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3.1 Establishing a Political Committee Statement of Organization

1. Generally

A Statement of Organization must be filed to establish a political committee*. There is no fee charged for establishing a campaign finance entity. The Statement of Organization can be used to form every type of political committee, including a(n):

• Authorized Candidate Campaign Committee;
• Slate;
• Political Action Committee (PAC);
• State Ballot Issue Committee;
• Local Ballot Issue Committee; and
• Party Central Committee.

§§ 13-202, 13-206, and 13-208 of the Election Law Article

* The Election Law Article refers to both "political committee" and "campaign finance entity". For compliance purposes, there is no difference between these terms under current law. Therefore, they can be read interchangeably wherever they are found in the statute.

2. Responsible Officers

All political committees require a chairman and treasurer. For more information regarding who may serve and the responsibilities of being an officer of a committee see Chapter 7.

- § 13-207(c) of the Election Law Article

3.Where to file

All political committees file the Statement of Organization with the State Board. 

4. Name of the Political Committee

The name assigned to the political committee on the Statement of Organization must be consistent with the following:

Political Committee Naming Convention

-§§ 13-208(d) and 13-228 of the Election Law Article

5. Election Designation

When a political committee is formed, it must designate the election or elections in which it will participate; either the Gubernatorial, Presidential or Baltimore City (Mayoral). If the committee spends or receives any money in connection with an election, then the committee is participating in the election. The designation will be effective for the duration of the committee. Once the committee indicates that it is participating in one of the elections, the committee will be required to file all of the reports related to that election. 

Election designation does not restrict political committees from receiving contributions and making expenditures for its own election in years not designated. The designation only restricts the committee’s support of other candidates or ballot issues during non-designated election cycles. 

For example, if the committee has designated the Gubernatorial election, the committee can still raise and/or spend money in connection with its own 2010 or 2014 campaign during a non-designated election year, such as the 2011 Baltimore City election year.  Because the committee’s activity is limited to contributions and expenditures directly related to its 2014 campaign, the committee is not required to file 2011 Baltimore election reports. However, if the committee transfers funds to a 2011 Baltimore City candidate, the political committee has participated in the election and must file all election related reports for that election year.

If the committee begins participating in an election which it did not designate, the responsible officers of the committee must notify the State Board immediately and begin to file all campaign finance reports in accordance with the reporting schedule, beginning with the first report due following the date of the committee’s first financial transaction relating to the relevant election.  See Section 11.1 of the Summary Guide for reporting dates.

For example: Committee A designates the Gubernatorial Elections. This designation allows the committee to only file Annual reports during the other election years. However, on September 5, 2011 Committee A made a transfer of $250.00 to a Baltimore City mayoral candidate. As a result of the transfer and subsequent participation in the Baltimore City election, Committee A is required to notify the State Board of its participation in the election and file the 2011 Baltimore City Pre-General and Post-General campaign finance reports.

Regardless of a committee’s designation, the political committee is required to file an Annual Campaign Finance Report every third Wednesday in January. 

Important:  The State Board sends Pre-Report Notices to all political committees that owe a campaign finance report. If the committee receives a Pre-Report Notice, you must either file the report or immediately contact the State Board if you believe the notice was sent in error.

- §§ 13-208(c)(3) and 13-309(b) of the Election Law Article

3.2 When Does a Political Committee Need to be Established

Generally, a political committee needs to be established to conduct any campaign finance activity. Campaign finance activity is raising and spending money or receiving other things of value to promote or assist in the promotion of the success or defeat of a candidate, political party or question.

Candidates are required to open an authorized candidate campaign committee prior to filing a Certificate of Candidacy regardless of whether the candidate wishes to engage in any campaign finance activity.

- § 13-202 of the Election Law Article

3.3 When to Close a Campaign Finance Entity

In most cases, the decision on when to close a political committee is left to the chairman and treasurer of the committee. However, there are instances when a political committee must be closed. A candidate campaign committee must close and file a final report within 8 years after the latest of:

• The end of the individual’s most recent term of office;
• The date of the last election in which the individual was a filed candidate; or
• The payment of the final debt or other obligation of the entity that was incurred in connection with that candidacy. 

-§ 13-310 of the Election Law Article

3.4 How to Close a Political Committee

1.  Generally

A political committee must have:

• Zero bank balance and cash on hand (Part 4 on the Summary Page of the campaign finance report); and
• No outstanding obligations or debts (including any loans from the candidate)

If the above conditions are met and satisfied, the political committee may file a final campaign finance report. 

2.  Process

Committee Actions  Required:

• The campaign finance report must be marked “Final” in order to close, otherwise the committee will remain open and active regardless of its financial activity or cash balance.

- § 13-311 of the Election Law Article

• For ELECTrack EFS users, simply check the “final” box on the Summary Page to indicate that the report is a final report. 

State Board Approval Required:

• The committee is not officially closed until the responsible officers for the political committee receive confirmation from the State Board. A political committee may not be officially closed if, according to the State Board records:
  • There is an outstanding campaign finance report due (including State Board amendments required);
  • The committee owes late fees; or
  • The reports filed are not in compliance or are incomplete.

3. Surplus Funds

If a political committee wishes to close and file a final report and has paid off all outstanding obligations, any money remaining is considered surplus funds and must be disposed of in one or more of the following ways:

• Returned, pro rata, to the contributors; or
• Paid to a state or local party central committee, provided:
• The candidate is a member of that party and, if the funds are paid to a local central committee, the central committee is located in the same county in which the candidate resides or seeks to represent; and
• In the case of a non-candidate committee, the committee is acting for the party.
• Paid to the local board of education of the county in which the candidate resides or seeks to represent; or
• Paid to a recognized non-profit organization that provides services or funds for the benefit of pupils and teachers; or
• Paid to a charitable organization registered or exempt from registration under the Maryland Charitable Solicitations Act*; or
• Paid to any public or private institution of higher education in this State provided:
• The institution possesses a certificate of approval from the Maryland Higher Education Commission; and
• The funds are designated for use by the institution solely to award scholarships, grants, or loans to students attending the institution**.

- § 13-247 of the Election Law Article

*To determine which charitable organizations are registered or exempt from registration under the Maryland Charitable Solicitations Act, please call the Secretary of State's Office at (410) 974-5534. Also see www.sos.state.md.us.

**To determine which public or private institutions of higher education have received certificates of approval from the Maryland Higher Education Commission, please call 410-260-4516. Also see www.mhec.state.md.us.

Note:  When a political committee closes, items purchased by the committee, such as equipment and furniture, must be sold,  and the money from the sale must be disposed of in the same manner as  other surplus funds.  These items cannot be retained by the candidate or a committee officer unless purchased.

4.  Negative Balance

A committee may not close with a negative cash balance. A negative balance usually results from the failure to report all income (including money from the candidate). If a report reflects a negative balance, the committee will need to review its past reports and account books and file an amended report(s) eliminating the negative balance. 

5. Outstanding Obligations

• Candidate Loans
  
  In the case of an outstanding loan to the campaign from the candidate or the candidate’s spouse, the candidate has the option of forgiving the loan and converting it into a contribution (contributions or monies from a candidate or the candidate’s spouse to the candidate’s campaign account are unlimited). In order to file a final report, the campaign finance report must reflect the conversion of the loan to a contribution and must include a copy of a letter of forgiveness from the candidate (attached to the report).

• Other Loans
  
  Outstanding loans  from persons other than the candidate or the candidate’s spouse may be forgiven only up to the contribution limit and must be documented in the same manner described above.  If the converted loan plus other contributions from the same individual or person exceeds the $4,000 contribution or the $10,000 aggregate limit for that person, a violation may have occurred.

• Bills
  
  The political committee must make every effort to repay the debt. However, if the political committee, due to extenuating circumstances, is unable to pay the debt, the political committee may close only after producing documentation satisfactory to the State Board of the political committee’s inability to pay. The State Board’s action to close a political committee does not limit the right of a creditor to bring an action against the responsible officers or candidate of the political committee.

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