DATES TO REMEMBER
Tuesday, April 13, 2010 - CEC Meeting 9:30 AM, City Hall Rm 1050
Friday, April 30, 2010 - First quarter 2010 reports due
TICKETS TO 501(c)3 FUNDRAISING EVENTS GIVEN TO CITY OFFICIALS MAY HAVE VALUE
The City Ethics Commission has recently received an increased number of questions regarding how state and City gift laws apply to tickets to fundraising events that benefit 501(c)3 organizations. To help you stay up to date about the laws and help you make informed choices, we would like to take this opportunity to provide a brief refresher on these laws and how they might apply to you as a registered lobbying entity in the City of Los Angeles.
Since Measure R took effect in 2007, if you are a lobbyist or lobbying firm, you are prohibited from giving any gift to a City official if you are a restricted source to that official. (LAMC § 49.5.10(A)(4)). All registered lobbying entities are restricted sources to all elected officials, and if you are registered to lobby any other City agency, you are a restricted source to any official with that agency, as well. City law also prohibits lobbyists and lobbying firms from acting as intermediaries for any gift by another person. (LAMC § 49.5.10(A)(5)).
A gift is anything of value that a City official receives for which he does not provide monetary or other consideration of equal or greater value. A gift may include meals, tickets to sporting events, and rebates or discounts in the price of anything of value (unless the rebate or discount is made in the regular course of business to any member of the public without regard to official status). (LAMC § 49.5.2).
When determining whether an item you may wish to give a City official is permissible, you’ll need to consider both the definition of a gift – and anything exempted from that definition – as well as the value of the gift.
Prior to October 2008, state law contained a significant exemption in relation to tickets to charitable fundraising events. Specifically, state law considered tickets to a fundraiser to benefit a 501(c)(3) non-profit organization as having "no value." Therefore, they were not considered gifts and were not limited under the law. In October 2008, however, the state Fair Political Practices Commission (FPPC) issued new regulations regarding how tickets to non-profit fundraisers are valued.
Here’s how it works. Now, pursuant to Title 2 California Code of Regulations §18946.4, a ticket to a 501(c)(3) fundraiser may have value depending on the source of the ticket, the non-deductible portion of the ticket, and the number of tickets offered. This change is significant because under this approach, tickets that have a value are now subject to City and state gift limits.
Under state law, a single ticket to a 501(c)(3) fundraiser that is given to a City official directly from the 501(c)(3) organization benefiting from the event is considered to have no value, provided that the ticket is used by the official and the non-tax deductible portion of the ticket(s) does not exceed $420. In this circumstance, a City official may accept such a ticket from the organization because the ticket is considered to have no value. However, additional tickets given directly by the organization to the official are valued at full face value and are subject to state and City gift restrictions.
In the instance where a City official is given single tickets from an organization for multiple fundraising events for the organization, the tickets have no value, provided the cumulative non-tax deductible portion of all tickets does not exceed $420 in a calendar year.
If the actual source of a single ticket to an official is someone other than the 501(c)(3) organization that benefits from the fundraising event, then the ticket is valued at its full face value. This means that any ticket to 501(c)(3) fundraising events that you offer to a City official is valued under state law at the full ticket or admission price.
If you have any questions about how state law determines who is the actual source of a ticket, or if you have any other questions about how state law values tickets to events under 2CCR §18946.4, please contact the FPPC (http://www.fppc.ca.gov/) at 1-866-ASK-FPPC for further guidance.
If you have any other questions about the City’s ethics laws and how they may apply to you, please feel free to contact our office at (213) 978-1960, and we’ll be happy to assist.