Advisory Opinion 00-08

     Campaigns receive goods such as artwork or other items with considerable monetary value. The candidate or campaign then sells these goods to individuals for monetary consideration. Questions arise as to the value of the "donated" items and the manner in which they should be recorded and reported. The Commission through this advisory provides that the individual donating the item makes a nonmonetary contribution to the campaign. The value of a nonmonetary contribution is a reasonable "market value" for the contribution. Any nonmonetary contribution received by the candidate or campaign should be recorded as an expense as part of one transaction. When the artwork or item of value is sold to an individual, the money received by the campaign is recorded as an "other receipt" and expended in the ordinary course of the campaign.

     Section 11-191, Hawaii Revised Statutes, defines a contribution in part as a "gift, subscription, deposit of money or anything of value,…for the purpose of influencing the nomination for election, or election, of any person to office". Similarly, the statute defines an expenditure in part as, "any purchase or transfer of money or anything of value,…or payment incurred or made, or the use or consumption of a nonmonetary contribution". Section 2-14.1-7(f), Hawaii Administrative Rules provides that "nonmonetary contributions to a candidate, committee, or party shall be disclosed and reported at the reasonable market value of the contribution". The Commission allows the candidate or candidate committee to determine "reasonable market value", generally, as determined by what an item would be purchased or paid for by anyone else in the public.

     Candidates may hold an auction, white elephant sale or some other similar means to raise money for the campaign, the sale items having been received by the campaign as a nonmonetary contribution. Items sold by the campaign clearly establish the market value. Thus, for example, a painting is received by the campaign from a donor, and is sold by auction to the highest bidder for $1,000. The nonmonetary contribution by the donor of the painting is $1,000 and reported as such.

     In reporting the nonmonetary contribution, the candidate or campaign committee reports the transaction on Schedule A (Form CC-5 (A) rev. 5/99) of the Candidate Committee Disclosure Report. At the same time, the transaction is reported as an expenditure on Schedule B (Form CC-5 (B) rev. 5/99). The purpose of the dual entry is to insure that the books remain balanced. The value of the sale item, the $1,000 in the previous example, is recorded and reported as a second transaction as an "other receipt" on Schedule C (Form CC-5 (C) rev. 5/99), and deposited into the campaign treasury.

     In the instant example, the donor of the painting has made a $1,000 contribution to the campaign, and is subject to the contribution limit for this candidate. The individual who purchases the painting for $1,000 is not credited for making a contribution with this purchase.

     This Advisory Opinion is provided by the Commission as a means of stating its current interpretation of the Hawaii Election Campaign Contributions and Expenditures laws provided under HRS section 11-191, et seq. and the administrative rules of the Commission provided in chapter 2-14, Hawaii Administrative Rules. The Commission may adopt, revise, or revoke, this Advisory Opinion upon its own initiative or upon the enactment of amendments to the Hawaii Revised Statutes or the adoption of amendments to the administrative rules by the Commission.

Dated: Honolulu, Hawaii, August 1, 2000.

CAMPAIGN SPENDING COMMISSION

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A. Duane Black
Chairperson

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Della Au
Commissioner

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Clifford Muraoka
Commissioner

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Andrea Low
Commissioner