Federal Election Commission Main Page
March 18, 1991
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1991-1
Lyn Utrecht
Manatt, Phelps & Phillips
1200 New Hampshire Avenue, N.W.
Suite 200
Washington, D.C. 20036
Dear Ms. Utrecht:
This responds to your letter dated January 23, 1991, requesting an
advisory opinion on behalf of the Deloitte & Touche Federal Political
Action Committee ("the Committee") concerning application of the
Federal Election Campaign Act of 1971, as amended ("the Act"), and
Commission regulations to the solicitation of credit card
contributions to the Committee by Deloitte and Touche employees.
You state that Deloitte and Touche is a general partnership
providing comprehensive accounting and auditing, tax, consulting, and
other professional services throughout the United States. It is a
Federal contractor. Because Deloitte & Touche is a partnership, the
Committee is not a separate segregated fund, but rather, a
nonconnected multicandidate committee.1/ All costs incurred in
connection with the administration and solicitation of contributions
to the Committee are defrayed from the contributions received by the
Committee.
You state that, pursuant to an agreement with American Express,
the Committee has become an American Express "establishment" for the
purposes of accepting credit card contributions. You state the
agreement between American Express and the Committee is identical to
those between American Express and other, nonpolitical establishments.
The Committee is responsible for paying all service charges and fees,
and Deloitte & Touche will not bear any costs related to the
solicitation or the agreement.
----------
1/ You state that Deloitte & Touche was formed in December
1989 upon the merger of Deloitte, Haskins & Sells and Touche
Ross. Prior to the merger each firm had established
nonconnected multicandidate political committees. After the
merger, the two committees considered themselves as
affiliated. In February 1990, the Committee changed its name
from Touche Ross Partners PAC to its present name. The
Deloitte, Haskins & Sells Good Government PAC transferred its
funds to the Committee in October 1990 and filed a
termination report in January 1991.
The Committee proposes to send an annual solicitation to all
Deloitte & Touche partners requesting that they make a contribution to
the Committee by charging it to their American Express cards. You
state that the solicitation will suggest a guideline and will comply
with the Commission's regulations concerning guidelines and notices
set out in 11 CFR 110.11 and 114.5(a), even though the Committee is
not a separate segregated fund. The solicitation will include a
return card which each individual will be asked to complete, sign, and
return, authorizing an annual charge to his or her American Express
card in a specific amount. The authorization will remain in effect
until revoked in writing by the contributor and the contributor may do
so at any time. A contributor may also elect to have his or her
contribution charged to his or her account on a monthly, rather than
yearly, basis. The Committee will comply with all recordkeeping and
reporting requirements applicable to these contributions.
Because the solicitation and contributor authorization may occur
some time before the actual charge to the individual's American
Express account in December of each year, the PAC is willing to
provide individuals with a written reminder of the amount of their
contributions, prior to the charge. In addition, the Committee will
refund to American Express (and thus to the individual contributor)
any contribution charged to an account which the individual repudiates
or refuses to pay, even if a written authorization is still in effect.
You state that these measures will ensure that contributors who have
signed authorizations will be fully aware of the charge of the
contributions to their accounts and that no inadvertent involuntary
contribution is made.
Additionally, the Committee may also inform employees below the
partner level of the Committee's existence and the opportunity to
contribute to the Committee through the use of an American Express
card. Such notification would probably be made in the Committee
newsletter, not by a specific solicitation letter. You state that the
notice would comply with the requirements of 11 CFR 110.11 and
114.5(a).
The Committee will accept contributions only from employees who
are United States citizens and will accept only individual
contributions from personal funds. (None of the partners are
individually incorporated.) The partners are entitled to obtain an
American Express card imprinted with the name Deloitte & Touche
through a separate arrangement between Deloitte & Touche and American
Express. The American Express accounts for the partners are
individual and not Firm accounts, although the cards are imprinted
with both the individual's name and the name of the Firm. You state
that Deloitte & Touche is not responsible in any way for bills charged
to these accounts, and American Express has no recourse to the Firm
for any late or unpaid balances. Individuals who choose to do so may
utilize these American Express cards to make a contribution to the
Committee or may utilize any other American Express account which they
maintain.
You state that individuals must use their own personal accounts to
pay these American Express bills. They may not pay these bills by
drawing on any partnership account or undistributed partnership funds.
You state that, therefore, although Deloitte & Touche is a Federal
contractor, the contributions will not result in the use of any
partnership funds or funds commingled with partnership funds to make
contributions to the Committee.
You ask whether the Committee's proposed plan may be implemented
under the Act and Commission regulations.
The Commission has previously recognized that the Act and
regulations allow lawful contributions to be made not only by personal
check, but also by other means, including properly documented
contributions by credit card. Advisory Opinions 1990-4 and 1978-68;
see also Advisory Opinions 1989-26 and 1984-45.
As you know, the Act and regulations prohibit corporations from
making any contributions in connection with a Federal election. 2
U.S.C. Sc441b(a); 11 CFR 114.2(b). A contribution results when a
service is provided at less than the usual and normal charge. 11 CFR
100.7(a)(1)(iii)(A). You state that the agreement between the
Committee and American Express will comply in all respects with
American Express' usual and normal practice and will not result in any
prohibited corporate contribution to the Committee. The Commission
notes that the agreement provides for a "discount rate" depending upon
the payment plan chosen by the American Express establishment and the
net amount of Cardmember charges for the previous year. This discount
represents American Express' charges for its credit services provided
to the Committee and appears to correspond with the usual and normal
discounts taken by American Express in the ordinary course of its
business with all establishments that agree to honor the American
Express card.2/
You state that the solicitation to the partners will comply with
the Commission regulations for separate segregated funds even though
the Committee is not an SSF. These include requirements ensuring the
voluntary nature of contributions. You also cite the disclaimer
requirements of 11 CFR 110.11. The Commission notes that the
Committee may not rely on the exemption from the disclaimer
requirement granted to separate segregated funds in 11 CFR
110.11(a)(1)(iv)(B). The Commission further notes that a written
Committee solicitation to the partners, or a contribution solicitation
in the Committee newsletter, may raise the issue of whether the
----------
2/ The agreement also provides that, if the establishment
includes the Optima Card as a method of payment in all of its
catalogues and order forms, it will receive an "Optima
Dividend," calculated at approximately one percent of the net
dollar volume of charges incurred by those using the Optima
Card. You have stated by phone to the Office of General
Counsel that the Committee has no intention of participating
in this plan. The Commission, therefore, expresses no
opinion with respect to the Optima Dividend.
solicitation is by direct mail or any other form of general public
political advertising. See 11 CFR 110.11(a)(1) and
110.11(a)(1)(iv)(A).
The Commission has, in other situations, concluded that the prior
authorization of periodic contributions is permissible under the Act.
The Commission has approved such arrangements with respect to
automatic monthly bank withdrawals by a principal campaign committee
as a result of an authorization signed by a contributor. Advisory
Opinion 1989-26. The Commission has also approved such arrangements
with respect to contributions via payroll deduction or checkoff.
Advisory Opinions 1986-7 and 1981-14. The permissibility of these
arrangements is conditioned upon the continuing right of the
contributor to revoke such authorization. You have made it clear that
the authorization to charge a contributor's American Express account
may be revoked by the contributor at any time.
Federal contractors are prohibited from making, directly or
indirectly, any contribution or expenditure of money or other thing of
value, or to promise expressly or impliedly to make any such
contribution or expenditure, to any political committee or other
person for any political purpose or use. 2 U.S.C. Sc441c(a)(1); 11 CF
115.2.3/ Although the assets of a partnership which is a Federal
contractor thus may not be used to make contributions in connection
with a Federal election, Commission regulations allow individual
partners to make contributions in their own names from their personal
assets. 11 CFR 115.4(b). In addition, employees of a partnership
which is a Federal contractor may make contributions from their own
personal assets. 11 CFR 115.4(c). Because no accounts of the
partnership will be used to make the contributions or pay the American
Express bills and because the partners and employees must use their
own personal, non-partnership accounts to pay the bills, the
contributions would not be prohibited under section 441c. See
Advisory Opinion 1985-23.
The Federal contractor prohibition also extends to the use of the
partnership funds for the Committee's establishment, administration,
and solicitation costs. The Act does not extend to a partnership the
ability granted to corporations to set up a separate segregated fund
and conduct itself as a connected organization. Thus, payments for
such costs would be contributions, rather than exempt costs. Advisory
Opinions 1990-20, 1982-63, 1981-56, and 1981-54; see also California
Medical Association v. Federal Election Commission, 453 U.S. 182
(1981). By providing that no charges, fees, or other costs related to
the solicitation or agreement will be borne by Deloitte & Touche, the
Committee will have avoided a prohibited contribution.
Based on the foregoing analysis, the Commission concludes that the
Committee's proposed plan may be implemented under the Act and
----------
3/ This prohibition does not apply to contributions or
expenditures in connection with state and local elections.
11 CFR 115.2(a).
Commission regulations. You have referred to the Committee's
intention to comply with all applicable reporting and aggregation
requirements. Although Advisory Opinion 1990-4 provided that a credit
card contribution was received when the contributor's authorization to
charge his or her credit card account was received, that situation did
not involve deferring the charge to the account until a specific time
after the contributor's authorization. Your situation involves the
receipt of the contributor's authorization well in advance, probably a
period of months, of the charge to the contributor's American Express
account. The Committee should, therefore, consider the receipt of the
contribution to occur on the date the contributor's credit card
account is charged, i.e., on the date the Committee transmits
necessary documentation to American Express to authorize crediting the
Committee's account and debiting the cardholder's account. That is
the date on which the Committee will obtain possession of the
contribution. See, by analogy, 11 CFR 102.8(b)(2). In view of the
contributor's ability to revoke the authorization, the contributor
will be considered to relinquish control over the contribution, and
thus to have made the contribution, on the date that his or her
American Express account is charged, the same date referred to above.
See 11 CFR 110.1(b)(6).
The amount of any contribution by credit card is the amount
authorized by the contributor. Any deductions or discounts taken by
American Express, the credit card issuer, against the proceeds of such
contributions should be reported by the Committee as operating
expenditures. See 2 U.S.C. Sc434(b)(4)(A) and (5)(A); 11 CFR
104.3(b)(1)(i) and (3)(i).
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the Commission,
to the specific transaction or activity set forth in your request.
See 2 U.S.C. Sc437f.
Sincerely,
(signed)
John Warren McGarry
Chairman for the
Federal Election Commission
Enclosures (AOs 1990-20, 1990-4, 1989-26, 1986-7, 1985-23,
1984-45, 1982-63, 1981-56, 1981-54, 1981-14,
and 1978-68)