May 5, 2016 •
Ask the Experts – Aggregation of Contribution Limits
Q. My employer is a wholly owned subsidiary of a parent corporation. Does a parent corporation, a subsidiary, or other affiliated entity have its own contribution limit or must the contributions be aggregated and have a shared limit?
A. This is a very important question that must be addressed when making a contribution, particularly when there is a hierarchy to the corporate structure. If a limit is shared, the parent, subsidiary, or other affiliated entity must have an open line of communication when it comes to making political contributions.
In New York, each affiliated or subsidiary corporation, if a separate legal entity, has its own limit.
In California, contributions made by certain combinations of affiliated individuals, entities, and committees must be aggregated. It all comes down to a matter of control:
- The contributions of an entity whose contributions are directed and controlled by any individual must be aggregated with contributions made by that individual and any other entity whose contributions are directed and controlled by the same individual.
- If two or more entities make contributions directed and controlled by a majority of the same persons, the contributions of those entities must be aggregated.
- Contributions made by entities majority-owned by any person must be aggregated with the contributions of the majority owner and all other entities majority-owned by that person, unless those entities act independently in their decision to make contributions.
So in California, a parent and subsidiary share a contribution limit if the decision to make a contribution is directed and controlled by a majority of the same persons. If the parent and subsidiary act wholly independently of each other in deciding to make a contribution, the parent and subsidiary each have their own limit.
In New Jersey, if a corporation has subsidiaries, affiliates, branches, or locals, then the contributions of these organizations cannot exceed the applicable contribution limit in the aggregate. Two or more corporations will be conclusively deemed to be affiliated if:
- Any individual, corporation, partnership, company, association, or other entity owns, directly or indirectly, more than a 30 percent interest in each of such corporations; or
- One such corporation owns, directly or indirectly, more than a 30 percent interest in the other such corporation.
These are just a few examples of aggregation of limits. As we always advise, verify the rules in your state before making political contributions.
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