Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
May 9, 2006
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2006-08
Craig Engle, Esq.
Arent Fox PLLC
1050 Connecticut Ave., NW
Washington, DC 20036
Dear Mr. Engle:
We are responding to your advisory opinion request on
behalf of Matthew Brooks concerning the application of the
Federal Election Campaign Act of 1971, as amended (the
"Act"), and Commission regulations to an as-yet unnamed
corporation (the "Corporation") to be formed by Mr. Brooks.
The Corporation intends to collect and forward contributions
from individuals at their request to political committees,
Federal candidates, and other entities. The Commission
concludes that the proposed activities are permissible.
Background
The facts presented in this advisory opinion are based
on your letters received on February 17, February 21, and
April 19, 2006, and email received on April 24, 2006.
Mr. Brooks intends to form a for-profit corporation
that would provide commercial services to individuals
("subscribers") interested in making contributions and
donations to Federal and non-Federal candidates, political
committees, and non-profit organizations.1 The Corporation
plans to accept funds from subscribers who will, at a later
date, direct those funds to be contributed to the candidates
or political committees, or donated to other non-profit
organizations the subscriber selects. The subscribers will
also pay a service fee that will be deposited into the
Corporation's treasury. The money the subscriber allocates
for future contributions and donations will be deposited
into a separate merchant account, where it will remain until
the subscriber designates a candidate, political committee,
or other non-profit organization as the recipient of the
funds, or asks for the funds to be returned. Once the
subscriber indicates to the Corporation that he or she would
like to make a contribution or donation, the Corporation
will forward the designated amount of funds to the recipient
political committee, candidate, or other non-profit
organization within ten days.
The Corporation will obtain each subscriber's mailing
address, occupation, and employer information and provide it
to the recipients, whenever necessary. The Corporation will
employ various screening and verification procedures to
prevent the making of prohibited contributions, and will
forward contributions only insofar as the Corporation deems
them permissible. It will disallow subscribers from
exceeding contribution limits if that can be determined
based on records maintained by the Corporation. Upon
registration for the service, subscribers will be informed
of the Act's contribution limits and source restrictions,
and State laws where applicable, and will be required to
attest that they are complying with the Act. 2 The
Corporation will provide up-to-date information to
subscribers regarding their remaining contribution limits
and account balance.
The Corporation will use its best efforts to monitor
subscriber contributions made independently of the
arrangement with the Corporation to ensure compliance with
the Act. If a subscriber makes a contribution using funds
not held by the Corporation, the subscriber may report the
contribution to the Corporation, and the Corporation will
ensure the contribution is recorded in its records and
counted towards all relevant contribution limits. The
Corporation will not forward any contributions it knows do
not comply with the Act and will notify subscribers when
they have reached any applicable contribution limit.
The Corporation will not place any limits on how a
subscriber disburses his or her money, other than refusing
to forward contributions it knows do not comply with the
Act. The Corporation will not engage in Federal election
activity or expressly advocate the election or defeat of any
clearly identified candidates or advocate on behalf of any
causes. All money in the merchant account will remain the
property of the individual subscriber, and the Corporation
will provide only an accounting and forwarding service.
Under the business model the Corporation has proposed,
the Corporation will be funded entirely by service fees paid
by subscribers. The Federal and non-Federal candidates,
political committees, and non-profit organizations that
receive forwarded contributions and donations will not pay
the Corporation for its services, and the Corporation will
not enter into a contractual relationship with these
entities.
The Corporation is considering providing commentary and
analysis of various State and Federal officeholders, non-
profit organizations, campaigns, and events as an additional
service to its individual subscribers. This may include
providing biographical information, voting records of a
candidate on particular issues, ratings of a candidate given
by various organizations, reelection percentages, the
candidate's campaign contribution position, the strength of
the candidate's party loyalty, and any relevant media
articles.
Subscribers would be asked to identify issues that are
of general interest to them. The Corporation would then
provide its subscribers with information and analysis
relevant to that issue. In some cases, the subscriber may
request specific information or analysis from a list of
organizations provided by the Corporation. Subscribers may
also request specific media articles to be forwarded to
them. However, the Corporation may also forward general
information, such as biographies of Members of Congress, to
all its subscribers, without their making a specific
request. Under no circumstances will the Corporation author
any of the information or analysis that is forwarded to
subscribers.
The Corporation expects that it may receive
solicitations directly from candidates, political
committees, and non-profit organizations. The Corporation
intends to ask its subscribers to fill out a questionnaire
that will be used to develop a "donor profile" for each of
them. Solicitations matching a subscriber's donor profile
will be forwarded to the subscriber. While the Corporation
will accept solicitations from any candidate, political
party, political committee, or non-profit organization, some
solicitations may not be forwarded to the subscriber due to
screening based on the subscriber's donor profile. The
Corporation does not propose to charge any fee to candidates
or political committees for this service.
Finally, the Corporation intends to recruit individuals
to serve on its Board of Directors who may also be officers
of political committees and non-profit organizations.
Questions Presented
1. May the Corporation receive and distribute deposits for
subscribers' contributions?
2. May the Corporation forward commentary and analysis of
Federal candidates to its subscribers?
3. May the Corporation maintain two accounts: one for its
corporate treasury, and one for funds held for subscribers
to be used to make donations and contributions?
4. May the Corporation receive and forward contribution
suggestions from political committees to its subscribers?
5. May the Corporation recruit individuals to serve on its
Board of Directors who may also be officers of political
committees?
Legal Analysis and Conclusions
1. May the Corporation receive and distribute deposits for
subscribers' contributions?
Yes, the Corporation may receive and distribute
deposits for subscribers' contributions. The Corporation
would provide services to individual subscribers to assist
them in making contributions, similar to corporations that
provide delivery services, bill paying services, or check
writing services. The individual subscribers would
compensate the Corporation as an incidental cost in making
contributions. Therefore, the Corporation's receipt and
distribution of subscribers' contributions would be
permissible under the Act and Commission regulations.
2. May the Corporation forward commentary and analysis of
Federal candidates to its subscribers?
Yes, the Corporation may forward the proposed
commentary and analysis of Federal candidates to
subscribers. This service will be provided to subscribers
at their request for an additional fee. As such, it is a
part of the Corporation's overall business plan to assist
subscribers in the making of contributions. Under all of
the circumstances present, the proposed activity would be
permissible under the Act and Commission regulations.
3. May the Corporation maintain two accounts: one for its
corporate treasury, and one for funds held for subscribers
to be used to make donations and contributions?
Yes, the Corporation is required to maintain two
accounts under the proposal that has been submitted. In
order to prevent a contribution by the Corporation to any
political
committee or candidate it must use a separate merchant
account for funds that will be dispersed as contributions.
See 2 U.S.C. 441b; 11 CFR 114.2(b). This account must be
entirely segregated from the Corporation's general treasury
to ensure that the funds are not commingled.
4. May the Corporation receive and forward contribution
suggestions from political committees to its subscribers?
Yes, the Corporation may forward contribution
suggestions from political committees to its subscribers.
The Corporation intends to forward only contribution
suggestions that the subscribers have previously indicated
they wish to receive, and the cost to forward any
contribution suggestions will be paid for entirely with
subscribers' fees. The Corporation will not exercise any
discretion, beyond matching contribution suggestions to the
subscribers' donor profile, in determining which
contribution suggestions, if any, to forward. This service
will be provided to the subscribers as part of the
Corporation's overall business plan to assist subscribers in
the making of contributions. Under these circumstances, the
proposed activity would be permissible under the Act and
Commission regulations.3
5. May the Corporation recruit individuals to serve on its
Board of Directors who may also be officers of political
committees?
Yes, the Corporation may recruit individuals to serve
on its Board of Directors who may also be officers of
political committees. However, if these individuals are
acting on behalf of a Federal candidate or political party
committee while participating on the Corporation's Board of
Directors, the Corporation might be directly or indirectly
established, financed, maintained, or controlled by a
Federal candidate, officeholder, or political party
committee, and thus subject to the applicable limitations
and prohibitions in 2 U.S.C. 441i(a), 441i(b), and
441i(e)(1)(A) and (B). See Advisory Opinion 2005-02
(Corzine) (organization directly or indirectly established,
financed, maintained or controlled by Federal candidate may
only solicit funds that comply with the limits and
prohibitions of the Act, even in connection with a non-
Federal election). If the individuals are not acting on
behalf of any Federal candidate or officeholder or any
political party committee while participating on the Board
of Directors, then the Corporation would not be considered
to be directly or indirectly established, financed,
maintained, or controlled by the Federal candidate or
officeholder or political party committee. See Advisory
Opinion 2003-10 (Reid) (the activities of an individual who
acts in his own capacity and not on behalf of a Federal
candidate or officeholder will not be attributed to that
Federal candidate or officeholder despite an existing agency
relationship).
This response constitutes an advisory opinion
concerning the application of the Act and Commission
regulations to the specific transaction or activity set
forth in your
request. See 2 U.S.C. 437f. The Commission emphasizes
that, if there is a change in any
of the facts or assumptions presented, and such facts or
assumptions are material to a conclusion presented in this
advisory opinion, then the requestor may not rely on that
conclusion as support for its proposed activity.
Sincerely,
(signed)
Michael E. Toner
Chairman
Enclosures (AOs 2005-02 and 2003-10)
_______________________________
1 This advisory opinion is limited to addressing your
proposal as it relates to Federal candidates and political
committees.
2 The attestation language will include the following:
Federal law prohibits contributions from the general
treasury funds of corporations, labor organizations, or
national banks. Therefore we are required to ask you
to confirm the following statements:
1. This contribution is made from my own funds, and
not those of another.
2. This contribution is not made from the general
treasury funds of a corporation, labor organization or
national bank.
3. I am not a Federal government contractor, nor am I
a foreign national who lacks permanent resident status
in the United States.
4. For credit or debit card transactions: This
contribution is made on a personal credit or debit card
for which I have the legal obligation to pay, and is
made neither on a corporate or business entity card nor
on the card of another.
Failure to sign or attest to any of the attestations above
will result in rejection of the funds. Additionally, the
Corporation plans to inform prospective subscribers that
their contributions will be publicly identified on the
recipient's disclosure reports.
3 In addition, if the Corporation were to receive
solicitations directed to individual subscribers, and not to
the Corporation itself, it would be permitted to forward
those solicitations to the proper recipient. This would be
a service provided solely to the individual for which the
Corporation would be properly compensated.