$5 million. That’s what Democratic mayoral candidate Mike Tolkin reports putting into his campaign recently. It’s an extraordinarily large amount, significantly exceeding the $2.7 million that Paul Massey reported lending his campaign through mid-May. There’s a catch, however. Tolkin reports the $5 million as an in-kind contribution of “Campgn Lit. / Campaign Assets.” He has separately loaned his campaign $225,000, but raised only $2,590 in cash contributions.
Tolkin is among the very longshot Democratic candidates looking to unseat Mayor de Blasio, with little name recognition or visible support so far.
In an email exchange this afternoon Tolkin confirmed that the $5 million in-kind is correctly reported, but offered little information about what the contribution is. Tollkin would only describe his in-kind contribution as “content and assets to the campaign (the aggregate value of which is $5m), which we’ll be using to promote the campaign while also generating revenue to fund some of our marquis initiatives before we take office.” He added that he plans to release details “soon.”
In response to a question of how the contributed assets were valued, Tolkin said “we used standard startup metrics and comps.” The precision of asset valuations varies widely, due both to the nature of the asset and the skill and objectivity of the evaluator. Absent any knowledge of what these assets are, it’s hard to assess whether the $5 million value assigned by Tolkin is reasonable. It’s also not possible to assess their utility to a mayoral campaign. Stay tuned as we await the promised details.
Update – Additional Note:
Campaign Finance Board Rule 1-04(g)(2) requires candidates to value in-kind contributions using “a reasonable estimate of fair market value.” Fair market value is what an arms-length purchaser would pay for such asset today. That’s a very different standard than often used in financial projections and investment pitches, which may seek to estimate or project the future value of an enterprise. Tolkin’s reference to using “standard startup metrics and comps” suggests that he may have used the latter method, although it’s not possible to determine that absent more information on the assets contributed.
Here’s the relevant subsection in the CFB Rules:
“Valuation. The candidate shall use a reasonable estimate of fair market value in determining the monetary value of an in-kind contribution and shall maintain a receipt or other written record supporting the valuation. “Fair market value” for goods means the price of those goods in the market from which they ordinarily would have been purchased at the time the goods are received. “Fair market value” for services, other than those provided by an unpaid volunteer, means the hourly or piecework charge for the services at a commercially reasonable rate prevailing at the time the services were rendered.”