The Illinois Venture Capital Association
Political Action Committee
(Amended March 2012)
o To support the election of candidates to Illinois state, county and city offices who support the Illinois Venture Capital Association’s legislative program, initiatives and philosophy regardless of party affiliation.
o The Board of the Illinois Venture Capital Association’s PAC shall be comprised of individuals from IVCA member firms. It is the intention of the Executive Committee of the IVCA to ensure that, to the extent practical [and consistent with other criteria taken into consideration in good faith], the Board’s membership is balanced to represent firms with a range of assets under management, investment stage focus and geographic concentration.
The Illinois Venture Capital Association- Political Action Committee (IVCA-PAC)
IVCA-PAC’s purpose and scope of activity, and the authority of the IVCA-PAC Board of Directors, shall be as set forth in the By-laws.
IVCA-PAC will support candidates for elective office with a pro-private equity investment philosophy or voting record.
IVCA-PAC support shall be given to candidates who can create and leverage support for an environment in Illinois that encourages the growth of the private equity community in the state. This includes candidates who are incumbents, challengers or contestants in an open race.
IVCA-PAC support will focus on individual candidates.
IVCA-PAC support will be given regardless of party affiliation.
The IVCA-PAC Board of Directors will evaluate the opportunity presented by each candidate who requests support and, if support is approved, will determine the level of support to be given.
After approval by the Board, contributions shall preferably be hand delivered by staff, a Director or a designated member of the Illinois Venture Capital Association.
IVCA-PAC will contribute to only one candidate in a particular election race so as to maximize the value of a contribution (i.e., IVCA-PAC will not provide support to two opponents in a race for a single position as some PAC’s do).
IVCA-PAC support should focus on individual candidates, leadership and selected committee chairs and caucuses, in that order of priority and emphasis.
IVCA staff shall provide periodic updates to PAC members and the IVCA Executive Committee. Such reports will include a financial update and a list of candidates who have received IVCA-PAC support.
IVCA-PAC will comply with all relevant laws and regulations regarding political contributions and political action committees. IVCA-PAC will revise its compliance policies and procedures on a as-needed basis to reflect changes in pertinent political contribution and PAC laws and regulations on the local, state and federal levels of government. When adopted or amended, compliance polices will be appended to the by-laws and incorporated herein by reference.
Illinois Venture Capital Association’s Political Action Committee
The name of this organization is the Illinois Venture Capital Association – Political Action Committee, hereinafter referred to as IVCA-PAC.
Principal Office and Address
The principal office of the IVCA-PAC is The Illinois Venture Capital Association, 225 West Wacker Drive, Suite 3000, Chicago, Illinois 60606.
IVCA-PAC shall be a voluntary, non-profit, unincorporated political action committee composed of its Directors, who shall be individuals from member firms of the Illinois Venture Capital Association. IVCA-PAC shall be independent of any political party or candidate. The IVCA-PAC shall pay all expenses directly incurred in operating the PAC (i.e., administrative expenses that are incurred solely as a result of the existence of a PAC). Any administrative expenses that IVCA would have incurred in whole or part regardless of the PAC shall be paid by the IVCA.
The exclusive purpose of the IVCA-PAC is to provide financial support for the nomination or election of candidates to state, county or city elective public office in the state of Illinois. The IVCA-PAC is empowered to solicit and accept voluntary contributions from any past, current, or future member firms and/or individuals of member firms of the Illinois Venture Capital Association. It is also empowered to expend such contributions to provide financial support for the nomination for election and the election of candidates for state, county or city elective public office in the state of Illinois who the Board of Directors of the IVCA-PAC believes will support the Illinois Venture Capital Association’s legislative program, initiatives and philosophy.
Article VSection 1. Membership
Membership, Contributions to Candidates
Any past, current, or future individual member or member firm of the Illinois Venture Capital Association may become a member of the IVCA-PAC upon a financial contribution to the IVCA-PAC.Section 2. Voluntary Member Contributions.
All financial contributions to the IVCA-PAC made by past, current, or future member firms or individuals of member firms of the Illinois Venture Capital Association shall be voluntary and no contributions shall be solicited or secured by intimidation, job discrimination, financial reprisal or as a condition of employment.Section 3. Contributions to Candidates
Requests for contributions to candidates shall be approved by the Board of Directors and such funds shall be disbursed at its sole discretion.Section 4. No Personal Benefit to Contributors; Segregation of Funds
No member of the IVCA-PAC Board of Directors, or contributors to the IVCA-PAC, shall have the right to share personally in any funds or assets of the IVCA-PAC upon its dissolution, or at any other time. All funds of the IVCA-PAC shall be segregated from, and may not be commingled with, any personal or business funds of any Directors, members, or anyone associated with the IVCA-PAC or the Illinois Venture Capital Association.
Article VISection 1. General Powers and Duties.
Board of Directors
The property and affairs of the IVCA-PAC shall be held, supervised and directed by the PAC Directors, and the Board of Directors of IVCA-PAC may exercise all the powers of the IVCA-PAC, subject to oversight by the Chairman of the IVCA. All significant action by the PAC shall be approved by the IVCA-PAC Board of Directors and the Chairman of the IVCA. Section 2. Number and Term of Office.
The IVCA-PAC shall be comprised of at least six but not more than twelve Directors. All Directors shall be affiliated with firms that are members of the Illinois Venture Capital Association. Upon election to a term of office, each director shall serve for a period of three (3) years or until he or she resigns or has been removed. Directors may serve for an unlimited number of terms. The Chairman of the Illinois Venture Capital Association shall at all times hold a seat on the IVCA-PAC Board for the period of his or her chairmanship, after which he or she must be elected to the Board.Section 3. Election or Appointment of Directors.
New Directors, who must be contributors to the IVCA-PAC prior to being appointed to the Board shall be nominated by the Directors then in office and approved by the Officers of the IVCA. In selecting Directors for election, the Directors then in office and the Officers of the IVCA, as applicable, shall take into account the nature of assets under management, investment stage focus and geographic concentration of the firms affiliated with existing Directors and the firms affiliated with available candidates and, [to the extent consistent with such other factors as such persons in good faith believe to be in the best interests of the IVCA-PAC ] shall seek to ensure that the composition of the Board shall represent a diversity of IVCA firm membership based on such criteria.Section 3A. Participation by Board Members.
The IVCA expects that Board members shall take a leadership role in the IVCA-PAC and shall:
1. regularly attend and actively participate in IVCA-PAC Board meetings and IVCA-PAC events; Section 4. Removal.
2. actively work to increase funding of the IVCA-PAC and to promote IVCA-PAC membership by personally participating in annual solicitation drives and peer-to-peer solicitation programs, and
3. maintain a personal or firm financial commitment to the IVCA-PAC.
The Chairman or any Director of the IVCA-PAC may be removed by a vote of the majority of the total number of PAC Directors and by the Chairman of the Illinois Venture Capital Association. Section 5. Resignation.
Any Director may resign at any time by giving written notice of resignation to the Chair or Treasurer of the IVCA-PAC. A resignation shall be effective upon delivery of such notice, whether or not accepted.Section 6. Vacancies.
Any Director vacancy, whether occurring on account of the termination of a term of office of a Director or an increase in the number of Directors, may be filled by a majority vote of the total number of Directors or by the Officers of the IVCA.Section 7. Action.
Any action required or permitted to be taken by the Directors may be taken; (i) by the majority vote of the Directors present at any ordinary meeting of directors called as provided herein, at which a quorum is present, (ii) by the majority of the Directors present at a telephonic meeting of Directors called as provided herein at which a quorum of Directors can simultaneously communicate by a telephonic means with each other, or (iii) by a written consent setting forth the action taken which shall be signed by a majority of a quorum of Directors. Section 8. Quorum.
A majority of the total number of Directors [then serving, which majority shall not in any event be comprised of less than four (4) directors,] shall constitute a quorum for the transaction of business at ordinary and telephonic meetings of the Directors or by written consents of the Directors.Section 9. Meetings.
The Board of Directors shall determine date, time and location of any regular meetings of the Board. Special meetings of the Board may be called by the Chairman on his own initiative, or shall be called upon the written request of three members of the Board.
Article VIISection 1. Election or Appointment.
The officers shall be elected by the Board of Directors and shall consist of a Chair and Treasurer and such additional officers and assistant officers as may be elected or appointed at the discretion of the Board of Directors. Each officer shall serve in his or her office until his or her successor is duly elected.Section 2. The Chair.
The Chair shall be the chief executive officer of the IVCA-PAC. The Chair or the Chair’s designee shall preside at all meetings of the Board of Directors. The Chair shall have the power to receive all contributions and to agree to any conditions or limitations thereto.Section 3. The Treasurer.
The Treasurer shall be the chief financial officer of the IVCA-PAC. The Treasurer shall have general responsibility for all funds collected and expended by the IVCA-PAC in accordance with the instructions of the Board. S/He shall be responsible for keeping full and accurate accounts, presenting financial statements, and preparing, signing and filing all reports to governmental authorities required to be filed by the Illinois Board of Elections. In the absence of the Chair, the Treasurer shall have authority to perform the duties of the Chair, and when so acting, shall have all the powers of and be subject to all the restrictions of the Chair. Section 3A. Deposits
All funds of the IVCA-PAC shall be deposited in a timely manner in such banks or other depositories as the Board may select.Section 3B. Fiscal year.
The fiscal year of the IVCA-PAC shall end on December 31.Section 3C. Audits.
IVCA-PAC’s books of account shall be audited every two years by a firm of certified public accountants selected by the Board.
Compensation and Expenses
The Directors and officers shall serve without compensation. Expenses shall not be reimbursed.
The power to alter, amend or repeal the By-laws or adopt new By-laws shall be vested in the Board of Directors [and shall also be vested in the Officers of the IVCA]. Such action may be taken at any meeting for which two weeks written notice of the purpose shall be given, or without a meeting if a unanimous written consent is signed by all the Directors entitled to vote [or all members of the Executive Committee of the IVCA].
Upon dissolution of the IVCA-PAC, all of its assets, after all expenses and debts have been paid, shall be distributed to the Illinois Venture Capital Association, a non-profit organization which is exempt from taxation under Section 501 (C) 6 of the Internal Revenue Code of 1954 (or any corresponding provisions of any later United States Internal Revenue Law).
Appendix 1To our Illinois Venture Capital Association (“IVCA”) PAC contributors –
IVCA-PAC Compliance Policy re Pay-to-Play
Numerous recent regulatory changes have changed the dynamics of political contributions, specifically impacting firms in the investment industry.
• Recently adopted SEC rules are designed to prevent influencing public pension decisions via political contributions. Both direct and indirect (e.g., through a PAC) contributions by an investment adviser to any official, including an incumbent, candidate or successful candidate, of a government entity who is directly or indirectly responsible for, or has the ability to influence, the awarding of advisory contracts are now subject to additional restrictions. Generally, if an adviser or a “covered associate” of the adviser has made a contribution to such an official, the adviser is prevented from receiving compensation for advisory services it provides to the associated government entity for two years. Investment advisers subject to the new SEC rule must be in compliance with the rule by March 14, 2011.
• Illinois law regulating “pay-to-play” relationships prohibits contributions by entities whose contracts, or pending bids and proposals on contracts, with the State of Illinois exceed a certain monetary threshold to political action committees established to promote elected public officials or candidates for public office that are (or if elected, would be) responsible for awarding such contracts. (30 ILCS 500/50-37)
• In 2010, the Cook County Board of Commissioners amended the existing Cook County “pay-to-play” regulations as part of a broader ethics and reform package.
In light of these rules, the IVCA Legislative Committee and IVCA-PAC Board have undergone a review of IVCA-PAC procedures to ensure compliance consistent with SEC rules, Municipal Securities Rulemaking Board rules and Illinois law in an effort to ensure that continuing annual contributions to the PAC will not limit a firm’s ability to access state and pension funding within its base of Limited Partners.
The purpose of this memo is to outline the steps that IVCA has undertaken to ensure that our PAC remains a valuable component of our government affairs strategy, and clarify certain aspects of the rules and statutory changes with respect to the continued permissibility of PAC contributions by Illinois-based private equity and venture capital firms. To provide confidence to our investing members, this memo has been reviewed by key attorney members of the IVCA, including Michael Rosenthal of SNR Denton US, L.L.P, Saul Rudo of Katten Muchin Rosenman LLP, and Bruce Ettelson of Kirkland and Ellis LLP.
IVCA-PAC contributions targeted to Illinois office holders have been vital to our continued ability to meet with lawmakers and discuss issues of concern to our industry. The IVCA, supported by the PAC, has been effective in influencing positive legislation regarding the Sudan Act, pension fund reform and earlier, FOIA and repealing the PPRT for investment income. With the support of the PAC, the IVCA continues to educate lawmakers on an ongoing basis about the importance of private equity and venture capital investment in the state to help ensure that they remain positive about strengthening the climate for investment in Illinois. IVCA supports an entrepreneurial spirit in Illinois’s public policy that encourages economic and business development and rewards investment in job creation and job relocations. This year has brought unprecedented change and complexity to the economic and legislative environment and it is imperative that the IVCA represent the industry with a strong voice.
In light of the rules discussed above, the IVCA-PAC has adopted the following procedures and policies commencing March 14, 2011:
• IVCA-PAC contributions are limited to the state-level legislators only.
o Federal contributions are prohibited.
o Contributions to Municipal and County (including the City of Chicago and Cook County) officials (including candidates and fundraising committees for such offices) are prohibited.
• IVCA-PAC will not make any contributions (i.e., give anything of value) to an “official” of any government entity (generally, any state or political subdivision). An official includes a person (including such person’s election committee) who, at the time of the contribution, was an incumbent, candidate or successful candidate for elective office of a government entity, if the office: (i) is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or (ii) has authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity.
• The IVCA-PAC will maintain a ‘black list’ of offices and persons deemed to have, directly or indirectly, the legal authority to cause or can influence the awarding of an investment advisory contract. Currently in Illinois, the IVCA-PAC “black list” includes the following five such offices and one additional elected official on the list:
o The Governor appoints pension fund board members (Pat Quinn).
o The Treasurer who serves on a pension fund board and invests the State’s money (Dan Rutherford).
o The Comptroller (Judy Baar Topinka) serves on the Illinois State Board of Investments (ISBI).
o One member of the Illinois House (no one is currently filling this seat) serves on ISBI’s Board.
o One member of the Illinois Senate (currently Senator James F. Clayborne) serves on ISBI’s Board.
o Justice Thomas E. Hoffman of the Illinois Appellate Court serves on ISBI’s Board.
The list will be regularly updated and will include, as applicable, both incumbents holding such offices (as noted in the list above) and any persons seeking election, or elected, to such offices.
The determination as to whether a contribution to an official triggers the two-year ban is in part based on the nature of the office held by the official at the time the contribution is made. So if an official who is subject to the ban (for example, because he has the authority to appoint or influence the selection of an investment adviser) is campaigning for a new position that would NOT be subject to the ban (i.e., he would not have such authority), a contribution made to the official, even if made to his campaign committee for such new position, would trigger the two-year ban.
Since the determining factor is an official’s position at the time the contribution is made, then a contribution to the official (assuming that his current position would not fall within the category of covered officials and that he is not seeking election for such a position) who thereafter seeks election or is appointed to a position that would be subject to the rule’s restrictions, would not trigger the two-year ban so long as such contribution was not made as a means of circumventing the SEC rule, because he was not subject to the ban at the time the contribution was made.
Essentially, a contribution made to an incumbent, successful candidate or candidate not in a covered or prohibited class who subsequently becomes part of a covered or prohibited class should be deemed in compliance with the SEC rules so long as such contribution was not made as a means of circumventing the SEC rule.
• The IVCA-PAC will use reasonable efforts to obtain a written certification from each official that he is eligible to receive the contribution in accordance with the above, although such certifications are not substitutes for appropriate compliance procedures.
• IVCA-PAC will not permit any investment adviser to coordinate the contributions of the IVCA-PAC or solicit the IVCA-PAC to make contributions to “officials” of a “government entity” within the meaning of the SEC rule. The PAC will not communicate, directly or indirectly, with any official for the purpose of obtaining or retaining a client for, or referring a client to, an investment adviser or for the purpose of obtaining or arranging a contribution or payment.
• IVCA-PAC will not make any (i) contribution to any official to which one of IVCA-PAC’s investment adviser members is providing or seeking to provide investment advisory services; or (ii) payment to a political party of a state or locality where any such investment adviser is providing or seeking to provide investment advisory services to a government entity.
• The IVCA-PAC will not do anything indirectly, which, if done directly, would result in a violation of the SEC rule.
• The IVCA-PAC will provide written confirmations to those that make contributions to the IVCA-PAC that such contributions will be used in accordance with these policies.
The IVCA-PAC will continue to monitor the regulatory environment in its mission to comply with any new rules or regulations enacted at the federal, state or local levels affecting its political contributions in Illinois. For further clarifications, please contact the IVCA lobbyist, Penny Cate at (847) 786-4540 or firstname.lastname@example.orgFor further advice on personal, non-PAC contributions, please contact your individual firm’s counsel or any attorney referenced above.
Compliance Certification Letter for PAC recipients
DateTo: Re: Confirmation of Compliance with Securities and Exchange RulesThe following letter explains the new SEC rules and their impact on IVCA-PAC’s contribution policy. IVCA-PAC no longer can make contributions to any candidate or elected official who has the ability to influence the selection of an investment adviser for any government entity. To ensure full compliance with the SEC regulations, IVCA-PAC now requires all candidates and elected officials to sign this letter certifying that they do not fall within the prohibited class prior to its making a contribution to that candidate or official. Please review this letter, sign it and return it by fax to 847-786-4550. Questions can be directed to Penny Cate via email email@example.com As you may be aware, the Securities and Exchange Commission (the “SEC”) issued new rules (the “SEC Rule”) severely restricting the making of political contributions to certain State of Illinois officials to curtail “pay-to-play” practices. The SEC Rule imposes severe penalties on money managers, such as venture firms and private equity firms (the “Investment Advisers”), if the Investment Adviser or any of its “covered associates” makes a political contribution to elected officials who may be able to influence directly or indirectly pension commitments and investments in funds sponsored by such Investment Advisers. The Illinois Venture Capital Political Action Committee (the “IVCA-PAC”) believes that working with the State of Illinois (the “State”) Legislature to address issues that impact its constituents is part of a good relationship. Historically, the IVCA-PAC has collected contributions from its members and has then made contributions to incumbents of and candidates for elective office. The SEC Rule includes punitive damages if it is violated and the need to protect our members’ (as well as your) reputation is a priority. Accordingly, prior to accepting a campaign contribution from the IVCA-PAC, we require that you confirm by signing below the following statements to provide assurance that that our contribution would not be construed as being an indirect violation of the new SEC Rule:
• You are not an incumbent of, or candidate or successful candidate for, an elective office:
o that is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or
o That has the authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity.
o “Government entity” for this purpose means any state or political subdivision of a state, including:
- Any agency, authority or instrumentality of the state or political subdivision;
- A pool of assets sponsored or established by the state or political subdivision or any agency, authority or instrumentality thereof, including, but not limited to a “defined benefit plan” or a state general fund;
- A plan or program of a government entity; and
- Officers, agents or employees of the state or political subdivision or any agency, authority or instrumentality thereof, acting in their official capacity.
- All public pension funds
• You are not and you do not play a controlling or similar role, or otherwise provide material assistance in the direction of, the election committee for an incumbent, candidate or successful candidate described above.______________________________ State official or candidate________________________________ IVCA-PAC Officer
• You agree to notify IVCA -PAC and return the contribution immediately if you become aware of an oversight that might cause this contribution to have been made in violation of the SEC rule.