2016 POLITICAL ADVOCACY FUND

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Lillian Watson
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2016 POLITICAL ADVOCACY FUND BACKGROUND Illinois has proven to be a national leader in statehouse legislative lobbying and since the early 1990s as the frontrunner in local issues advocacy.

In 2006 the Board of Directors created the RVOICE Advocacy Fund which continues to provide funding for issue and ballot initiatives, community economic development projects, informational brochures

1 2016 POLITICAL ADVOCACY FUND BACKGROUND Illinois has proven to be a national leader in statehouse legislative lobbying and since the early 1990s as the frontrunner in local issues advocacy. The Board of Directors boldly approved funding for the statewide Governmental Affairs Director program, a program which continues to be emulated by other states. In 2006 the Board of Directors created the RVOICE Advocacy Fund which continues to provide funding for issue and ballot initiatives, community economic development projects, informational brochures for members, and select statewide issue research and analysis, such as the Gross Receipts Tax and Fire Sprinkler mandates. The world of political activity was redirected in 2010 by the United States Supreme Court decision in the Citizens United v. the Federal Election Commission case. In a nutshell, Citizens United allows corporations and unions to spend unlimited funds on ads and other political communications that expressly advocate the election or defeat of a specifically identified federal, state or local candidate, as long as those funds are expended independent of the candidate s campaign. The Citizens ruling does not impact the need for RPAC since these funds are direct contributions to candidates and are governed by the Federal Election Commission, the Illinois State Board of Elections, and in some instances by local election laws. Therefore, the continued importance and funding of RPAC is critical, however, the unbridled funding in the form of independent expenditures is the crux of the impact of the Citizens United case. It should be noted that even with the Court s ruling being in 2010 the full impact of independent expenditures evolved and continues to reach historic levels of funding in 2012 and Nationally, NAR has and continues to be a leader in candidate contributions through RPAC. When PACs were the only source of funding for candidates RPAC was near the top of influence makers. However, the quick and well-conceived REALTOR Party national assessment provided NAR, states, and locals to be an early responder to the political funding of candidates through independent expenditures. The REALTOR Party assessment became effective in

A quick primer an independent expenditure is by name, definition and action totally independent of the candidate s knowledge, involvement or direction.

2 A quick primer an independent expenditure is by name, definition and action totally independent of the candidate s knowledge, involvement or direction. Given this independent action, RPAC may and does participate through PAC contributions to the same candidate who is also benefiting from the independent expenditure, however the RPAC Trustees are like the candidate, unaware of the independent expenditure campaign for the candidate. To date, IAR s funding for independent expenditures has been restricted to the funds allocated by NAR to IAR. NAR allocates based upon state membership totals, $4.73 per member. In turn, the funding is used in even years by IAR for state candidates such as Representatives, Senators, and statewide positions; in the odd years the total allocation is available for local candidates such as county board, municipal governing officials and special districts of local government. IAR has used every dollar allocated by NAR in each year since REALTOR Party funds were made available. To put this in perspective, the NAR total allocations to Illinois have been $598,307. The most remarkable distinction between even and odd year spending is the number of races which may be funded. Typically, in the even years (state races) the total funding only supports 3-5 candidates and in the odd years (local races) the number expands to an average of 20. The impact of conducting an independent expenditure program has a wider impact than just the winning of the race, albeit winning is the ultimate desire. The mere presence of the independent expenditure has a profound impact on the political parties involved, meaning they may decide based upon the independent expenditure if they are going to continue to engage in funding and forces an early and often discussion about key races. Knowledge of an IAR independent expenditure can be greatly beneficial or conversely elevate the race into an arena which they do not wish to go. An obvious result: an IAR independent expenditure winner understands the role and pure political impact REALTORS play while continuing to foster a keen awareness of REALTOR issues NEED Simply stated it takes money to influence and cultivate political allies. Illinois has more units (6,963) of local government than any other state in the country. Given our limited local track record we are very restricted in our level of participation in local elections. IAR elected leaders and staff continually have advocated that political influence begins at the local level. This is evident in a multitude of ways, such as many taxing initiatives begin locally, home rule ballot initiatives origins begin locally, and restrictive or onerous ordinances begin locally. 2

Therefore, with the recruitment, support, and impact that local associations have, through IAR financial and political advice, they can and will develop an elected base which will have our issues and

3 Local elected officials often urge their state legislators to pursue state legislation which gives locals more power to tax and regulate. Politically, local elected leaders are a leading source for future state representative and senator candidates. Therefore, with the recruitment, support, and impact that local associations have, through IAR financial and political advice, they can and will develop an elected base which will have our issues and private property mantra engrained in their core political values. It would be naïve to suggest that we would only support REALTOR candidates but it is a goal to encourage our members to seek elected positions locally. Nevertheless, our local GADs and local leaders have or can cultivate relationships with potential local candidates in the local interview vetting process to recommend support for those non-realtor candidates who clearly understand and support private property rights. Since IAR has a Statewide GAD program with a soon to be compliment of eleven (11) GADs it is easily projectable to have a substantial increase in the number of local independent expenditures running in a local election cycle (primary and consolidated general). Also, factoring in Chicago Aldermanic races and contentious races in areas such as Springfield, Urbana and the south suburban area, the average costs per independent expenditure would easily eclipse our past spending average of $8,300. Additionally, since the local independent expenditures are competitive, our new spending costs could conservatively range between $5,000 and $10,000 per race. The second part of the need equation is RPAC at the state and local level. IAR, under the agreement with NAR, is their RPAC partner. Local associations may have a local PAC but all RPAC receipts and disbursements must be in concert and agreement with IAR. In a recent and ongoing analysis of RPAC receipts and disbursements the following is historically prevalent: For every RPAC dollar received 30% is remitted to NAR Local distributions for fundraising costs, IAR fundraising costs, discretionary funds allocated to local associations, local association PAC revenue sharing and administrative expenses consume 28% of every dollar 42% is available to RPAC for candidate support. 3

4 Additionally, the recent changes to the Illinois Campaign Finance Laws have had the adverse impact of raising the amount of PAC money requested from state candidates, with the candidate eyeing the caps. So the unintended consequences of Illinois enacted PAC contribution limits ratcheted up candidates perceived and actual need. This, combined with the overall increase in money in elections due to Citizens United, has greatly increased the level of spending needed to be among the top groups in campaign influence. As evidenced in local elections, the need for RPAC funds at the local level is growing. The independent expenditure program funding and RPAC are not mutually exclusive. The two in tandem, but not coordinated, provide the REALTOR organization a unique opportunity to move upward and forward as the political player we once were when operating singularly as a RPAC contributor. The actual dollar costs applied to the abovementioned percentages, assuming $1,000,000 dollars in RPAC receipts, results in a total outlay of $580,000 for non-candidate expenses. However the 30% for the NAR allocation will not be a dollar for dollar tradeoff in the remittance to NAR, but the NAR RPAC dollar remittance costs can be somewhat offset with the use of soft PAF dollars. The larger use of a soft dollar source will offset related fundraising expenses, revenue sharing, and state independent expenditures. The combined offset could be in the range of $400,000-$450,000 annually, regardless of the state or local cycle. FUNDING In June 2014 the Executive Committee of IAR reviewed the program needs and the estimated costs associated with establishing a sustainable funding source for IAR and the local association to either start or ramp up their local political advocacy. The Executive Committee noted and clearly distinguished the existing local/state issues advocacy program RVOICE from a Political Advocacy Fund (PAF). The Executive Committee recommends the creation of a separate fund or line item, the Political Advocacy Fund (PAF), and that funding be established in 2015 with a one-time transfer of $400,000 from the RVOICE Fund and beginning with the 2016 dues billing an additional $25 assessment per member be approved. This additional $25 will be added to the RVOICE assessment raising the total RVOICE assessment to $75. The annual funding should generate approximately $1.1 million dollars. The PAF fund at $1.1 million would cover the aforementioned IAR and local association needs and it is not anticipated that this level of funding would create a significant reserve once a state and local cycle has been completed. The Executive Committee further recommends the operational dues portion of IAR dues, $160, be the only amount subject to the annual cost of living adjustment as reviewed by the Finance Committee. 4

5 PROCESS The PAF assessment funds would be allocated on a 50/50 split between IAR and the local associations, or roughly $500,000 apiece on an annual basis. The splits could be marginalized should in any given cycle there be a unique demand for either the local or state needs. IAR would use a percentage of these funds to meet our annual needs-based NAR goal, cover fundraising costs, and apply funds to additional independent expenditure campaigns beyond the NAR annual allocation. Local associations would receive funding akin to their discretionary funds from their splits which would cover fundraising costs and the majority of funds would then be available for local independent expenditures. To avoid any legal concerns and to clearly establish the firewalls needed to ensure there is not any campaign coordination, all local independent expenditure recommendations must come from a local association Independent Expenditure Committee, which would be independent of whoever is the responsible local PAC oversight group. A local Independent Expenditure Committee may be 3-5 members who are granted authority locally to make independent expenditure recommendations but DO NOT also sit on any local government affairs PAC, or oversight committee which approves or authorizes any local PAC expenditure, or recommends to Illinois RPAC direct local candidate funding or local elected official campaign grassroots involvement. The IAR local Independent Expenditure Committee will review all local recommendations and initiate those independent expenditure campaigns as approved and to which funds are available. All local independent expenditure requests will be addressed within a week of submission and the local independent expenditure oversight committee will be notified of the IAR Independent Expenditure Committee s decision. Each local independent expenditure oversight committee member must sign a strict confidentiality statement prior to any request being considered by IAR. Once the independent expenditure is approved by the IAR Independent Expenditure Committee the local association independent expenditure oversight committee and the local GAD (assuming there is not a coordination issue) will assist in the approval of the messaging content of the independent expenditure materials with support of IAR independent expenditure staff. IAR will be the sole responsible party for filing the appropriate disclosure forms with the Illinois State Board of Elections or any required local or county election body. Although there is not a local association allocation of funds, the IAR Independent Expenditure Committee will be sensitive to the importance of a race to each local association and the number of competitive races in play. 5

6 SUMMARY The Political Advocacy Fund (PAF) is: An annual member assessment of $25 which will increase the RVOICE assessment to $75 annually. Assessment is split between IAR and local association uses. IAR uses are soft money remittance to NAR, political costs and independent expenditures. Local association allocations are for local independent expenditures and grants for discretionary funds. Supports the movement for all political activity to become needs based. The Political Advocacy Fund (PAF) is a necessary compliment to RVOICE and the IAR local Governmental Affairs Program. The IAR GAD team has and continues to have tremendous results with local issues and in the process spends considerable time in trying to cultivate local elected officials support. The PAF program moves the relationship building and private property rights understanding to the forefront or before the issues arise. Early involvement and intervention at the candidate identification and subsequent campaign stage allows for an open and more meaningful dialogue while minimizing an elected official s retreat from an issue or ordinance already in play. The plan as conceived further defines the partnership of the GAD program and the support needed at the local level to further enhance our political activity. The split of the funding which directly supports local elections and local costs may also be further augmented with additional RPAC funds given the PAF s use for soft dollar costs. The creation of the PAF allows for the expansion of the current NAR local independent expenditures funds, supports the GAD programs next new frontier, and positions local associations to balance an early positive relationship with their elected officials. As one of our former IAR past presidents stated, Our threat is to not have enough resources to continue to respond and participate in our Advocacy arena. The PAF program is one more step which not only allows us to continue to participate, but truly moves political advocacy to the local political area, where all political activity begins. ### 6

7 2016 POLITICAL ADVOCACY FUND (PAF) FREQUENTLY ASKED QUESTIONS 1. Why not borrow money from RVOICE? A. The principal reason is the level of funding needed for the PAF activities, such as local Independent Expenditures and related political costs would not sustain the PAF and the RVOICE activities beyond one or maybe two elections. This is apparent in our ask for only $400,000 in a one-time transfer in 2015 before the PAF assessment is operational in Is it realistic to believe that IAR will engage in 100 local races? A. Actually, this could be a conservative number if NAR s state and local IE program is the benchmark. The process will require education and information for our local association partners, but once the units of local government and their impact on real estate and private property rights are identified, and coupled with the number of governmental units in Illinois (6,963), 100 races should be the baseline not the ceiling. 3. How does the PAF replace local association discretionary funds? A. The intent of the program is to assist local associations, not penalize them. The PAF will have a grant process whereby local associations can request funds which are currently covered by the discretionary funds. It is the aim and goal to have the PAF assessment be a more reliable source of funds than the RPAC discretionary funds. 4. Why doesn t IAR allocate the funds based upon a prorated amount per member for the local associations? A. The funds will be allocated based upon the requests and needs of the local association similar to the REALTOR Party fundraising grants. Additionally, the allocated amount must have a degree of separation to comply with Illinois campaign finance laws and Internal Revenue tax laws. As IAR moves into RPAC fundraising being based upon need, it is prudent to allocate funds based upon need and having the greatest political impact, regardless of where the candidate resides.

8 5. Is the PAF assessment mandatory or is there a mechanism for a member to opt out? A. The PAF assessment of $25 will be added to the RVOICE assessment. It is mandatory, not prorated and there is not a capacity to opt out. 6. Collectively RPAC raised $1 million in Will this assessment negatively impact RPAC fundraising? A. Hopefully not, and the key will be our education and information program which will delineate the difference between RPAC needs and uses and PAF needs and uses. Our historical baseline is the advent of the RVOICE assessment in 2007 as it did not have a noticeable impact. The PAF assessment is a lesser amount than the initial RVOICE assessment, plus the assessment has the same opportunity for return to the local association. Additionally, the PAF assessment clearly assists local associations to comply with the Advocacy and Consumer Outreach components of the Core Standards as required by NAR. 7. Why is participating in an independent expenditure program necessary? A. The United States Supreme Court case of Citizens United v. The Federal Election Commission resulted in the ability to use funds, such as PAF, for support or opposition of candidates. IAR and NAR have historically been leaders in RPAC funding but that model has remained static for almost five decades. Coupled with the Citizens case it is a virtual necessity to move into the independent expenditure program or continue to lag behind in our political advocacy. Furthermore, taxing, zoning, and regulatory efforts at the local level have and continue to present onerous results. The best way to attack these actions is to elect candidates who fully understand the importance and impact of real estate and private property rights, before the imposition of taxes and ordinances. 8. How much control does the local association have in the selection of local candidates for independent expenditures? A. The local association has absolute control in recommending candidates for support, however, the legal requirements in Illinois prevent a coordinated campaign, thus the decision whether to support and the level of support must be independent and reside with the IAR committee. Similarly to NAR s process, the IAR committee will strongly rely upon local knowledge, interest and importance when considering recommendations.

9 9. Are there levels or limits for a local independent expenditure? A. There are no levels or limits per se. However, Independent Expenditure Committees should use such factors as competitiveness of the race, electability, the candidate s record on issues, and local association jurisdictional concerns and differing opinions, such as two local associations within a county and differing opinions on a county board seat. 10. Once a local association makes a recommendation to IAR and IAR agrees to support the candidate, what is the process for notification to the local association? A. IAR will follow the same procedure as NAR. The local association will be notified just prior to the release of the first I.E. activity, e.g. robo-calls, mailer, phone, etc. That will be the only communication to the local association. IAR will not initiate any conversation with the local candidate or the local candidate s campaign. 11. Describe the components and costs for an average independent expenditure campaign. A. The costs vary depending on the size of the voter population and the usual and customary marketing costs in the area. The typical expenses, using past independent expenditures as an example, include: a. Polling (Candidate/Issues) b. Data Strategies c. Robo-call(s) d. First and second mailers e. Walking piece f. Social media/website g. GOTV 12. Given that members will be on both sides of a local campaign, who will respond to those members who do not support the independent expenditure candidate? A. The required Disclosure on local I.E. campaigns will be the Illinois Association of REALTORS, therefore any response will fall upon IAR. Since, the I.E. will be in full operation, IAR will also inform the local association of any concern and the response(s), thus continuing to preserve the degree of separation and lack of coordination requirements. ###

2016 Political Advocacy Fund (PAF) Grants The IAR Political Advocacy Fund (PAF) replaces the previous Discretionary Fund policy and is the sole source for discretionary fund uses.

PAF fund requests must use a simplified form that will be modeled after RPAC Fundraising / REALTOR Party Grant requests.

10 2016 Political Advocacy Fund (PAF) Grants The IAR Political Advocacy Fund (PAF) replaces the previous Discretionary Fund policy and is the sole source for discretionary fund uses. The PAF fund will help local associations increase their RPAC fundraising receipts and RPAC participation within Illinois state and federal fundraising laws. PAF fund requests must use a simplified form that will be modeled after RPAC Fundraising / REALTOR Party Grant requests. Local associations that received zero or very low discretionary funds based on the previous formula will benefit from access to the PAF fund to help grow their RPAF fundraising to a higher level. Local associations that earned a lot of funding based on the past discretionary formula will still have access to this higher level of funding and perhaps additional based on need. There simply will be a form to request the funding. Uses for the PAF fund will expand to include: Tier 1 - Fundraising grants at 2014 former "discretionary fund" level, purposes related to local fundraising and recognition; uses and financial accountability required. Tier 2 - Grant of up to $5,000 for political participation activities (e.g., Travel and Transportation for Capital Conference, Local political meet and greet events, DR Conferences for express purposes of Broker Involvement knowledge and recruitment, other activities as defined and approved.) Uses and financial accountability required. Tier 3 - Grant related to local ballot or ordinance campaign directed to the consumer/voter. Grant must clearly define uses and a prior determination as application of State Board of Election filing requirements. The grant application form will be available later this year. All grant applications and questions are to be directed to rpac@iar.org or RPAC Fundraising Coordinators

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