A non-connected PAC, one of many formed in 2010, raised a significant amount of money in support of dozens of candidates nationwide.  It made a name for itself amongst a small and generous donor base and an ideologically-oriented candidate community.  The PAC made many good decisions from the outset - it recruited a strong Board of Directors and dedicated volunteer leadership.  It created a yearlong plan and successfully executed to achieve its goals.  It implemented a balanced fundraising strategy and established strict contribution parameters.  This all-volunteer, ideologically driven PAC had a team of smart, experienced business owners that ran the PAC like a business - something that far too few PACs do.  From the outset, the PAC understood generally that it had compliance obligations, and made the seemingly logical choice to have an attorney - a volunteer - serve as the Treasurer and handle the compliance duties.

Their attorney, successful and accomplished in his own practice, had no experience with PAC reporting.  Lacking expertise in the compliance role or familiarity with the intricacies of FEC regulations, reporting errors went unnoticed.  Mistakes ranged from accepting improper contributions and making the same; not making sufficient "best efforts" to obtain contributor information, not keeping records, not reporting transactions, reporting them in the wrong amounts or on the wrong lines, or double reporting them, and offering guidance that did not reflect the current state of the law.  None of this was intentional, malicious, or sinister.  The Treasurer simply didn't know because, while a consummate professional in his field, that field wasn't PAC compliance.

Compliance is an investment

In time, complexity wins out.  As PACs grow larger and develop more complicated activities and relationships, the compliance questions they face change as well.  A Treasurer, even an attorney, without some deeper experience in the field can't necessarily provide the guidance needed, particularly on the rapid changes in the law over the past year.  Volunteers are a particular challenge, as they have lives and careers wholly unrelated to, and of higher priority than, their volunteer activities.  Volunteers can very easily "check out" and lose interest when distracted, overwhelmed, or out of their depth.

Treasurers are also the point of contact for FEC inquiries, which may involve technicalities that inexperienced Treasurers are ill-equipped to address.  And once errors and problems mount, they easily snowball.  In a heartbeat, a PAC can go from failing to respond to an FEC Request For Additional Information (RFAI), to missing multiple reports.  And, as Volunteers, they often lack the professionalism and accountability of compliance professionals.

For one PAC, the tip of the iceberg revealed the depth of errors spanning a year.  It required the investment of an extraordinary amount of time, talent, and treasure from volunteers and professionals to rebuild an entire year of reports.  An investment far greater than that of proper compliance from the outset.  Tracking down contributor data, auditing and reconciling internal financials, and reviewing potentially problematic transactions all to reconstitute a years' worth of reports.  This can be a grueling, resource-intensive process that is de-motivating to the volunteers and leadership involved.  Even after the work is done, the potential still exists for significant fines and penalties from the FEC.

Caveats & final thoughts

Political Action Committees are businesses in their own right.  A smart business in a regulated field - like PACs, which operate under complex election laws - invests in proper compliance from the outset.  Doing the job right from the beginning always costs less than fixing what you've done wrong.  While hindsight is golden, and front-end investment is an expense, savvy PACs that get results make effective, knowledgeable, and professional compliance a priority.