1612 -purchase Of Advertising Space - En - 8 Juillet 2008

Draft July 9, 2008

Information Sheet XX The Purchase of Advertising Space at Political Events (Date)

DISCLAIMER These information sheets set out Elections Canada’s interpretation of the Canada Elections Act and are issued to assist political entities in understanding the Act. The views expressed in the information sheets are not law and are not intended to replace the official text of the Act. How the Act applies to any particular case will depend on the individual circumstances of that case. Should you have any questions or comments with regard to this particular information sheet, please send us an e-mail at …………@elections.ca

Draft July 9, 2008

Table of Contents Introduction................................................................................................... 1 The Legislative Context................................................................................ 1 The Purchase of Advertising Space at Political Events ............................ 2 .

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Introduction 1.

Elections Canada is often asked questions concerning the “sponsoring” of events by corporations or other entities or the purchasing of “visibility” at political events. This type of transaction can lead to illegal contributions being made. This information sheet aims at clarifying which transactions meet the requirements of the Canada Elections Act.

The Legislative Context 2.

Only individuals may make contributions.

3.

Contributions can be monetary or non-monetary in nature. The Act defines a monetary contribution as “an amount of money provided it is not repayable.” It defines a non-monetary contribution as “the commercial value of a service, other than volunteer labour, or of property or of the use of property or money to the extent that they are provided without charge or at less than their commercial value.” 1

4.

Therefore, if a political entity receives property or a service for free or for less than commercial value, the difference between the commercial value and the amount paid is a non-monetary contribution.

5.

These principles guide Elections Canada’s treatment of questions regarding “sponsorships,” the selling of “visibility” or the plain sale of advertising space to corporations or other entities in the context of political events, including fundraising events.

1

S. 2. Also see the definition of “commercial value” in that section. As well, see the soon-to-be-published information sheet entitled Determining the Value of Election Expenses (Candidates and Registered Parties).

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The Purchase of Advertising Space at Political Events 2 6.

Corporations and other groups or associations sometimes offer to purchase “visibility” or advertisement space at political conventions or fundraising events. They may also offer to provide certain goods or services to attendees of these events.

7.

It should be remembered that any person or entity who gives money to a political entity, provides goods and services for less than commercial value to a political entity, or purchases goods and services for more than commercial value from a political entity with the intent of benefiting that entity will have made a contribution to the registered party, which would be subject to the rules of the Canada Elections Act. This applies to a person or entity acting in any capacity, including as a sponsor.

8.

As a corollary principle, any arrangement entered into by any person or entity, including the purchase of advertising space by a corporation or other entity or any other commercial arrangement that circumvents the eligibility, caps or disclosure rules of the Canada Elections Act respecting contributions, would be contrary to section 405.2 and would constitute an offence.

9.

Accordingly, when a corporation purchases advertising space at a political event, the political entity that sells it must be able to establish that the amount paid by the corporation represents the commercial value for such advertising (that is, the lowest price someone who is in the business of providing advertising would charge for this service in the area where it was provided).

10. For example, in the case of an advertisement placed in an event program or newsletter, the commercial value would be the lowest rate charged by a publisher that is in the business of selling advertising space in a general or special interest consumer periodical of equivalent circulation. 2

This type of arrangement is sometime referred to as a “sponsorship.” Inasmuch as the concept of sponsorship connotes not just a commercial arrangement but also financial support for the organization running the activity and its objectives, it would constitute an illegal contribution if made by a corporation.

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11. Similarly, if the advertising space to be purchased constitutes banner space at a political event, the commercial value would be the lowest rate charged for equivalent visibility of commercial advertising placement in public areas such as bus shelters, billboards, etc. 12. It is not appropriate to compare the amount paid by a corporation for advertising at events organized by charities or other not-for-profit organizations. This is because part of the amount paid in such contexts includes sponsorship costs incurred to support the activity and build goodwill. An amount in excess of the commercial value of any advertising would, in the context of transactions involving a political entity, constitute a contribution to that political entity. 13. The political entity must also be able to demonstrate that attendees of the event represent a market for the purchaser of advertising space. If this is not the case, the transaction would constitute a contribution. 14. An offer by a corporation or other entity of goods or services to be distributed or made available to attendees at a political event should be refused, as the Act provides that the offering of goods or services at less than commercial value constitutes a contribution. This is so even if such offering represents a normal business practice in another context.