Mailing Address:

PO Box 27255

Raleigh, NC 27611-7255

(919) 733-7173

Fax (919) 715-0135

January 10, 2002

Mr. Bill James

2010 Draymore Lane

Matthews, NC 28105

Dear Mr. James:

In a letter dated October 11, 2000, Susan Nichols of the Office of the Attorney General determined that certain personal gifts made to Mr. Arthur Griffin, an elected member of the Charlotte-Mecklenburg Board of Education, were not "contributions" governed by and reportable under the campaign finance reporting laws of North Carolina.

By a series of emails beginning in November 2001, and continuing most recently on January 2, 2002, you report that you have received a check for $100 from an entity called "Kearns and Company," which you have not cashed. You state that you are aware that you may not receive political contributions from business entities, but, citing Ms. Nichols's letter, you state further your intention to cash the check and treat it as a personal gift, not a campaign contribution. In that connection, you ask several questions which I will attempt to answer in this opinion.

Because analysis of your questions may be applicable to other potential candidates, I am responding pursuant to the paragraph in N. C. Gen. Stat. 163-278.23 which authorizes the Executive Director of the State Board of Elections to issue opinions to candidates and others. As required by this statute, this opinion will be filed with the Codifier of Rules to be published unedited in the North Carolina Register. This opinion will also be posted on the web page for the State Board of Elections (www.sboe.state.nc.us).

Your series of e-mails beginning in November 2001, present several questions. First, you ask whether your may accept a contribution of $100 from "Kearns and Company" with a residence listed as the business address. You believe the company is owned by a husband and wife and has not been incorporated. Under N. C. Gen. Stat. 163-278.6(6) a contribution is defined as

"any advance, conveyance, deposit, distribution, transfer of funds, loan, payment, gift, pledge or subscription of money or anything of value whatsoever, to a candidate to support or oppose the nomination or election of one or more clearly identified candidates, to a political committee, to a political party, or to a referendum committee, whether or not made in an election year...."

Since you characterize the check from Kearns and Company as a contribution, it must have been given in support of your future candidacy or towards a debt still extent from a previous candidacy.

Your specific concern is whether the campaign finance statutes permit you to accept corporate or other business contributions. Pursuant to N. C. Gen. Stat. 163-278.19, a "corporation, business entity, labor union, professional association or insurance company" is prohibited from making contributions to a candidate. Exceptions to this prohibition include when a corporation forms a political committee and makes contributions through it or the donor is an entity that meets the criteria of N. C. Gen. Stat. 163-278.19(f). The case which you reference, N. C. Right to Life, Inc. v. Bartlett, 168 F.3d 705 (4th Cir. 1999), caused the General Assembly to legislate the exception set forth in 163-278.19(f) but did not otherwise remove the prohibition against business entities making contributions to candidates.

The campaign reporting staff will assume that any report listing a contribution by "Kearns and Company" is a business contribution, even when the address for the company is a residence, unless your obtain assurances from the contributor that he or she is making the contribution from personal funds maintained in a partnership account. Without documentation such as a letter so stating, you should not accept the contribution and if you have deposited it, you should return the contribution.

Your second question is when you are considered a "candidate" for campaign reporting purposes. A "candidate" is defined for the campaign reporting article in N. C. Gen. Stat. 163-278.6(4) as follows:

"The term 'candidate' means any individual who, with respect to a public office...has filed a notice of candidacy or a petition requesting to be a candidate, or has been certified as a nominee of a political party for a vacancy or has otherwise qualified as a candidate in a manner authorized by law, or has received funds or made payments or has given the consent for anyone else to receive funds or transfer anything of value for the purpose of exploring or bringing about that individual's nomination or election to office. . Status as a candidate for the purpose of this Article continues if the individual is receiving contributions to repay loans or cover a deficit or is making expenditures to satisfy obligations from an election already held."

You state in your initial e-mail that you have an open campaign account. The Kearns and Company contribution was apparently intended for it. Your question about the permissibility of accepting a corporate contribution indicates the donation was a political contribution and not a personal gift. The intent of the person or persons making a donation at the time it is given, and the context in which the donation is made, is very important in determining whether it is a political contribution or a personal gift. Now you would like to characterize the contribution from Kearns and Company as a personal gift rather than a campaign contribution. To do so would be inconsistent with the apparent intent of the original contribution. You initially characterized it as a contribution and your e-mail gave no indication that it was a gift to you individually. This is the key distinction between the facts you have posed and those underlying the dinner honoring Arthur Griffin. All the evidence in that situation was that funds in excess of the expenses for the dinner honoring Mr. Griffin might be given to him as a personal gift. The donors of those funds did not intend for them to be used to support or oppose his candidacy for elective office or his duties in office and they were not solicited for that purpose.

You are correct that it is possible for a candidate to undermine the campaign reporting system by accepting gifts from individuals, loaning his or her campaign the same amount of money as the gift, and then maintaining it was never intended to be a political contribution. Quite frankly, the campaign reporting system is dependent on the honesty, integrity, and desire of candidates and their supporters to comply with applicable statutes. It is the intent of the law to regulate and provide disclosure of contributions made to candidates or to elected officials in support "of their duties and activities while in an elected office." N. C. Gen. Stat. 163-278.346. It is not the intent of the campaign reporting statues to regulate personal gifts made to candidates or elected officials by friends and family members for the recipient's personal use. Thus, I appreciate your stated desire to comply with applicable statutes and your forthrightness in characterizing the check you received from Kearns and Company as a contribution and not as a gift. You may not, however, now change its character as a contribution by choosing to "accept" it as a personal gift.

Finally, there are motions pending in the case of N. C. Right to Life, Inc. v. Leake(E.D.N.C. No. 5:99-CV-798-BO(3)). There is no date by which the court must rule on these motions. If the decision on the motions has some bearing on this opinion then I will so inform you. Until you receive notification that this opinion is no longer in effect, you may rely on it as to the facts on which it is based.


Gary O. Bartlett

Executive Secretary

cc: State Board of Elections Members

Kim Westbrook, Deputy Director Campaign Reporting

Peter S. Gilchrist, III, District Attorney for the 26th Prosecutorial District

Molly Masich, Director of APA Services, N. C. Register

Susan K. Nichols, Special Deputy Attorney General

Robert Joyce, Institute of Government

Dot Presser, Former State Board of Elections Member

The following state regulations pages link to this page.