AO 2023-08: Nonconnected committee may deduct a fee from earmarked contributions
Cowboy Analytics, LLC, proposed to form a nonconnected conduit political committee (“PAC”) to solicit funds for itself and earmarked contributions for federal candidates that the PAC supports. The Commission concluded that funds deducted from earmarked contributions to cover the PAC’s costs would be contributions to the PAC and not contributions to the recipient candidate. The Commission also concluded that the initial payment to produce merchandise would not constitute an in-kind contribution from the committee to the candidates receiving the earmarked contributions.
Background
Cowboy Analytics, LLC, provides voter and consumer data to political campaigns, businesses, and media organizations. The proposed PAC intends to create and operate a website offering donors merchandise (such as T‐shirts and hats) with political messages in exchange for contributions to itself and earmarked contributions to candidates that it endorses.
Before forwarding each earmarked contribution to the recipient candidate’s campaign, the PAC would deduct the costs of producing merchandise, payment processing, administration and solicitation. The PAC will provide contributors with a breakdown of the amount deducted for its costs as well as the amount forwarded to the designated candidate.
The PAC would operate independently and would not coordinate its merchandise or solicitations with candidates or their campaigns. Cowboy Analytics also proposed a second scenario, where the committee would solicit the purchase of its political merchandise separately from the making of any earmarked contribution.
Analysis
The Commission determined that the amount withheld by the PAC from each earmarked contribution to pay for its own costs will be a contribution to the PAC and not to the designated candidate. Accordingly, each solicitation by the PAC will contemplate two contributions: the amount withheld by the PAC to pay for its own costs and the remaining amount of the earmarked contribution forwarded to the designated candidate.
The Commission also concluded that the political merchandise at issue would not constitute in-kind contributions from the PAC to the candidates receiving the earmarked contributions, because the expenditure would not be coordinated with any candidate or candidate’s authorized committee.
The Commission was unable to reach a response by the required four affirmative votes on the questions of whether the PAC would have to report the costs of producing and distributing political merchandise that include express advocacy as independent expenditures, and whether the PAC would have to report its solicitation costs for those earmarked contributions that contain express advocacy as independent expenditures.
Finally, the Commission noted that its analysis for the prior questions would not change under the second scenario, where the PAC would separate the sale of political merchandise from the making of an earmarked contribution.
Date issued: December 20, 2023; Length: 9 pages
Citations
11 C.F.R. § 100.22
Expressly advocating
11 C.F.R. § 100.52
Gift, subscription, loan, advance or deposit of money
11 C.F.R. § 102.8
Receipt of contributions
11 C.F.R. § 109.21
What is a “coordinated communication”?
11 C.F.R. § 110.6
Earmarked contributions