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  • FEC Record: Advisory opinions

AO 2015-11: App for making contributions by rounding up purchases made on contributors’ credit cards permissible

December 15, 2015

A limited liability company (LLC) taxed as a corporation may provide an app that “rounds up” each transaction on a user's credit or debit card to the next dollar, and provides the difference between that amount and the original charge—minus a service fee—to political committees or other nonprofits chosen by the user. The Commission concluded that this arrangement would not result in the LLC making contributions or serving as a conduit or intermediary, but was unable to agree on the legal basis for its conclusion by the required four affirmative votes.

FYP, LLC, plans to develop a contribution processing platform called "MyChange." The app will round up each credit or debit card transaction to the next dollar and transmit the difference between that amount and the original charge to political committees or other nonprofit organizations designated by the user. For example, if a user were to purchase a cup of coffee for $2.30, the app would charge an additional $.70 to the user's card and transmit that amount, minus FYP's service fee, to the user's designated recipients (which could include federal political committees).

To enroll in MyChange, users must provide their credit or debit card information. If they intend to use the app to make political contributions, they must also verify their eligibility to make contributions under federal law and provide their contributor information, such as employer and occupation. Users will select recipients for their rounded up contributions from a pre-determined list included in the app. FYP will update that list each month and will include only committees that are in good standing with the Federal Election Commission and that share "users' ideology and values."

Within one business day after a user's credit or debit card is charged, funds that are designated as rounded-up amounts will be transferred from FYP's merchant account to the user's indicated recipient, less FYP's service fee. At the end of each month, FYP will reconcile funds processed via the MyChange app with its internal records.

User fees charged by FYP will be deducted from the rounded-up amounts before the rounded-up amounts are remitted to the political committees or organizations who are the recipients. The service fees will be calculated as a percentage of the total funds charged to the user's credit or debit card in a given transaction. FYP expects the fee to cover all of its costs in providing the processing and forwarding services and to provide FYP with a "reasonable profit."

The Federal Election Campaign Act (the Act) and Commission regulations generally prohibit any corporation from making contributions in connection with federal elections. 52 U.S.C. § 30118(a); 11 CFR 114.2(b)(1). The term "contribution" includes any "direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or anything of connection with any [federal] election." 52 U.S.C. §30118(b)(2); 11 CFR 114.1(a)(1). "Anything of value" includes in-kind contributions, such as the provision of goods or services without charge or at a charge that is less than the usual and normal charge. 11 CFR 100.52(d)(1). The "usual and normal charge" is "the price of those goods in the market from which they ordinarily would have been purchased at the time of the contribution, or "[the] commercially reasonable rate prevailing at the time the services were rendered." 11 CFR 100.52(d)(2).

The Commission concluded that FYP's proposal would not result in prohibited corporate contributions from FYP to any recipient political committee, but the Commission was unable to agree on the legal basis for its conclusion by the required four affirmative votes. Nor could the Commission agree whether a MyChange user’s payment of fees for the processing of a contribution to a political committee would constitute a contribution from the user to the recipient committee.

Similarly, the Commission also concluded, but could not agree on the legal basis by the required four affirmative votes, that FYP would not be acting as a "conduit or intermediary" of earmarked contributions when processing contributions from users to recipient political committees. Commission regulations prohibit corporations from serving as conduits or intermediaries of earmarked contributions to federal candidates. 11 CFR 110.6(b)(2)(ii).

Date Issued: December 2, 2015; 6 pages