Charity Events Are Exceptions to New Gift Ban Rules in the House
I am a longtime House staffer who recently, out of the blue, received an invitation to a fundraiser for victims of Hurricane Katrina. It is a $1,000-a-plate lunch here in D.C. prepared by the nation’s best Cajun chefs. The corporation sponsoring the event offered complimentary tickets to me and my husband. I was thrilled! My husband, who is a stay-at-home dad, is a serious foodie and, on my staffer’s salary, we rarely have an opportunity like this. However, when I told a friend in our office about the tickets, she said she thought the new ethics rules require me to decline the tickets. She said she’s pretty sure the corporation that invited me employs lobbyists and that staffers may no longer accept gifts of any kind from entities that do so. May I accept the tickets?
[IMGCAP(1)]A: Your friend is right that, with the January amendments to the House ethics rules, there is now a broad prohibition on accepting gifts from lobbyists and entities that employ lobbyists. So, as a general rule, if the corporation employs lobbyists you may not accept a gift from it. However, you can if it qualifies for an exception, and the good news for you is that the list of exceptions is long. Therefore, before taking your friend’s advice and declining the invitation, I’d take a close look at them.
The one that seems most likely to apply concerns attendance at charity events. Clause 5(a)(4)(C) of House Rule 25 states that you “may accept a sponsor’s unsolicited offer of free attendance at a charity event.” The purpose of this exception is to enable Members and staff “to lend their names to legitimate charitable enterprises and otherwise promote charitable goals.”
While an invitation to charity events has been an exception to the general gift restrictions for more than decade, there was some confusion about whether the charity events exception survived the January amendments banning all gifts from lobbyists. On May 24 the House resolved that confusion. It amended the rules to clarify that Members and staff may still accept a sponsor’s invitation to a charity event regardless of whether the sponsor retains or employs a registered lobbyist.
So far so good, but you’re not in the clear yet. This is because application of the charity events exception can be complicated. In fact, the ethics manual devotes several pages to discussing the elements of the exception. The manual states that, for an invitation to an event to qualify, it must meet three conditions.
First, the event must be a charity event, as defined by the rule. This means that the primary purpose of the event must be to raise funds for an organization that is qualified under the Internal Revenue Code to receive tax deductible contributions. Here, the $1,000-a-plate lunch is a fundraiser for Katrina victims. This is a good sign. However, you should still confirm that the primary purpose of the lunch is to raise funds for a legally qualifying entity.
If this condition is met, the next requirement is that the invitation come from the actual sponsor of the event. This can be tricky because the House Rules Committee’s definition of “sponsor” is probably different from how you are accustomed to the term being used with reference to charity events. In common usage, the term “sponsor” often refers to anyone who makes a financial contribution to an event. However, the definition applicable to the charity event exception is much narrower.
For purposes of the charity events exception, a sponsor is “the person, entity, or entities that are primarily responsible for organizing the event.” Moreover, someone “who simply contributes money to an event” is specifically not a sponsor under the rule. In your case, then, you need to confirm that the corporation offering you the tickets also is primarily responsible for organizing the event.
The third requirement is that the invitation to the event be unsolicited. You say your invitation came “out of the blue.” If that’s right, and if the event and corporation meet the other two conditions, you may accept the offer of free attendance to the lunch.
However, there is one last issue to consider. What does “free attendance” cover? Under the rule, the scope of free attendance depends on what is provided to other attendees of the event. For example, free attendance may include the event fee, food, refreshments, entertainment and even local transportation, so long as those items are furnished to all attendees as an integral part of the event.
However, free attendance does not encompass entertainment that is merely collateral to the event, or food and refreshments that are taken other than in a group setting with all, or substantially all, event attendees. For example, if, after the Cajun lunch, there is a reception to which only certain VIPs are invited, you may not attend that reception under the charity event exception.
In sum, assuming all guests are served the same food and refreshments, and all the other requirements are satisfied, it appears that in this case, there is such a thing as a free lunch. And, perhaps best of all, the rule allows your husband to have one, too.
C. Simon Davidson is an attorney in the Washington, D.C., office of McGuireWoods LLP. Click here to submit questions. Readers should not treat his column as legal advice. Questions are not confidential and do not create any attorney-client relationship.