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      AO 2011-06: Vendor may collect and forward contributions without making impermissible contribution

FEC Record: Advisory opinionsAO 2011-06: Vendor may collect and forward contributions without making impermissible contributionJuly 1, 2011 A vendor may collect contributions from a group of subscribers and forward them to recipient political committees. The vendor’s services in collecting and forwarding these contributions do not amount to impermissible corporate contributions from the vendor. A conveniencefee paid by the contributor to the vendor does not constitute a contribution by the contributor to any of the recipient political committees. Background Democracy Engine, LLC (the vendor) is the sole stockholder of Democracy Engine, Inc. Democracy Engine, Inc. is the connected organization of the separate segregatedfund (SSF) Democracy Engine, Inc.,PAC (the PAC). Mr. Jonathan Zuckerand Mr. Erik Pennebaker are UnitedStates citizens who qualify as partof the restricted class of DemocracyEngine, Inc., and therefore maybe solicited by and contribute tothe PAC. The vendor is a for-profitlimited liability company offeringa web-based payment service thatprovides “subscribers” with theopportunity to make contributionsto federal political committees anddonations to non-political entities.Mr. Zucker and Mr. Pennebaker planto become subscribers and use thevendor’s services. A subscriber wishing to makea contribution using the vendor’sservice must first go to the vendor’swebsite and choose the intendedrecipient political committee andthe amount of the contribution. Ifthe recipient political committee isnot already included in the vendor’sdirectory of potential recipients, the vendor will add that recipientpolitical committee to its directory.If the recipient political committeeis an SSF, the vendor ensures thatthe subscriber is a member of the restrictedclass of the SSF’s connectedorganization. The vendor does notsolicit contributions for any politicalcommittee or other entity, nor does the vendor exercise any direction orcontrol over any subscriber’s choiceof recipient political committees. Ifa subscriber designates a politicalcommittee as a recipient, the vendorinforms the subscriber of the contributionlimits established by 11 CFR110.1. The vendor will not processcontributions that the vendor determinesor believes will exceed hoselimits. The subscriber is required to provide information to the vendorthat the recipient political committeemust maintain or report, includingthe subscriber’s name, mailingaddress, employer and occupation.11 CFR 104.8(a). The vendor willforward this information to the recipientpolitical committee. The vendor deducts a conveniencefee from the subscriber’s paymentbefore transmitting the remainingamount to the recipient politicalcommittee. The convenience feecovers all of the costs of the financialinstitutions involved in the creditcard transaction and the vendor’scosts, and provides a reasonableprofit to the vendor. The vendor, andnot the recipient political committee,pays the fees and costs to thosefinancial institutions. The vendor indicates that it willset the convenience fee in a commerciallyreasonable manner in accordancewith market conditions withrespect to all recipients, regardlessof whether the recipient is a politicalcommittee or a non-political entity.This amount will reflect a completepayment of the vendor’s costs plusan amount as profit. After the subscriberprovides the vendor with therequired information, attests to his orher ability to make the contribution and agrees to the terms of service,the vendor accepts the subscriber’spayment by means of credit card,debit card or electronic check. Thevendor then deposits the subscriber’scontribution, via a vendor merchantaccount, into a vendor bank accountthat is completely separate from thevendor’s corporate operating funds. The vendor will transfer thesubscriber’s funds from its transferaccount to the recipient politicalcommittee no later than ten daysafter the subscriber authorizes thecontribution to the recipient politicalcommittee. The vendor will alsoforward all the necessary contributorinformation required for the recipientcommittees’ reports. Analysis The Federal Election Campaign Act (the Act) and Commission regulationsprohibit corporations frommaking a contribution in connectionwith federal elections. 2 U.S.C.§441b(a); 11 CFR 114.2(b)(1). A“contribution” includes, amongother things, the provision of goodsor services without charge or at acharge that is less than the usual andnormal charge. In this case, the vendor’s servicesin processing subscribers’ contributionsto the committee and otherrecipient political committees wouldnot result in impermissible corporatecontributions by the vendor to thosepolitical committees because thevendor is not providing services oranything else of value to any recipientpolitical committee. The payment of the conveniencefee will not relieve the PAC orany other recipient political committeeof a financial burden that itwould otherwise have had to payfor itself. Therefore, a subscriber’spayment of the convenience feewould not constitute a contribution by the subscribers to the PAC or anyother recipient political committee. Because the subscriber’s payment of the convenience fee is not a contributionor any other form of receipt,the convenience fee does not need tobe reported to the Commission. AO 2011-06: Date issued: May 26, 2011; Length: 7 pages.
 Author
          Isaac BakerCommunications Specialist


Read next: AO 2011-07: Principal campaign committee may pay certain campaign consultant’s legal fees
 Related: Explore campaign finance data »


This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


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