the affected public official.

The corporation’s offense could conceivably occur if it is subject to the direction of a public official allowed to establish a citizen-service program, and the corporation contributes and expends monies to the public official, in a manner similar to the citizen service program. Conversely, unlike the corporation, the citizen-service program is subject to statutory limitations and public disclosure. Id.

In sum, the Campaign Finance Act does not preclude an individual or a group of citizens from forming a corporation for the purpose of providing an inaugural celebration for a public official, and inviting the support of the public official, when the activity is not coordinated out of the office of the public official, and the public official does not control the fundraising operations or the funds contributed. Such an entity would not be regulated by OCF. Otherwise, the activity may be viewed as one within the parameters of those activities sanctioned by the citizen-service program.

To recap, the inaugural events are part and parcel of public and government-sponsored activities. So long as Councilmember Brown is participating in these events as a component of his government responsibilities, his conduct falls outside of the Campaign Finance Act

and the Standards. Nonetheless, if his involvement in any of the events was to further a personal or private interest, the statutory and regulatory prohibitions would apply.

This is an Interpretative Opinion of the Office of Campaign Finance. Pursuant to D.C. Official Code §1-1103.05(c)(1), you are entitled to request an advisory opinion from the Board of Elections and Ethics on this transaction or activity. If you have any questions, please contact Kathy S. Williams, General Counsel, on 202/671-0554.