The New York City Campaign Finance Board (the “Board” or “CFB”) issues this determination concerning a complaint received on February 22, 2016 from Common Cause/NY (“the Complaint”). The issue presented is whether a candidate, Bill de Blasio (“Mr. de Blasio”), and his 2017 campaign for Mayor (the “2017 Campaign”) have violated the Campaign Finance Act (“the Act”) and Board Rules by establishing and cooperating closely with Campaign for One New York (“C41NY”) and United for Affordable NYC (“UFANYC”).
The Board’s central mandate is to protect the integrity of the Act and administer the Campaign Finance Program (“the Program”). The effectiveness of the Program depends on the Act’s contribution and expenditure limits, which restrict the potential influence of large special interest donors. The Board is concerned about candidates engaging in cooperation with outside organizations that have made expenditures on issue advocacy communications promoting the candidate, especially organizations that raise contributions that would be otherwise impermissible under the Act. Such cooperative activity raises the question of whether these organizations are making expenditures in connection with a covered election.
The Board simultaneously issues Advisory Opinion 2016-1 to provide further guidance in this area of the law. The Advisory Opinion provides a basis for the Board to review the issue presented by the Complaint, and establishes a set of factors the Board will consider to determine whether coordinated expenditures were made in connection with a covered election.
The Board has determined that C41NY is not independent of the 2017 Campaign. However, because C41NY’s communications promoting Mr. de Blasio occurred during the six months following the 2013 election and focused on issues being discussed by a governmental body, the Board cannot conclude that those communications were made in connection with the 2017 election.
The Board will enforce Advisory Opinion 2016-1 going forward. If C41NY continues its activities, or if the 2017 Campaign makes use of any work product created by C41NY, those expenditures may be considered in-kind contributions to the 2017 Campaign. While the Board does not have enough information to reach a conclusion about whether UFANYC’s activities were coordinated, they implicate many of the same factors laid out in the Advisory Opinion.1
While the Act helps prevent actual or perceived corruption by limiting contributions to candidates for covered office, the facts raised in the Complaint illuminate the ways in which the jurisdiction of the Act is limited in this area. The Board strongly urges the City Council to strengthen the city’s protections against influence-seeking by wealthy interests, and pass legislation to more closely regulate fundraising solicitations by elected officials for non-profit organizations, especially § 501(c)(4) entities.
With this determination, the Board dismisses the Complaint and concludes its inquiry.
As a candidate for mayor, Bill de Blasio made a proposal to establish universal pre-kindergarten, funded by a tax on high-income New Yorkers, a centerpiece of his campaign agenda. After winning the general election in December 2013, Mr. de Blasio announced “a grassroots campaign… to ensure that this legislation is passed in Albany,” which was conducted by UPKNYC.2 In May 2014, UPKNYC was renamed C41NY.
Public records indicate that C41NY is a § 501(c)(4) tax-exempt organization incorporated with the New York Department of State on December 12, 2013 as a domestic non-profit corporation. C41NY has not registered as a political committee with the New York State Board of Elections. It filed as a lobbyist with the New York State Joint Commission on Public Ethics for 2014.3 In May 2015, C41NY launched The Progressive Agenda to Combat Income Inequality (“The Progressive Agenda”), which formed its own fundraising § 501(c)(4) entity in October 2015.4
C41NY has fundraised and made expenditures to advocate for universal pre-kindergarten in New York City (as UPKNYC), affordable housing by funding UFANYC, and in support of The Progressive Agenda at the national level.5 C41NY has reported raising and spending over $4 million since it was created.6 Many of these contributions greatly exceeded the contribution limits and/or were from sources that are prohibited from contributing to campaigns.7 Contributions have included hundreds of thousands of dollars from entities with business before the City, at least $1.3 million from unions, and more than $1 million from real estate interests.8 C41NY has also reported that it paid $500,000 to BerlinRosen, $284,000 to Hilltop Public Solutions (“Hilltop”), $325,000 to Greenberg Quinlan Rosner Research (“Greenberg”) and $1.4 million to AKPD Message and Media (“AKPD”), all companies with ties to Mr. de Blasio and his 2013 mayoral campaign (“the 2013 Campaign”).9 The 2013 Campaign reported paying $265,000 to BerlinRosen, $544,000 to Hilltop, $427,000 to Greenberg, and $7,503,000 to AKPD, and the 2017 Campaign has made payments to each of these entities except AKPD.10
Mr. de Blasio actively engaged in fundraising on behalf of C41NY and participated in its activities by attending meetings.11 C41NY was active on social media platforms, including Facebook and Twitter, to promote UPKNYC or the Progressive Agenda, sometimes featuring Mr. de Blasio’s name or image.
In 2014, C41NY created seven videos in support of Mr. de Blasio’s universal pre-kindergarten initiative. Three of these videos featured either direct references to Mr. de Blasio, or appearances by Mr. de Blasio or his wife, Chirlane McCray (“Ms. McCray”):
- C41NY released “National Experts Agree,” a video compilation of clips of political and media figures discussing their support of “de Blasio’s universal pre-k plan.”12 The clips include Mr. de Blasio’s name repeatedly, with several images of Mr. de Blasio. The video opens with statements identifying universal pre-kindergarten with Mr. de Blasio: “Mayor-elect Bill de Blasio is making a big push for his universal pre-K plan” and “de Blasio wants mandatory pre-K across the board. I’m good for that.” The video also includes a clip of Larry Summers stating that he was “struck . . . by the incoming mayor here in New York . . . .” In each instance universal pre-kindergarten is mentioned in the video, it is identified as Mr. de Blasio’s plan.
- In April 2014, C41NY purchased and ran a 30-second air spot to play another video, “The Time is Now,” on local and broadcast networks in New York City. The video featured Ms. McCray, identified as the “First Lady of NYC,” extolling Mr. de Blasio’s education initiatives, and included images of both Mr. de Blasio and his children, who were also featured in advertisements for the 2013 Campaign.13 The video also included a headline graphic praising Mr. de Blasio’s past work: “Class Action: de Blasio Notches Near-Total Pre-K Victory in First Real Fight.” According to reported sources, the air spot cost $500,000, and C41NY was planning to spend more than $1 million to keep it on the air through that month.14
- Another video, “Clergy Breakfast: We Want a Vote!,” compiles clips from a public appearance made by Mr. de Blasio and Ms. McCray arguing for a vote on universal pre-kindergarten.15
Four of the videos created by C41NY promoted universal pre-kindergarten in New York City without featuring Mr. de Blasio’s name or image.
C41NY was also responsible for over 200,000 robocalls in March 2014. The calls offered “some breaking news about Mayor de Blasio’s game-changing plan” for universal pre-kindergarten, and noted that the “New York Assembly majority just resolved to fund the Mayor’s plan” before thanking the Assembly for its leadership.16 C41NY also paid for a mailer sent to households in Brooklyn concerning Long Island College Hospital on June 26, 2014 from Carroll Gardens Neighborhood Association board member Gary Reilly (“Reilly”). In the mailer, Reilly stated “I was asked by Mayor de Blasio to share my views on what this means for families in Cobble Hill, Carroll Gardens, Brooklyn Heights, Boerum Hill, downtown Brooklyn and Red Hook. . . . The outcome is much better than we expected.”17 The mailer listed C41NY on its return address.
C41NY has represented that it stopped soliciting contributions and began to wind down its operations in March 2016.18
UFANYC was incorporated as a § 501(c)(4) organization in February 2016. It has been reported that the organization has raised most of its funds from C41NY and a number of unions.19
According to a spokesperson for UFANYC, the organization was formed “with the explicit purpose of supporting the Mayor’s affordable housing plan,”20 and its communications have focused exclusively on that plan. A Facebook post from the organization on February 8, 2016 stated that “Mayor de Blasio has a plan to make NYC more affordable for all New Yorkers. His housing plan will invest $41 billion to create 200,000 affordable housing units. And for the first time ever, affordable housing will be required for all new housing developments.” UFANYC has also conducted a significant Twitter campaign to promote Mr. de Blasio’s plan. It tweeted on February 8, 2016 for its followers to “[l]earn more about @BilldeBlasio’s #AffordableHousing plan that will bring #RealAffordability to NYers most in need.” On February 25, 2016, the organization tweeted “w/ a 0% housing vacancy rate in #NYC, we need Mayor @BilldeBlasio’s #Affordable Housing plan now more than ever.”
UFANYC also purchased a 60 second spot that aired for two weeks on MSNBC, CNN, NY1, and News 12 to promote Mr. de Blasio’s housing plan.21 The spot featured clips from Mr. de Blasio’s 2015 State of the City address regarding affordable housing, including the details of Mr. de Blasio’s plan.22 Mr. de Blasio’s image and voice are prominent throughout the spot.
UFANYC has represented that it stopped soliciting contributions and began to wind down operations in March 2016.23
On June 18, 2015, Board staff sent a letter to the 2017 Campaign requesting information about Mr. de Blasio’s role in appointing, hiring, and firing individuals paid by C41NY; whether past lobbying activity by C41NY differed from the work of the New York City Office of State Legislative Affairs; whether any guidance had been requested from the New York City Conflicts of Interest Board (“COIB”) regarding C41NY’s activities; and whether the 2017 Campaign believed that any C41NY activities constituted “expenditures” under the Act.24
The 2017 Campaign responded on July 13, 2015.25 The response stated that C41NY was not an authorized committee because, according to its Certificate of Incorporation, it was “formed to advocate for One New York and New York City by informing the public and policymakers about legislative and public policy options” and not to aid or take part in any covered election. The response indicated that Mr. de Blasio occasionally “seeks assistance” from C41NY to advocate for New York City by exercising its mandate, and that C41NY is “enthusiastic” about assisting Mr. de Blasio. While the response noted that Mr. de Blasio does not have any legal rights or responsibilities to govern C41NY and holds no position with the organization, it did state that “Mr. de Blasio may from time to time have made suggestions to [C41NY] regarding the appointing, hiring or firing of individuals and firms paid by [C41NY], although Mr. de Blasio has no authority to make such decisions for [C41NY].”
The 2017 Campaign also provided a letter of guidance from COIB, in response to a 2013 inquiry by Mr. de Blasio regarding Mr. de Blasio’s fundraising efforts for C41NY.
26 The letter indicates that “among [C41NY’s] staff or consultants may be individuals who have been or will be employed or retained by a political campaign committee that Mr. de Blasio has authorized to work in support of his electoral efforts,” and that among C41NY’s three incorporators and initial directors was Bill Hyers, who was “the manager of Mr. de Blasio’s 2013 mayoral campaign.” The letter stated that Mr. de Blasio and Ms. McCray have occasionally fundraised for C41NY, including Mr. de Blasio being designated an “honorary chair” of fundraising campaigns. Additionally, the letter indicated that Mr. de Blasio occasionally used his official position to solicit funds for C41NY when C41NY’s work supported a major initiative of the mayoral office. COIB, based on its past guidance, found no conflict of interest under the facts Mr. de Blasio provided.
Common Cause/NY Complaint
On February 22, 2016, the Board received the Complaint. The Complaint alleged that “the conduct of Mayor Bill de Blasio, in establishing, and soliciting funds for [C41NY] and, most recently, directing the transfer of funds from [C41NY] to [UFANYC] has violated . . . the spirit, and we believe, the letter of Sec. 3-703 of the New York Campaign Finance Law.”27 The Complaint questioned whether C41NY was a campaign committee subject to the Act and Board Rules; whether contributions to C41NY violated the contributions limits imposed by Admin. Code §§ 3-703(1)(f) and (1-a); and whether, if C41NY could not be considered a committee subject to the Act and Board Rules previously, if it might at some date closer to the election become subject to the Act and Board Rules.28
In accordance with Board Rule 7-01, Board staff sent the Complaint to the 2017 Campaign.29 The Board received a response from the 2017 Campaign on March 14, 2016.30 The response asserted that the Complaint did not “allege or present any facts that suggest [C41NY] is an ‘authorized committee’” within the meaning of the Act. The response stated that since C41NY is not a political committee under the Act, it does not receive contributions as defined by the Act. It further argued that the limitations of Admin. Code §3-703(1)(f) and (1-a) did not apply to C41NY, since those provisions only apply to contributions accepted by a candidate or authorized committee.
The Board simultaneously issues Advisory Opinion 2016-1 to provide further guidance to candidates who participate in the efforts of outside organizations.
If an organization’s expenditures are coordinated with a campaign, and are made in connection with a covered election, those expenditures will be subject to the Act and Board Rules governing candidates. Advisory Opinion 2016-1 enumerates factors the Board will consider in determining when coordinated expenditures are considered to be in connection with an election. While C41NY’s communications as listed above focused on and promoted Mr. de Blasio, they occurred more than three years before his next covered election and focused on issues being discussed by a governmental body. The promotional benefits of those communications likely dissipated during that time, and the Board has determined that they are not connected to the 2017 election for the purpose of applying the limits in the Act.
The Act defines “independent” activity as that in which a candidate or a candidate’s committee “did not authorize, request, suggest, foster or cooperate.” Admin. Code § 3-702(8); Board Rules 1-08(f)(2), (3).
Pursuant to Board Rule 1-08(f)(1):
Factors for determining whether an expenditure is independent include, but are not limited to:
- whether the . . . entity making the expenditure is also an agent of a candidate;
- whether the treasurer of, or other person authorized to accept receipts or make expenditures for the . . . entity making the expenditure is also an agent of a candidate;
- whether a candidate has authorized, requested, suggested, fostered, or otherwise cooperated in any way in the formation or operation of the . . . entity making the expenditure;
- whether the . . . entity making the expenditure has been established, financed, maintained, or controlled by any of the same persons, political committees, or other entities as those which have established, financed, maintained, or controlled a political committee authorized by the candidate;
- whether the . . . entity making the expenditure and the candidates have each retained, consulted, or otherwise been in communication with the same third party or parties, if the candidate knew or should have known that the candidate’s communication or relationship to the third party or parties would inform or result in expenditures to benefit the candidate . . . .
Whether expenditures are non-independent “is necessarily fact specific.”31
Mr. de Blasio’s involvement in C41NY’s operations and activities demonstrates that C41NY is not independent of Mr. de Blasio and the 2017 Campaign. Mr. de Blasio has authorized, requested, suggested, fostered, and/or cooperated with C41NY’s formation and operations. C41NY was established by Mr. de Blasio and other individuals connected to Mr. de Blasio, including those who worked on the 2013 Campaign and the Mayoralty. Mr. de Blasio occasionally “seeks assistance” from C41NY to advocate for particular issues related to the mayor’s office, and may “make suggestions” over hiring and firing questions at C41NY.
Additionally, C41NY was established and is maintained and controlled by the same individuals who established and controlled the 2013 Campaign, and who occupy similar roles in the 2017 Campaign. Individuals with long-standing relationships to Mr. de Blasio appear to control, direct, and speak on behalf of C41NY.32 Examples of these ties are included in the analysis below.
Finally, C41NY and Mr. de Blasio have each retained, consulted, or otherwise been in communication with the same third party or parties. Review of C41NY’s financial disclosure through August 2015 shows an overlap between the 2013 and 2017 Campaigns’ and C41NY’s use of legal representation, public relations consulting, media consulting, and personnel. Given the nature of the third parties employed by C41NY and the 2013 and 2017 Campaigns, Mr. de Blasio knows or should have known that the overlapping relationship to third parties would inform or result in expenditures that benefited him.
Therefore, the Board considers C41NY and expenditures made by the organization to be coordinated with Mr. de Blasio.
In Connection with a Covered Campaign
Issue groups and other entities regularly conduct public advocacy on issues that have no connection to an election or a candidate, and are not subject to the Act. However, candidate-coordinated communications that refer to or otherwise promote candidates may be considered to be made in connection with a covered election. See Advisory Opinion No. 2016-1 (July 7, 2016). The Board will consider a number of factors to determine whether a coordinated expenditure is made in connection with a covered election, including, but not limited to:
- whether the content focuses on the candidate, his/her opponent, or otherwise promotes the candidate and/or denigrates his/her opponent;
- whether, in cases where the communication refers to more than one individual, the content references the candidate in a manner that overshadows references to the other individuals, or otherwise promotes the candidate and/or denigrates his/her opponent;
- whether the distribution of a communication appears designed to reach the candidate’s electorate;
- whether the communications are focused on the candidate’s past accomplishments or positions, rather than focusing on issues being discussed by a governmental body;
- whether there is consistent and repeated overlap between campaign staff, the organization’s staff, and/or their consultants’ staff, or the candidate or his/her agent has raised funds for the organization;
- whether the organization lacks a history of advocacy on issues or other work that is separate from a candidate or campaign; or
- whether the timing coincides with the candidate’s campaign.
See Advisory Opinion No. 2016-1. See also Advisory Opinion Nos. 2003-2 (July 14, 2003), 2000-1 (March 7, 2000), 1997-6 (June 24, 1997), 1993-10 (September 23, 1993), 1993-9 (September 9, 1993). The Board will generally find that expenditures made prior to January 1 of the election year are not in connection with a covered election. When, however, numerous or substantial factors are present, such that those expenditures closely overlap with election activity, including by focusing on the candidate’s past accomplishments or otherwise promoting the candidate and/or denigrating his/her opponent, the Board may consider activity prior to January 1 of the election year to be in connection with a covered election, particularly if it occurs closer to the election year. Expenditures in connection with a covered election that are made with the cooperation of a campaign are in-kind contributions, which must be accounted for and reported by campaigns.33
Many of the factors noted in Advisory Opinion 2016-1 are present in this case. As in the examples cited above, C41NY’s communications have focused on Mr. de Blasio by name, specifically promoted Mr. de Blasio’s policy initiatives, and have publicized Mr. de Blasio’s past accomplishments. The content of many communications have made exclusive reference to Mr. de Blasio, his role as mayor, and his initiatives, beyond merely advocating for the underlying issues. Mr. de Blasio’s name and image are sometimes featured in these communications, as are Ms. McCray’s voice and image.
Further, there has been extensive and repeated overlap between the staffs of the 2013 and 2017 Campaigns, Mr. de Blasio’s mayoral staff, C41NY, Hilltop, BerlinRosen, and Mr. de Blasio himself.34 Examples of these ties include:
- Bill Hyers, adviser to the Mayor, an initial director of C41NY, manager of the 2013 Campaign, and currently a partner at Hilltop, which consulted on the 2013 Campaign and is consulting on the 2017 Campaign;
- Ross Offinger, who served as C41NY treasurer after raising money for the 2013 Campaign, and who the 2017 Campaign reported as a consultant;
- Jonathan Rosen, adviser to the Mayor and principal at BerlinRosen, which worked extensively with the 2013 Campaign and C41NY, and is a consultant for the 2017 Campaign;
- Dan Levitan, a spokesperson for the 2013 and 2017 Campaigns, who served as an officer of C41NY and works as a vice president for BerlinRosen;
- Sam Nagourney, finance director for the 2013 Campaign, consultant for the 2017 Campaign, and a principal at Hilltop, who helped C41NY raise funds.35
Recently, de Blasio Administration officials announced that Mr. Hyers and Mr. Rosen were “agents of the City” based on their close connection to Mr. de Blasio.36
Additionally, C41NY does not have a history of engaging in issue advocacy or other work unrelated to a candidate or campaign; it was created by associates of Mr. de Blasio solely to advocate for Mr. de Blasio’s policy initiatives.
Nevertheless, it is difficult for the Board to conclude that the timing of these communications, completed more than three years before any ballots will be cast, can be said to coincide with the candidate’s campaign in the 2017 elections. Additionally, many of the communications were directly related to issues that were at the time being considered by a governmental body and were a matter of general public debate. Therefore, the Board determines that the expenditures related to these communications were not made in connection with a covered election. However, if they had occurred closer to the election, the number and significance of the factors is such that the Board would likely have found that they were made in connection to the 2017 election.
C41NY has represented that it has ceased operations, and will not make additional expenditures for public communications between now and the 2017 elections. Still, some of the work conducted by C41NY may have enduring value, including research, polling, organizing, or list-building. Given the significant presence of the factors described above, and in particular the extensive use of common consultants by C41NY and the 2017 Campaign, the Board will closely review the activities of the 2017 Campaign during the pre-election period to ensure that any work product prepared by C41NY and made available to the 2017 Campaign is appropriately valued and accounted for under the applicable limits on contributions and expenditures.
The Board currently does not have enough information to determine whether UFANYC was non-independent of Mr. de Blasio or his 2017 Campaign, and without such determination, Advisory Opinion 2016-1 does not apply. However, UFANYC’s communications appear to implicate the factors discussed in Advisory Opinion 2016-1 as being in connection with a covered election. UFANYC has exclusively promoted Mr. de Blasio’s affordable housing plan. The organization has not advocated for affordable housing generally, but specifically for “de Blasio’s affordable housing plan.” As such, UFANYC’s communications have not just focused on the underlying issue, but also promoted Mr. de Blasio. Additionally, UFANYC was created with the express purpose of promoting Mr. de Blasio’s housing plan; it has not engaged in issue advocacy independent of this initiative. For the reasons stated above, however, the Board cannot conclude that these expenditures are in connection with the 2017 election.
In response to the questions posed in the Complaint, the Board finds that contributions to C41NY are not subject to the Act and Board Rules. The Board does find that C41NY coordinated with the 2017 Campaign. However, as discussed in Advisory Opinion 2016-1, when determining whether a coordinated expenditure is made in connection with a covered election, the Board will consider the timing of the expenditure of particular importance.
C41NY created and distributed communications promoting the candidate, implicating many of the factors discussed in Advisory Opinion 2016-1. In particular, there was consistent and repeated overlap between key staff and consultants to the 2013 and 2017 Campaigns and C41NY. However, because C41NY’s communications as described above occurred more than three years before the 2017 elections, any consequent benefit to the candidate is attenuated. As a result, those activities are not considered in connection with a covered election, and as such are not considered to be in-kind contributions to the 2017 Campaign.
If C41NY had engaged in similar activity closer in time to the upcoming 2017 election, it is likely the Board would have considered those expenditures subject to the Act and Board Rules. Given the extensive use of common consultants by C41NY and the 2017 Campaign, the Board will closely review the activities of the 2017 Campaign during the pre-election period to ensure that any C41NY work product transferred to the 2017 Campaign is subject to the limits on contributions and expenditures.
These findings concerning C41NY’s expenditures do not fully address the perceptions generated by C41NY’s fundraising activities. The Program was created to reduce the influence of campaign fundraising on government decision-making. The drafters and supporters of the Act recognized that any time a candidate or elected official solicits large contributions, the resulting transaction creates the potential for perceived or actual corruption. As such, the Act places reasonable, common-sense limits on contributions to candidates. Mayoral candidates, for example, may accept contributions no larger than $4,950 from any single contributor, and no more than $400 from individuals doing business with the city. The Act recognizes that fundraising by elected officials can present a heightened possibility of improper influence-seeking or coercion. As such, winning candidates are prohibited from accepting contributions from individuals doing business with the city for their transition or inaugural expenses.
More than 95 percent of the funds accepted by C41NY could not have been accepted by campaigns under the Act, including a dozen contributions of $100,000 or more. Some came from individuals who were doing business with the city. Many came from corporations, limited liability companies, and other sources prohibited from making contributions to candidates for city office.37
These facts raise serious policy and perception issues and clearly illuminate the ways in which the jurisdiction of the Act is limited. While fundraising activities for election campaigns are closely regulated by the Act, other provisions of city law allow elected officials to solicit funds practically without limits. City laws must be strengthened to provide a more uniform set of protections against the possibility and perception that favor-seeking wealthy interests may influence government decision-makers by contributing to entities associated with an office-holder.
The Board calls upon the City Council to close this solicitation loophole, and amend the law to more closely regulate fundraising solicitations by elected officials and their agents for non-profit organizations, especially § 501(c)(4) entities.
This determination hereby concludes the Board's investigation into the Complaint, which is now closed. However, as with all 2017 campaigns, the Board will continue to closely monitor the activities of the 2017 Campaign as it conducts its pre-election audit reviews to ensure the Campaign complies with the Act’s limits on contributions and expenditures.
NEW YORK CITY CAMPAIGN FINANCE BOARD