NASBIC Political Action Committee

¨     What is NASBIC PAC?

NASBIC PAC is a Political Action Committee registered with and regulated by the Federal Election Commission (FEC).  Its sole purpose is to raise money in support of individuals seeking election or re-election to the U.S. Senate or the U.S. House of Representatives who are—or are likely to be—supporters of the SBIC program in general or supporters of positions on other issues or initiatives important to NASBIC’s SBIC members.  NASBIC PAC is a distinct legal entity and not a division of NASBIC.  However, as permitted by FEC rules, NASBIC contributes the space, personnel, and logistical support necessary to operate NASBIC PAC.

¨     Why is NASBIC PAC important to NASBIC Members?

The SBIC program requires the passage of legislation on an almost yearly schedule.  Sometimes the legislation required is the reauthorization of the basic program itself.  Other legislation often involves leverage availability (required yearly) or operational issues.  Some of the successes include:

§         billons in available leverage;

§         the right to control a portfolio company from time of investment; and

§         a minimum required period of investment of just one year, not the original 5 years.

Each of the examples required specific congressional champions and, of equal importance, a general acceptance of the benefits of the SBIC program by congressional leaders and rank and file members.  Without these champions, achieving goals we now take for granted would have been impossible.  Supporting those who support the SBIC program is critical to the continuation and improvement of the program.  NASBIC PAC turns contributions into effective tools in that process.

¨     How do NASBIC PAC contributions involve us in the political process?

First, PAC contributions to candidates (whether incumbents or challengers) help pay the costs of running a congressional campaign.  Without adequate funds, congressional candidates cannot survive the election process.  Costs can be substantial, with a Senate race running as much as      $20 million or more and a House race requiring $1 million or more.  For a $20 million Senate race and incumbent Senator would have to raise as much as $9,000 per day for each of the six years he or she was in office to run for re-election for another six-year term.  For a House member it can easily be $1,500 or more per day for the two-year cycle.  To say congressional members spend time fundraising is an understatement.  This is particularly so because candidates can accept no more than $2,000 from one individual or $5,000 from one PAC for any single election.  Each election cycle has both a primary and a general election.  Thus, the maximum contribution limits are $4,000 for individuals and $10,000 for PACs for each election cycle.                                             (over)

Secondly, NASBIC PAC contributions involve us in the political process in a less obvious, but equally important, if not more important manner.  Candidates raise money by direct solicitations or at personal fundraising events.  In the latter case, only those who make contributions may attend.  NASBIC PAC contributions are almost always made in connection with fundraising events.  The events provide us with the opportunity to speak with congressional members in informal settings more conducive to building personal relationships than are 15-minute office visits shoehorned into a busy schedule.  Personal relationships often spell the difference between success and failure.    

¨     Can my SBIC management company contribute to NASBIC PAC? 

The answer is yes in most cases.  Individuals, partnerships, and limited liability companies that are taxed as partnerships may contribute to NASBIC PAC.  Partnerships and eligible LLCs that contribute more than $200 to a PAC must allocate the contributions among individual partners or shareholders.  One PAC may also contribute to another PAC.  “S” and “C” Corporations may not make PAC contributions.  Finally, although it is legal for a partnership or eligible LLC holding an SBIC license to make political contributions, NASBIC suggests that eligible SBICs that wish to make partnership or LLC contributions do so through eligible management companies.  Contributions to NASBIC PAC are not deductible for federal income tax purposes.

¨     What are PAC contribution limits and how are contributions reported?

For 2008-2009, individuals may contribute no more than $5,000 per year to any one PAC—subject to the further limitation that no individual may make more than $108,200 in contributions over the  two-year cycle to a combination of individual candidates ($42,700) and political organizations or PACs ($65,500).  PAC-to-PAC contributions may not exceed $5,000 per year.  NASBIC PAC must report all contributions it receives and all contributions it makes to candidates to the Federal Election Commission.  For a contribution to NASBIC PAC equal to or less than $200, only the total dollar amount must be reported.  For a contribution in excess of $200, both the contribution amount and the identity of the contributor must be reported.  The reports are public documents.

¨     Can NASBIC use its own money to contribute to individual candidates?

No.  Candidates can pay campaign expenses only with individual assets or with contributions from individuals, qualified partnerships or LLCs, or qualified PACs.  Money from these sources is “hard money.”  So-called “soft money” that is contributed to political organizations or committees from “non-qualified” organizations like NASBIC or businesses corporations is used primarily for issue advocacy.  Issue advocacy cannot promote individual candidates directly.

¨      What is the process that leads to a contribution to NASBIC PAC?

Individuals may contribute based on their own initiative.  However, no individual may be solicited by a PAC representative without the written consent of an individual designated as the primary contact for the NASBIC-member organization of which the individual is a part.  Once a decision to contribute is made, the contribution should be made by check or credit card.

¨     Who manages NASBIC PAC and makes political contribution decisions?

Decisions on political contributions are generally made by Brett Palmer in consultation with NASBIC’s political consultants pursuant to a contribution plan reviewed periodically by NASBIC’s Board of Governors.

For more information contact Brett Palmer at 202-628-5055 or bpalmer@nasbic.org.