Committees are subject to a number of restrictions on the use of their funds. Generally, committee funds must be used for campaign, and not personal, purposes. There are further restrictions on the use of a candidate-controlled committee’s funds. All restrictions are set forth in the FPPC and Ethics Commission manuals.
Importantly, all contributions to City candidates are limited to $500 and committees must use funds received from non-corporate donors to make contributions to candidates. Committees sponsored by certain contractors who are negotiating or recently negotiated a City contract are also prohibited from making a contribution to City candidates.
A full explanation on applicable limits for candidate contributions can be found in the Commission’s guide for contributors.
Use of Campaign Funds
The general rule is that the expenditure of campaign funds must be reasonably related to a political, legislative, or governmental purpose. A controlled committee may not use campaign funds to support or oppose a candidate, including the controlling candidate.
A campaign expenditure that confers a substantial personal benefit on any individual authorized to approve campaign expenditures, a controlling candidate, or a state ballot measure proponent, must be directly related to a political, legislative, or governmental purpose. A substantial personal benefit means an expenditure of campaign funds which results in a direct personal benefit with a value of more than $200.
Ballot measure committees should also consult Elections Code Section 18680, which provides that ballot measure funds are held in trust for use on the measure and specifies permissible expenditures. Under Elections Code Section 18680, expenditures for food, clothing, shelter and other personal needs of the trustee are not permissible.
Campaign funds may not be commingled with any individual’s personal funds; they must be kept in an account separate from any account that contains personal funds. Campaign funds may not be used for personal expenses.
For examples on uses of campaign funds, see FPPC Manual 3 Ballot Measure Committees or Manual 4 General Purpose Committees.
Ballot Measure Committee Surplus Funds
The campaign funds of a committee primarily formed to support or oppose a measure in San Francisco become surplus at the end of the post-election reporting period following the election at which the measure appeared on the ballot. Surplus funds can be used only for the following purposes:
- returned on a “last-in, first-out” basis to contributors;
- donated to a charitable organization;
- donated to the City and County of San Francisco;
- used to pay outstanding campaign debts or accrued expenses; or
- used to pay expenses associated with terminating the committee, such as bookkeeping, legal fees, preparation of campaign statements, and audits.
Prohibition on Contributions from Contractors Doing Business with the City
A person who contracts with the City and County of San Francisco, a state agency on whose board an appointee of a City elective officer serves, the San Francisco Unified School District, or the San Francisco Community College District may not make a contribution to:
- an individual holding a City elective office if the contract must be approved by such individual, the board on which that individual serves or a state agency on whose board an appointee of that individual serves;
- a candidate for the office held by such individual; or
- a committee controlled by such individual or candidate.
The restriction applies when:
- the City and County of San Francisco, a state agency on whose board an appointee of a City elective officer serves, the San Francisco Unified School District, or the San Francisco Community College District is a party to the contract,
- the contract or series of contracts in the same fiscal year has a total anticipated or actual value of $100,000 or more in a fiscal year, and
- the City elective officer, a board on which that officer serves, or the board of a state agency on which the officer’s appointee serves must approve that contract or series of contracts. The ban goes into effect when negotiations commence. For officeholders, candidates and their controlled committees, the ban on receiving contributions from contractors begins when the contract is submitted for approval.
The restriction begins at submission of proposal for a qualifying contract, and ends when either the parties terminate contract negotiations or twelve months have elapsed from the date the contract is approved.* During this period, a contribution may not be made from the following persons:
- any party or prospective party to the contract,
- the contracting party’s board of directors, its chairperson, chief executive officer, chief financial officer, chief operating officer,
- any person with an ownership interest of more than 10 percent in the contracting party,
- any subcontractor listed in the contract, and
- any committee that is sponsored or controlled by the contracting party.
*For unsuccessful bidders, the restriction ends at the time the contract is awarded.
Prohibition on Soliciting or Accepting Contributions by Persons with Pending Land Use Matters
Pursuant to C&GC Code section 1.127(c)(1), no member of the Board of Supervisors, the Mayor, the City Attorney, candidates for such offices, or controlled committees of such officers and candidates may accept or solicit any contribution by a person or affiliated entity with a financial interest in a property or project subject to a land use matter pending before the Board of Appeals, Board of Supervisors, Building Inspection Commission, Commission on Community Investment and Infrastructure, Historic Preservation Commission, Planning Commission, Port Commission, or Treasure Island Development Authority Board of Directors, from contributing any amount to a member of the Board of Supervisors, the Mayor, and the City Attorney, as well as, candidates for such offices, and committees controlled by such officers.
For the purposes of 1.127, a person or affiliated entity has a financial interest if they meet one of the following criteria:
- has an ownership interest of $5 million or more in a property or project;
- holds the position of director or principal officer, or are a member of the Board of Directors for an entity that has an ownership interest of $5 million or more in a property or project; or
- is a developer with an estimated construction costs of at least $5 million in a property or project that is subject to a Land Use Matter.
A person’s primary residence is not subject to the prohibitions of this section.
Restrictions and Disqualification from Voting Based on Contributions to Elected Officials, Department Heads and Appointed Officials
California Government Code section 84308 prohibits elected officials, department heads and members of appointed boards and commissions from soliciting or accepting contributions in excess of $250 from persons who are parties to, or participants in, proceedings pending before them, and from making decisions affecting a source of campaign contributions of more than $250.
If an official received a campaign contribution of more than $250 from a party or participant with a financial interest in a proceeding, the official must recuse from participating in the matter, unless they cure the violation within a designated timeframe.
Section 84308 applies to elected officials, department heads and appointed boards and commissions.
The prohibition under Section 84308 applies:
- while a proceeding is pending before the officer’s agency; and
- for twelve months following the date of the decision.
For additional information on the ban and disqualification, please see this notice or contact the FPPC.