Final Audit Report of the 

Commission on the Nebraska 

Democratic Party 

(January 1, 2009 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports under 

the Federal Election 

Campaign Act' (the Act). 

The Commission generally 

conducts such audits when a 

committee appears not to 

have met the threshold 

requirements for substantial 

compliance with the Act.^ 

The audit determines 

whether the committee 

complied with the 

limitations, prohibitions and 

disclosure requirements of 

the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, with 

respect to any of the matters 

discussed in this report. 

About the Committee (p. 2) 

The Nebraska Democratic Party is a state party committee 

headquartered in Lincoln, Nebraska. For more information, 

see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 218,270 

Contributions from Political Committees 24,202 

Transfers from Affiliates 1,682,699 

Transfers from Non-federal Accounts 344,901 

Other Receipts 

o 

o 

o 

o 

Total Receipts 

Disbursements 

o Operating Expenditures 

o Other Federal Expenditures 

o Federal Election Activity 

o Transfers to Affiliates 

o Coordinated Expenditures 

o Independent Expenditures 

o Other Disbursements 

Total Disbursements 

185,066 

S 2,455,138 

$ 540,126 

129,323 

1,490,477 

138,967 

114,788 

12,475 

35,174 

$ 2,461,330 

Commission Findings (p. 3) 

• Recordkeeping for Employees (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

• Excessive Coordinated Party Expenditures (Finding 3) 

Additional Issue (p. 5) 

• Reported Coordinated Party Expenditures 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended f'the Act"), was transferred 

from Title 2 of the United States Code to new Title S2 of the United States Code. 

^ 52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 
Final Audit Report of the Commission 

on the Nebraska Democratic Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Audit Hearing 2 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 3 

Part III. Summaries 

Commission Findings 4 

Additional Issue S 

Part IV. Commission Findings 

Finding!. Recordkeeping for Employees 7 

Finding 2. Reportingof Debts and Obligations 9 

Finding 3. Excessive Coordinated Party Expenditures 11 

Part V. Additional Issue 

Reported Coordinated Party Expenditures 17 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Nebraska Democratic Party^ (NDP), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance 

with the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted the audit pursuant to 52 U.S.C §30111(b) (formerly 2 U.S.C. 

§438(b)), which permits the Commission to conduct audits and field investigations of any 

political committee that is required to file a report under S2 U.S.C §30104 (formerly 2 

U.S.C. §434). Prior to conducting any audit under this subsection, the Commission must 

perform an internal review of reports filed by selected committees to determine whether 

the reports filed by a particular committee meet the threshold requirements for substantial 

compliance with the Act. 52 U.S.C §30111(b) (formerly 2 U.S.C. §438(b)). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the disclosure of independent and coordinated expenditures; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the "Policy Statement Establishing a Program for Requesting Consideration 

of Legal Questions by the Commission," NDP requested early consideration of a legal 

question raised during the audit. NDP questioned whether the monthly time logs required 

under 11 CFR § 106.7(d)(1) applied to employees paid with 100 percent federal iiinds. 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided it will not 

pursue recordkeeping violations for the failure to keep time logs or to provide affidavits 

to account for employee salaries paid with 100 percent federal funds and reported as 

such. The Audit staff informed T^P Counsel of the Commission's decision on NDP's 

request. This audit report does not include any finding or recommendation with respect 

to NDP's employees paid with 100 percent federal funds and reported as such. 

' The committee's name during the audit period was the Nebraska Democratic State Central Committee 

and was changed subsequently on April 4,2012. 
Audit Hearing 

NDP declined the opportunity for a hearing before the Commission on matters presented in 

this report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration December 3,1975 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Lincoln, Nebraska 

Bank Information 

• Bank Depositories One 

• Bank Accounts Five Federal and Two Non-federal 

Checking Accounts 

Treasurer 

• Treasurer When Audit Was Conducted Gerry Finnegan 

• Treasurer During Period Covered by Audit Gerry Finnegan 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid Staff 

Overview of Financial Activity 

Cash-on-hand ® January 1,2009 S 63,195 

Receipts 

o Contributions from Individuals 218,270 

o Contributions from Political Committees 24,202 

o Transfers from Affiliates 1,682,699 

o Transfers from Non-federal Accounts 344,901 

o Other Receipts 185,066 

Total Receipts S 2,455,138 

Disbursements 

o Operating Expenditures 540,126 

o Other Federal Expenditures 129,323 

o Federal Election Activity 1,490,477 

o T ransfers to Affil iates 138,967 

o Coordinated Expenditures 114,788 

o Independent Expenditures 12,475 

o Other Disbursements 35,174 

Total Disbursements S 2,461330 

Cash-on-band @ December 31,2010 S 57,003 
Part III 

Summaries 

Commission Findings 

Finding 1. Recordkeeping for Employees 

During audit fieldwork, the Audit staff noted that NOP did not maintain any monthly 

payroll logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit staff identified payments to NOP 

employees totaling $282,882 for which payroll logs were not maintained. This amount 

consisted of payroll which was allocated between federal and non-federal funds. 

In response to the Interim Audit Report recommendation, NOP stated that it has 

established procedures to maintain contemporaneous documents to certify the payroll 

records for employees paid exclusively with non-federal funds or with an allocation of 

federal and non-federal funds. 

The Commission approved a finding that NDP failed to keep monthly time logs for the 

$282,882 that NDP disclosed as having been paid with an allocation of federal and nonfederal funds. (For more detail, see p. 7.) 

Finding 2. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that NDP had failed to correctly disclose 

debts and obligations totaling $120,447. In response to the Interim Audit Report 

recommendation, NDP filed amended reports to materially disclose these debts and 

obligations. 

The Commission approved a finding that NDP failed to itemize debts and obligations 

totaling $120,447. (For more detail, see p. 9.) 

Finding 3. Excessive Coordinated Party Ebcpenditures 

During audit fieldwork, the Audit staff identified $114,789 of coordinated party 

expenditures made by NDP for a House candidate that appeared to exceed the 2010 

coordinated party expenditure limitation by $34,789. 

In response to the Interim Audit Report recommendation, NDP argued that of the 

$114,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 should not be considered excessive cooi^inated party expenditures and 

that the unspent coordinated party expenditure limitation of $6,600, ceded by the DCCC, 

remains available under the spending authority and therefore should reduce the amount of 

excessive expenditures. NDP also acknowledged that it incorrectly reported expenses for 

"Get Out The Vote" (GOTV) calls totaling $29,615 due to a miscommunication with the 

candidate campaign. As part of its response, NDP materially amended its disclosure 

reports by including these expenditures on Schedule F (Coordinated Party Expenditures). 
After considering NDP's Interim Audit Report response, the Audit staff recalculated the 

excessive coordinated expenditures to account for the $4,S96 for a candidate postcard 

which NDP claims as exempt under the volunteer materials exemption and the $578 for a 

window sign which NDP indicated was not a public communication. However, while the 

Audit staff recognized that the $6,600 represented unspent funds under the combined 

spending authority of both committees, the Audit staff did not allow for the additional 

spending authority of $6,600 because, in similar cases, the Commission has rejected 

assignments of spending authority after the fact. Accordingly, the Audit staff 

recommended that the Commission find that NDP exceeded the coordinated party 

expenditure limit by $29,615 ($34,789 less the candidate postcard of $4,596 and 

campaign sign of $578). 

The Commission approved a finding that NDP exceeded the 2010 coordinated party 

expenditure limit by $29,615. 

In addition, the Audit staff recommended that due to the lack of clarity on the volunteer 

materials exemption, the reported expenditures of $99,206 should not be attributed to 

NDP's coordinated expenditure limit. The Commission agreed that $95,188 should not 

be attributed to NDP's coordinated expenditure limit. The Commission did not approve 

by the required four votes the portion of the Audit staffs recommended finding related to 

the $4,596 for the candidate postcard. As such, this expenditure is presented in the 

"Additional Issue" section. (For more detail, see p. 11.) 

Additional Issue 

Reported Coordinated Party Expenditures 

As detailed in Finding 3 above, at the end of audit fieldwork, the Audit staff concluded 

that NDP spent $114,789 on coordinated expenditures. In addition, the Audit staff 

concluded that NDP spent $94,610 to produce a single mailer on behalf of the candidate 

which NDP considered to be an exempt activity under the volunteer materials exemption. 

Due to the uncertainty regarding the amount of volunteer involvement needed to qualify 

for the volunteer materials exemption, as well as the amount of documentation required 

to support such an exemption, the expenditures for the mailer totaling $94,610 were not 

attributed to NDP's coordinated expenditure limit in the Interim Audit Report. 

In response to the Interim Audit Report recommendation, NDP argued that of the 

$114,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 did not represent coordinated activity. NDP argued that $578 for a sign 

placed in the party's field office was not a public communication and that $4,596 for the 

candidate postcard qualified for the volunteer materials exemption. 

Based on NDP's explanation, the Audit staff agreed that the payment of $578 did not 

represent a coordinated expenditure as the sign was not intended as a public 

communication. Additionally, due to the lack of clarity regarding the application of the 

volunteer materials exemption, the Audit staff did not attribute the $4,596 for the 

candidate post card, as well as the $94,610 of expenditures identified by the Audit staff 
during field work, to NDP's coordinated expenditure limit in the Draft Final Audit 

Report. 

Accordingly, the Audit staff recommended that the Commission should not attribute 

expenditures totaling $99,206 towards the coordinated expenditure limit. The 

Commission approved a finding that the reported expenditures of $9S,l 88 should not be 

attributed to NDP's coordinated expenditure limit. 

The Commission did not approve by the required four votes the portion of the Audit 

staffs recommended finding related to the $4,596 for the candidate postcard. Pursuant to 

Commission Directive 70,^ this expenditure is discussed in the "Additional Issue" 

section. (For more detail, see p. 17.) 

Available at http;//www.iec.gov/diFectives/directive_70.pdf 
Part IV 

Commission Findings 

I Finding 1. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff noted that NDP did not maintain any monthly 

payroll logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit staff identified payments to NDP 

employees totaling $282,882 for which payroll logs were not maintained. This amount 

consisted of payroll which was allocated between federal and non-federal funds. 

In response to the Interim Audit Report recommendation, NDP stated that it has 

established procedures to maintain contemporaneous documents to certify the payroll 

records for employees paid exclusively with non-federal funds or with an allocation of 

federal and non-federal funds. 

The Commission approved a finding that NDP failed to keep monthly time logs for the 

$282,882 that NDP disclosed as having been paid with an allocation of federal and nonfederal funds. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25% or less of their compensated time in a given month on 

federal election activities must be paid either from the federal account or be 

allocated as administrative costs. 

• employees who spend more than 25% of their compensated time in a given month 

on federal election activities must be paid only from a federal account; and, 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with state law. 11 

CFR§ 106.7(d)(1). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements NDP made to employees for 

payroll, totaling $282,882^, for which monthly logs were not provided to document the 

percentage of time the employee spent in connection with federal election activity. These 

' This total does not include payroll for employees paid with 100 percent federal iiinds and reported as 

such (see Part I, Background, Commission Guidance, request for Early Commission Consideration of a 

Legal Question, page 1). Payroll is stated net of taxes. 
logs are required to document proper allocation of federal and non-federal funds used to 

pay these workers. 

As part of fieldwork, the Audit staff provided NDP with a schedule of employees with an 

allocation of federal and non-federal funds for which a log was required. An NDP 

representative completed this schedule by inserting the percentage of time each employee' 

spent in connection with federal election activity and provided a signed affidavit in which 

a NDP representative attested to the accuracy of the information provided. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed the recordkeeping issue with NDP 

representatives. They asked whether the schedule and the affidavit they had provided 

would resolve the recordkeeping finding. The Audit staff explained that because NDP 

did not create and maintain these documents prior to the audit notification letter, but 

instead prepared them during fieldwork, the issue would be included in the Interim Audit 

Report. 

For NDP employees that were paid with an allocation of federal and non-federal funds, 

the Interim Audit Report recommended that NDP provide and implement a plan to 

maintain monthly payroll logs to track the percentage of time each employee spends on 

federal election activity. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NDP stated that, while it has 

already provided the documentation reflecting how much time employees spent on 

federal election activity, it agreed to maintain such records contemporaneously with 

payroll activities in the future. The Audit staff considered this matter resolved. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that NDP has established procedures to 

maintain contemporaneous documents to certify the payroll records for employees paid 

with an allocation of federal and non-federal funds. 

E. Committee Response to the Draft Final Audit Report 

NDP's response to the Draft Final Audit Report provided no additional comments. 

Commission Conclusion 

On August 14,2014, the Commission considered the Audit staffs recommendation that 

the Commission adopt a finding that NDP failed to maintain logs to document the time 

employees spent on federal election activity totaling $282,882. 

On April 23,2014, the Commission approved the Audit Division Recommendation Memorandum in 

which the Audit staff recommended that NDP failed to maintain logs to document the time employees 

spent on federal election activity totaling $300,708. Subsequent to this approval, the Audit staff 

recommended that the Commission rescind its prior approval of Finding 1 and approve a revised Finding 

I based on this revised amount. See Audit Division Recommendation Memorandum on the Nebraska 

Democratic Party (Resubmission) - Agenda Document No. 14-23, dated July 25,2014. 
The Commission approved a finding that NDP failed to keep monthly time logs for the 

$282,882 that NDP disclosed as having been paid with an allocation of federal and nonfederal funds. 

I Finding 2. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that NDP had failed to correctly disclose 

debts and obligations totaling $120,447. In response to the Interim Audit Report 

recommendation, NDP filed amended reports to materially disclose these debts and 

obligations. 

The Commission approved a finding that NDP failed to itemize debts and obligations 

totaling $120,447. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C. §30104(b)(8) (Formerly 2 U.S.C. §434(b)(8)) and 11 CFR §§104.3(d) and 

104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the committee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR§104.11(a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the date incurred, a debt of $500 or 

less must be reported on the next regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred, except reoccurring administrative expenses (such as 

rent) shall not be reported as a debt before the payment due date. 

11 CFR §104.11(b). 

Facts and Anal3rsis 

A. Facts 

During audit fieldwork, the Audit staff used available disbursement records to reconcile 

the accounts^ of NDP's 11 largest vendors. These vendors provided NDP mainly with 

services such as office space, phone bank, printing and compliance services. 

^ The Feconclliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 2009-2010 campaign cycle. The Audit staff then determined whether any outstanding debts were 

correctly disclosed on Schedule D. Each debt amount was counted once, even if it required disclosure 

over multiple reporting periods. 
10 

The Audit staff reviewed the vendors' invoiced amounts and identified unreported debts 

and obligations, totaling $105,447, owed to 10 of its vendors. Included in this balance 

were payments totaling $4,500 for office space that NDP made more than 30 days late 

throughout the audit period. Regularly reoccurring administrative expenses such as rent 

are reportable as debts if payment is not made by the due date. 

In addition to the unreported debts discussed above, NDP incorrectly reported debt 

amounts owed to one vendor. The under-reported debts total $15,000 for the audit 

period.' 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to NDP representatives at the exit conference and 

provided schedules detailing the unreported and under-reported debts for each reporting 

period for the audited cycle. NDP representatives objected to the inclusion of rent, a 

regularly recurring obligation, appearing on the debt schedule. The Audit staff 

acknowledged that regularly occurring administrative expenses are not debt reportable as 

long as they are paid by the due date; however, NDP had consistently paid its rent more 

than 30 days after the payment was due. 

The Interim Audit Report recommended that NDP provide documentation demonstrating 

that these expenditures did not require reporting on Schedule D. Absent such 

documentation, the Interim Audit Report recommended that NDP amend its reports to 

disclose the outstanding debts. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NDP filed amended reports to 

materially disclose these debts and obligations. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that NDP materially amended its reports and 

correctly disclosed the debts and obligations. 

E. Committee Response to the Draft Final Audit Report 

NDP's response to the Draft Final Audit Report provided no additional comments. 

Commission Conclusion 

On April 23,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that NDP had failed to disclose debts and obligations totaling $120,447. 

The Commission approved the Audit staffs recommendation. 

' The total amount of reportable debt to this vendor was $34,500. NDP reported only $19,500 on its 2009 

and 2010 disclosure reports. The underpayment was calculated as follows; $34,500 - $19,500 = $15,000. 
11 

I Finding 3. Excessive Coordinated Party Expenditures 

Summary 

During audit fieldwork, the Audit staff identified $114,789 of coordinated party 

expenditures made by NOP for a House candidate that appeared to exceed the 2010 

coordinated party expenditure limitation by $34,789. 

In response to the Interim Audit Report recommendation, NOP argued that of the 

$114,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 should not be considered excessive coordinated party expenditures and 

that the unspent coordinated party expenditure limitation of $6,600, ceded by the DCCC, 

remains available under the spending authority and therefore should reduce the amount of 

excessive expenditures. NOP also acknowledged that it incorrectly reported expenses for 

"Get Out The Vote" (GOTV) calls totaling $29,615 due to a miscommunication with the 

candidate campaign. As part of its response, NOP materially amended its disclosure 

reports to include these expenditures on Schedule F (Coordinated Party Expenditures). 

After considering NDP's Interim Audit Report response, the Audit staff recalculated the 

excessive coordinated expenditures to account for the $4,596 for a candidate postcard 

which NOP claims as exempt under the volunteer materials exemption and the $578 for a 

window sign which NOP indicated was not a public communication. However, while the 

Audit staff recognized that the $6,600 represented unspent funds under the combined 

spending authority of both committees, the Audit staff did not allow for the additional 

spending authority of $6,600 because, in similar cases, the Commission has rejected 

assignments of spending authority after the fact. Accordingly, the Audit staff 

recommended that the Commission find that NDP exceeded the coordinated party 

expenditure limit by $29,615 ($34,789 less the candidate postcard of $4,596 and 

campaign sign of $578). 

The Commission approved a finding that NDP exceeded the 2010 coordinated party 

expenditure limit by $29,615. 

In addition, the Audit staff recommended that due to the lack of clarity on the volunteer 

materials exemption, the reported expenditures of $99,206 should not be attributed to 

NDP's coordinated expenditure limit. The Commission agreed that $95,188 should not 

be attributed to NDP's coordinated expenditure limit. The Commission did not approve 

by the required four votes the portion of the Audit staffs recommended finding related to 

the $4,596 for the candidate postcard. As such, this expenditure is presented in the 

"Additional Issue" section. 

Legal Standard 

A. Coordinated Party Expenditures. National party committees and state party 

committees are permitted to purchase goods and services on behalf of candidates in the 

general election—over and above the contributions that are subject to contribution limits. 
12 

Such purchases are referred to as "coordinated party expenditures." They are subject to 

the following rules: 

• The amount spent on "coordinated party expenditures" is limited by statutory 

formulas that are based on the Cost of Living Adjustment (COLA) and the voting 

age population; 

• Party committees are permitted to coordinate the spending with the candidate 

committees; 

• The parties may make these expenditures only in connection with the general 

election; 

• The party committees—not the candidates—are responsible for reporting these 

expenditures; and 

• If the party committee exceeds the limits on coordinated party expenditures, the 

excess amount is considered an in-kind contribution, subject to the contribution 

limits. 2 U.S.C. §30116(d) (Formerly 2 U.S.C. §441a(d)) and 11 CFR §§109.30 

and 109.32. 

B. Assignment of Coordinated Party Expenditure Limit. A political party may 

assign its authority to make coordinated party expenditures to another political party 

committee. Such an assignment must be made in writing, state the amount of the 

authority assigned, and be received by the assignee before any coordinated party 

expenditure is made pursuant to the assignment. The political party committee that is 

assigned authority to make coordinated party expenditures must maintain the written 

assignment for at least three years. 11 CFR §§104.14 and 109.33(a) and (c). 

C. Volunteer Activity. The payment by a state committee of a political party of the costs 

of campaign materials (such as pins, bumper stickers, handbills, brochures, posters, party 

tabloids or newsletters, and yard signs) used by such committee in connection with 

volunteer activities on behalf of any nominee(s) of such party is not a contribution, 

provided that the following conditions are met: 

1. Such payment is not for cost incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists. 

2. The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act. 

3. Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for Federal office. 

4. Such materials are distributed by volunteers and not by commercial or for-profit 

operations. 

5. If made by a political committee, such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports. 

6. The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b),(c),(d),(e) and (g). 
13 

D. Limits on Contributions Made by State and Local Party Committees. 

State and local party committees must comply with the contribution limits below: 

• $5,000 per election to a Federal campaign if the contributing committee has 

qualified as a multicandidate committee; 

• $2,400 per election to a Federal campaign if the contributing committee has 

not qualified as a multicandidate committee; 

• $5,000 per year to a separate segregated fund (corporate or labor political 

action committee) or a non-connected committee; and 

• unlimited transfers to other party committees. 52 U.S.C. §30116(a) (Formerly 

2 U.S.C. §441a(a)). 

Facts and Anal3rsis 

A. Facts 

The coordinated expenditure limit for the 2010 election cycle for a House candidate in 

the state of Nebraska was $43,500 each for the state and national party committees. 

During audit fieldwork, the Audit staff reviewed the correspondence between NDP and 

the DCCC that addressed the coordinated expenditures. On May 25,2010, NDP 

transferred its entire coordinated spending limit to DCCC. This permitted DCCC to 

make coordinated expenditures of $87,000 on behalf of Tom White, Democratic 

candidate for the United States House of Representatives from Nebraska's 2"*' 

Congressional District (the candidate). Additional documentation indicated that DCCC 

authorized NDP to spend no more than $80,000 of its coordinated party spending limit on 

behalf of the candidate.^ 

The Audit staffs review of disbursements during field work indicated that NDP appeared 

to make coordinated expenditures on behalf of the candidate that totaled $114,789, as 

outlined below. 

• NDP reported three media-related expenditures totaling $85,174 as coordinated 

expenditures on behalf of the candidate. Specifically, NDP spent $80,000 on a 

media ad in opposition of the candidate's opponent, $4,596 on production of a 

candidate postcard, and $578 for campaign signage. 

• After the coordinated spending limit was established, NDP reported two 

additional disbursements, totaling $29,615, for generic GOTV calls as federal 

election activity on its disclosure reports. The scripts provided by the vendor 

seem to indicate there was possible coordination with the candidate's committee 

since the scripts contained the message to vote for the candidate and included a 

disclaimer that the message was paid for by NDP and authorized by the candidate. 

In addition to the $114,789 in expenditures discussed above, NDP spent $94,610 to 

produce a single mailer on behalf of the candidate. This amount consisted of the 

following components: layout and production ($92,610) and postage ($2,000). NDP 

considered the cost of the entire mailer to be an exempt activity under the volunteer 

materials exemption. To support its assertion, NDP provided vendor statements and 

' DCCC filings disclosed an additional candidate expenditure in the amount of S3S3, leaving DCCC with 

an available coordinated limit of S6,647; ($87,000 - $80,000 - $353.) 
14 

invoices along with photographs of the volunteers participating in various duties such as 

reviewing, sorting, and packing the direct mail pieces. 

The Commission has addressed the applicability of the volunteer materials exemption in 

the Final Audit Reports of the Republican Party of Arizona, the Democratic Executive 

Committee of Florida, and the Tennessee Republican Party. In these reports, the 

Commission recognized a lack of clarity regarding the application of the volunteer 

materials exemption. 

In view of the uncertainty regarding the amount of volunteer involvement needed to 

qualify for the volunteer materials exemption, as well as the amount of documentation 

required to support such an exemption, the expenditures for the mailer totaling $94,610 

were not attributed to NDP's coordinated expenditure limit. 

The Audit staff concluded that NDP spent SI 14,789 on coordinated expenditures and 

exceeded its authorized coordinated party expenditure limit by $34,789." As a result, 

these expenditures are considered an excessive in-kind contribution to the candidate. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter at the exit conference and provided schedules 

detailing the possible excessive in-kind contributions NOP made on behalf of the 

candidate. In response, NDP representatives stated their belief that some of the amounts 

reported on Schedule F might not actually have been coordinated expenditures. 

The Interim Audit Report recommended that NDP provide additional documentation 

demonstrating that it did not exceed the coordinated party expenditure limitation for the 

candidate.'^ 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NDP argued that of the 

$I 14,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 (items 1 and 2 below) do not represent coordinated activity and that the 

unspent coordinated party expenditure limitation of $6,600 (item 3 below), ceded by the 

DCCC, should further reduce the amount of the excessive expenditures. NDP explained 

as follows: 

I. The payment of $578 to an NDP vendor was for a sign that was placed in the 

window of the party's field office during the 2010 general election period. The 

In recognizing the lack of clarity, the Commission has attempted to formulate a consensus policy 

regarding what constitutes substantial volunteer involvement for the purpose of applying the exemption. 

Proposed Interim Enforcement Policy, Open Session Agenda document No. 10-16 dated March 10,2010, 

Drafls A through D. 

" The amount over the limit was calculated as follows: Total spent by NDP less amount authorized by 

DCCC: SI 14,789 - $80,000=$34,789. NDP made and reported the maximum allowable contribution to 

the candidate during the 2010 election cycle. 

The authorized committee of Tom White was approved for administrative termination on May 10,2011. 

Therefore, a recommendation to seek refund from the candidate committee is not warranted. 
15 

sign was not intended as a public communication; it was placed next to the sign of 

many other Nebraska candidates as is commonplace for party offices. 

2. NDP provided a declaration, signed and dated September 16,2013, from its 

Executive Director who oversaw all political and administrative operations of 

NDP during the 2009/2010 election cycle. In the document, the Executive 

Director attested that NDP paid for the printing of the postcards ($4,596) which 

advocated the election of the candidate. According to his recollection, the 

volunteers distributed, hand stamped, and placed the mailing labels on the 

postcards at the party headquarters. NDP incorrectly disclosed this payment on 

Schedule F and plans to amend its reports by disclosing the expenditures as 

Federal Election Activity (Line 30b). 

3. NDP acknowledged that it received spending authority of only $80,000 from the 

DCCC prior to making expenditures. In addition, NDP presented an unsigned 

letter from the DCCC dated April 24,2012, in which DCCC designated NDP as 

its agent "...for the exclusive purpose of making expenditures pursuant to 52 

U.S.C. §30116(d) (Formerly 2 U.S.C. §441a(d)) on behalf of [the Candidate] up 

to $6,600." NDP acknowledged this authority was not ceded in a timely fashion. 

Nevertheless, NDP urged the Commission to acknowledge that this amount 

remains available under the spending authority and should therefore reduce the 

amount of excessive expenditures. 

4. In its response, NDP also acknowledged that it incorrectly reported expenses for 

GOTV calls totaling $29,615 due to a miscommunication with the candidate 

campaign. NDP materially amended its disclosure reports and included these 

expenditures on Schedule F (Coordinated Party Expenditures). 

The Audit staff considered NDP's response and reviewed the submitted documentation. 

Based on NDP's additional explanation regarding the nature and the location of the 

campaign sign, the Audit staff agreed that the payment of $578 did not represent a 

coordinated expenditure as the sign was not intended as a public communication. Since 

NDP disclosed this expenditure on Schedule F, the Audit staff recommended that NDP 

amend its 2010 August Monthly report to disclose this disbursement on Schedule E 

(Independent Expenditures) since the sign contains express advocacy. 

NDP's Executive Director attested to the volunteers' involvement with the printing of a 

candidate postcard ($4,596). As with the other expenditures noted above, totaling 

$94,610, for which NDP claims the volunteer materials exemptions, the Audit staff 

acknowledged the lack of clarity regarding the level of volunteer involvement needed to 

qualify for the volunteer materials exemption. As with the treatment of those 

expenditures, the Audit staff no longer attributed the $4,596 expenditure toward NDP's 

coordinated limit. NDP was encouraged, however, to provide any further documentation 

" NDP used these funds to finance its broadcast television media buy and production and disclosed this 

expenditure on Schedule F of its 2010 Post-General disclosure reports. 
16 

such as photographs of the volunteers participating in the dissemination of the candidate 

postcard for the Commission's consideration of the matter. 

Finally, by presenting the assignment authority letter from the DCCC, NDP demonstrated 

that it was granted additional spending authority ($6,600) beyond $80,000. The Audit 

staff noted that the letter was issued on April 24,2012, well after the November 2,2010, 

general election. As noted in the legal standards above, 11 CFR § 109.33(a) requires that 

an assignment must be made in writing, state the amount of the authority assigned, and be 

received by the assignee before any coordinated party expenditure is m^e pursuant to 

the assignment. In similar cases, the Commission has rejected assignments of spending 

authority after the fact. Therefore, while the Audit staff recognized that the $6,600 

represented unspent funds under the combined spending authority of both committees, 

the Audit staff did not allow for the additional spending authority of $6,600. 

As a result of NDP's response to the Interim Audit Report, the Audit staff recalculated 

the excessive coordinated expenditures to be $29,615. The revised figure adjusts for 

$578 which does not represent a coordinated expenditure and $4,596 which NDP claims 

as exempt from the definition of a contribution under the volunteer materials exemption. 

D. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged NDP's response that 

provided a written description and documentation of the tasks performed by the 

volunteers. Given the lack of clarity regarding the amount of volunteer involvement 

deemed to qualify for the volunteer materials exemption, as well as the amount of 

documentation required to support such an exemption, the expenditures totaling $99,206 

were not attributed to NDP's coordinated expenditure limit. 

E. Committee Response to the Draft Final Audit Report 

NDP's response to the Draft Final Audit Report provided no additional comments. 

Commission Conclusion 

On April 23,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that NDP exceeded the 2010 coordinated party expenditure limit by $29,615. 

The Commission approved the Audit staffs recommendation as to the amount by which 

NDP exceeded the 2010 coordinated party expenditure limit. 

In addition, the Audit Division Recommendation Memorandum recommended that due to 

the lack of clarity regarding the level of volunteer involvement needed to qualify for the 

volunteer materials exemption, the Commission not attribute expenditures totaling 

$99,206 towards the coordinated expenditure limitation. The Commission agreed not to 

attribute $95,188 of the reported expenditures to NDP's coordinated expenditure limit. 

The Commission concluded that the reported expenditures of $94,610 (the amount 

associated with the candidate mailer) should not be attributed to NDP's coordinated 

Calculated as follows: S29,6IS = [(SI 14,789 - $578 - $4,596) - S80.000]. 
17 

expenditure limit due to the lack of clarity on the volunteer materials exemption. NDP 

had provided vendor statements and invoices along with photographs of the volunteers 

participating in various duties, such as reviewing, sorting, and packing the direct mail 

pieces, relating to these expenditures. In addition, the Commission concluded that the 

reported expenditure of $578 (the amount associated with the window sign) should not be 

attributed to NDP's coordinated expenditure limit because the expenditure was not a 

public communication. 

The Commission did not approve by the required four votes the portion of the Audit 

staffs recommended finding related to the $4,596 for the candidate postcard. As such, 

this expenditure is presented in the "Additional Issue" section. 

Part V 

Additional Issue 

I Reported Coordinated Party Expenditures 

Summary 

As detailed in Finding 3 above, at the end of audit fieldwork, the Audit staff concluded 

that NDP spent $114,789 on coordinated expenditures. In addition, the Audit staff 

concluded that NDP spent $94,610 to produce a single mailer on behalf of the candidate 

which NDP considered to be an exempt activity under the volunteer materials exemption. 

Due to the uncertainty regarding the amount of volunteer involvement needed to qualify 

for the volunteer materials exemption, as well as the amount of documentation required 

to support such an exemption, the expenditures for the mailer totaling $94,610 were not 

attributed to NDP's coordinated expenditure limit in the Interim Audit Report. 

In response to the Interim Audit Report recommendation, NDP argued that of the 

$114,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 did not represent coordinated activity. NDP argued that $578 for a sign 

placed in the party's field office was not a public communication and that $4,596 for the 

candidate postcard qualified for the volunteer materials exemption. 

Based on NDP's explanation, the Audit staff agreed that the payment of $578 did not 

represent a coordinated expenditure as the sign was not intended as a public 

communication. Additionally, due to the lack of clarity regarding the application of the 

volunteer materials exemption, the Audit staff did not attribute the $4,596 for the 

candidate post card, as well as the $94,610 of expenditures identified by the Audit staff 

during field work, to NDP's coordinated expenditure limit in the Draft Final Audit 

Report. 

Accordingly, the Audit staff recommended that the Commission should not attribute 

expenditures totaling $99,206 towards the coordinated expenditure limit. The 

Commission approved a finding that the reported expenditures of $95,188 should not be 

attributed to NDP's coordinated expenditure limit. 
18 

The Commission did not approve by the required four votes the portion of the Audit 

staffs recommended finding related to the $4,S96 for the candidate postcard. Pursuant to 

Commission Directive 70, this expenditure is discussed in the "Additional Issue" 

section. 

Legal Standard 

The legal standard in the Finding 3 above is incorporated herein. 

Facts and Anal3rsis 

A. Facts 

As detailed in Finding 3 above, at the end of audit fieldwork, the Audit staff concluded 

that NOP spent $114,789 on coordinated expenditures. Specifically, NDP reported three 

media-related expenditures totaling $85,174 as coordinated expenditures on behalf of the 

candidate. NDP reported two additional disbursements for generic GOTV calls, totaling 

$29,615, as federal election activity on its disclosure reports for which the scripts seem to 

indicate there was possible coordination with the candidate's committee. 

In addition to the $114,789 in expenditures discussed above, the Audit staff concluded 

that NDP spent $94,610 to produce a single mailer on behalf of the candidate. This 

amount consisted of the following components: layout and production ($92,610) and 

postage ($2,000). NDP considered the cost of the entire mailer to be an exempt activity 

under the volunteer materials exemption. To support its assertion, NDP provided vendor 

statements and invoices along with photographs of the volunteers participating in various 

duties such as reviewing, sorting, and packing the direct mail pieces. 

Due to the uncertainty regarding the amount of volunteer involvement needed to qualify 

for the volunteer materials exemption, as well as the amount of documentation required 

to support such an exemption, the expenditures for the mailer totaling $94,610 were not 

attributed to NDP's coordinated expenditure limit in the Interim Audit Report. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter at the exit conference and provided schedules 

detailing the possible excessive in-kind contributions NDP made on behalf of the 

candidate. In response, NDP representatives stated their belief that some of the amounts 

reported on Schedule F might not actually have been coordinated expenditures. 

The Interim Audit Report recommended that NDP provide additional documentation 

demonstrating that it did not exceed the coordinated party expenditure limitation for the 

candidate. 

Available at http://www.fec.gov/directives/directive_70.pdf 

The authorized committee of Tom White was approved for administrative termination on May ID, 2011. 

Therefore, a recommendation to seek refund iirom the candidate committee is not warranted. 
19 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NDP argued that of the 

$114,789 identified by the Audit staff as coordinated expenditures, two expenditures 

totaling $5,174 did not represent coordinated activity. 

NDP explained that the payment of $578 to an NDP vendor was for a sign that was 

placed in the window of the party's field office during the 2010 general election period. 

The sign was not intended as a public communication; it was placed next to the sign of 

many other Nebraska candidates as is commonplace for party offices. 

NDP also provided a declaration, signed and dated September 16,2013, from its 

Executive Director who oversaw all political and administrative operations of NDP 

during the 2009/2010 election cycle. NDP's Executive Director attested to the 

volunteers' involvement with the candidate postcard ($4,596). According to his 

recollection, the volunteers distributed, hand stamped, and placed the mailing labels on 

the postcards at the party headquarters. 

D. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged NDP's response and 

reviewed the submitted documentation. 

Based on NDP's additional explanation regarding the nature and the location of the 

campaign sign, the Audit staff agreed that the payment of $578 did not represent a 

coordinated expenditure as the sign was not a public communication. Since NDP 

disclosed this expenditure on Schedule F, the Audit staff recommended that NDP amend 

its 2010 August Monthly report to disclose this disbursement on Schedule E (Independent 

Expenditures) since the sign contains express advocacy. 

Additionally, given the lack of clarity regarding the amount of volunteer involvement 

needed to qualify for the volunteer materials exemption, as well as the amount of 

documentation required to support such an exemption, the $94,610 of expenditures 

identified by the Audit staff during field work and the expenditures totaling $4,596 were 

not attributed to NDP's coordinated expenditure limit in the Draft Final Audit Report. 

E. Committee Response to the Draft Final Audit Report 

NDP's response to the Draft Final Audit Report provided no additional comments. 

Commission Conclusion 

On April 23,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that due to the lack of clarity 

regarding the level of volunteer involvement needed to qualify for the volunteer materials 

exemption, the Commission should not attribute expenditures totaling $99,206 towards 

the coordinated expenditure limitation. The Commission approved a finding that the 

reported expenditures of $95,188 should not be attributed to NDP's coordinated 

expenditure limit. 
20 

The Commission did not approve by the required four votes the portion of the Audit 

staffs recommended finding related to the $4,S96 in the reported expenditures for the 

candidate postcard. Some Commissioners approved the finding. Other Commissioners 

determined that unsworn written assertions absent any documentation of the nature and 

extent of the volunteer involvement would not be sufhcient to qualify these expenses for 

the volunteer materials exemption. 

Pursuant to Commission Directive 70, this matter is presented as an "Additional Issue".