Advisory Opinion 06-06
The Campaign Spending Commission (Commission) in this Advisory Opinion rescinds Advisory Opinion No. 00-08;1 and provides guidance to a committee who receives donated property, including artwork, and sells the property at a fundraiser for more than its reasonable market value.
The Commission determines that
- The committee must report the donation of property as a nonmonetary contribution, and the “reasonable market value” of the contribution on the date received.
- If the property is sold, the amount by which the purchase price exceeds the reasonable market value of the property is a contribution from the purchaser of the property.
I. The committee must report a nonmonetary contribution from the person donating the property
The term “contribution” is broadly defined and includes the donation of property.
A “contribution” includes any gift, deposit of money, or anything of value made by any person for the purpose of influencing an election for a Hawaii elective public or constitutional office. Anything of value includes a nonmonetary contribution. The Commission has emphasized that these terms are interpreted broadly and has provided examples of nonmonetary contributions, including the donation of property.2
Whether the donated property, including artwork, is sold or not sold by the end of the reporting period, the committee reports the receipt of the nonmonetary contribution as provided in Part IV of this opinion. The amount of the contribution is the reasonable market value3 of the property on the date received by the committee. (Emphasis added.) For example, a person makes a $1,000 nonmonetary contribution to the committee if the person donates a painting valued at $1,000 on the date received by the committee.
II. The committee must report a contribution from the person purchasing the property when the price exceeds its reasonable market value
We are also aware that oftentimes a purchaser at a fundraiser (e.g., silent auction) may purchase the property for more than its reasonable market value. For example, the contributed painting that is valued at $1,000 may be sold for $1,500 at the fundraiser. In that event, the purchaser has also made a contribution to the committee. The purchaser’s contribution would be the difference between the purchase price and the reasonable market value. In the above example, the purchaser would be making a $500 contribution. The purchaser must be careful not to exceed the contribution limits for the candidate’s office.4 Accordingly, the Commission recommends that purchasers be notified of the reasonable market value prior to sale at a fundraiser so that the purchaser knows whether the purchaser is also making a contribution.
III. The committee does not report a contribution from the person purchasing the property when the price is less than its reasonable market value
If property is purchased at a price that is less than the reasonable market value, there is no contribution by the purchaser. In the example above, if the contributed painting with a reasonable market value of $1,000 is purchased for $700, there is no contribution from the purchaser.
IV. Reporting the Transaction
The committee reports the nonmonetary contribution by, for instance, the artist, on Schedule A (Form CC-5 (A) rev. 5/99) of the Candidate Committee Disclosure Report. The transaction is also reported as an expenditure on Schedule B (Form CC-5 (B) rev. 5/99). The purpose of the dual entry is to ensure that the books remain balanced.
When the painting is sold, the reasonable market value ($1,000) of the painting is reported as an “other receipt” on Schedule C (Form CC-5 (C) rev 5/99). The portion of the selling price that exceeds the reasonable market value at the time of sale, is reported as a contribution on Schedule A (Form CC-5 (A) rev. 5/99), and deposited into the campaign treasury.
Dated: Honolulu, Hawaii, August 9, 2006.
CAMPAIGN SPENDING COMMISSION
Steven E. Olbrich
Michael E. Weaver
1 The Commission, in Advisory Opinion No. 00-08, determined that:
· The donation of property is a nonmonetary contribution;
· The committee must report the “reasonable market value” of the property as a contribution and the value is determined at the time of the sale of the property; and
· Upon the sale of the property, the contribution is attributed to the person who contributed the property, rather than purchaser of the property.
2 Advisory Opinion No. 04-05
3 Section 2-14.1-7, Hawaii Administrative Rules
4 Hawaii Revised Statutes section 11-204