A company may develop and administer a mobile app that allows users to “round up” the amount of their credit and debit card purchases to the nearest dollar and contribute the change to federal candidates.
Eli Stein and Jeremy Gottlieb plan to create a for-profit limited liability company (LLC) that will be treated as a corporation (hereafter referred to as the “Project”) which will develop and administer the mobile app. The Project will use data and analysis to identify swing districts in U.S. House and Senate elections and select races where app users’ contributions “will have the most impact.” The Project intends to choose about 20-30 candidates to include in the app as “featured candidates.” This list of featured candidates, which may be altered over time, will be determined by the Project and not by any candidate.
When a user makes a purchase with the card or account associated with the app, the difference between the purchase price and the next whole dollar will be treated as a “pledged contribution” to the candidates that user has selected. Users may choose to contribute only to specific candidates listed in the app; distribute their contributions equally across all featured candidates; or distribute their contributions among a “Project Basket” of candidates based on criteria such as region, gender, or funds raised to date. Once a user’s pledged contributions have met a certain minimum threshold, the Project will charge the user’s card or account for those pledges and deposit the funds into a “merchant services account,” separate from the Project’s general treasury account.
The Project will transfer all contributions from its merchant services account to the selected candidate committees within 10 days of receipt, along with each contributor’s name, address, occupation, and employer. The Project will not exercise any direction or control over users’ funds in the merchant services account.
The Project will charge a service fee that will cover overhead, research, bank fees, and provide it a commercially reasonable profit. The Project will not contract with any candidate committees to provide contribution processing services, nor will it receive any compensation from recipient candidate committees. In the current election cycle, the Project intends to market the app and services only to donors wishing to make contributions to Democratic candidates and the app will feature only Democratic candidates.
The Federal Election Campaign Act (the Act) and Commission regulations prohibit corporations from making contributions in connection with federal elections. A contribution includes any “direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or anything of value…to any candidate, campaign committee, or political party or organization, in connection with any [federal] election.” The term “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.
In several previous advisory opinions, the Commission has concluded that entities that process contributions as a service to contributors without entering into agreements or receiving compensation from the recipient political committees are not making contributions because the entities are not providing any services to the recipient committees. See, for example, Advisory Opinions (AOs) 2016-08 (eBundler.com), 2015-15 (WeSupportThat.com), 2014-07 (Crowdpac). The services in these and other opinions were provided at the request of and for the benefit of the contributors, as opposed to that of the recipient committees, and the service provided did not relieve the recipient committees of any financial burden or obligation they would otherwise incur.
In this instance, the Project will pass along the associated costs to the contributors who are using the app and not to the recipient candidates. The fees that the app’s users will pay are not contributions to the Project itself, but commercial payments in exchange for its analysis and processing services. The Commission further determined that the Project’s decision to list only Democratic candidates and to market the app to Democratic users was based upon commercial considerations.
The Commission also determined that any contributions processed by the Project and forwarded to the recipient candidates would be contributions directly from the individual contributors and would not constitute “earmarked” contributions made through a conduit or intermediary. The Project will function as a corporate, commercial payment-processing entity that charges its users a fee for the services it provides them. Although the Commission noted that the Project currently will require that a user’s pledge be split equally among candidates to whom the user chooses to contribute, this will not cause the Project to be considered a conduit or intermediary. The Project will communicate clearly to users that their contribution amounts (from their “rounded-up” transactions) be split equally among their selected candidates.
Since the Project maintains that it will forward all contributions to the recipient candidates within 10 days of receiving them, will keep users’ funds in an account separate from the Project’s own treasury funds, and will collect all recordkeeping information required by the Act (such as contributor information) , the Commission concluded that the Project’s app proposal is permissible.
Date issued: September 14, 2017; Length: 9 pages
52 U.S.C. § 30101(8)(A)(i)
Definition of contribution
52 U.S.C. § 30118(a) and (b)(2)
Contributions and expenditures by national banks, corporations and labor organizations
11 CFR 100.52(a) and (d)(1)
Definitions of contribution and in-kind contribution
11 CFR 110.6
11 CFR 114.2(b)
Prohibition on contributions by corporations and labor organizations