Proposed Legislation Would Expand New Jersey Disclosure Obligations for 501(c)(4)s and Increase Contribution Limits

New Jersey Senate Bill S1500 would, if passed and signed into law, represent the greatest change to New Jersey's campaign-finance law in many years.

The proposed legislation unanimously passed the Senate Budget and Appropriations Committee on January 17, 2019 and would, among other changes, create a new category of New Jersey political committee called an "independent expenditure committee." Although independent expenditure committees may already be required to file regular reports with the New Jersey Election Law Enforcement Commission, under the proposed legislation, an independent expenditure committee would be defined to expressly include 501(c)(4) organizations. Thus, any person or group-specifically including 501(c)(4) social-welfare organizations and IRS 527 political committees-that raises or expends $3,000 or more per year for the purpose of attempting to influence any New Jersey election, public question, or legislation and regulation would be covered. Independent expenditure committees would be required to file regular reports with the New Jersey Election Law Enforcement Commission, disclosing in detail the committee's contributions received and expenditures made. The bill, as currently drafted, would require retroactive disclosures back to January 1, 2018. Although it remains to be seen whether retroactive application would pass legal muster, 501(c)(4)s must now begin considering whether their activities have in the past or will in the future create coverage under New Jersey's possible expanded campaign-finance definitions.

In addition, the bill would increase contribution limits for various New Jersey political recipients. For example, while public New Jersey candidates (other than candidates for governor) are currently subject to a campaign-finance contribution limit of $2,600 per election, the bill would increase this limit to $3,000 per election. Similarly, the contribution limit for state political parties would be increased from $25,000 per calendar year to $28,000 per calendar year. Contributors should keep in mind that these proposed changes are increases to New Jersey's traditional campaign-finance limits and have no impact on the reduced pay-to-play limits that are currently in effect in New Jersey at various levels of government.

As 501(c)(4)s have grown in popularity nationwide, New Jersey has proven to be no exception. This proposed legislation would not only change the calculus for many 501(c)(4) organizations active in New Jersey, but would also change the political landscape for contributors. Although it remains to be seen whether the law will take effect in its current form, given its possible retroactive application, now is the time for politically active organizations, individuals, and companies to evaluate their political activity and make sure they are ready to comply with any changes to the law.

For more information on how you or your company may safely participate in the political process, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group at rfreed@genovaburns.com or 973-230-2075 or Avi Kelin, Esq., Associate in the Corporate Political Activity Law Group at akelin@genovaburns.com or 973-646-3267.