The Cost of Convenience: charging for online contributions

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On May 7, 2013, the Minnesota Campaign Finance and Public Disclosure Board (“Board”) will consider an advisory opinion request submitted on behalf of Democracy Ventures, Inc., d/b/a Democracy.com. The organization is seeking guidance from the Board on issues related to fee-based online contributions to state candidates.

In the request, Democracy Ventures, Inc., a nonpartisan, for-profit corporation, based in New York, indicates that it plans to operate a website that will serve as an online directory of federal, state and local candidates to assist voters in identifying elected officials and candidates for public office. The website will include publicly available information about each candidate and the candidates will be allowed, for a fee, to expand their webpage with customized content. The organization will also allow users to make online contributions to candidates. The contributions will be subject to the applicable contribution limits and will require donors to provide all information that is required under Minnesota law including the contributor’s name, address, employer and lobbyist registration status. Each contributor will be asked to certify that he or she is of legal age, is a United States citizen or permanent resident alien, and that the contribution is being made from personal funds. The organization intends to deduct a transaction and processing fee from each contribution before the money is transmitted to the candidate’s treasurer.

Democracy Ventures is seeking guidance from the Board to ensure that it will not be required to register with the Board as a political committee, that it will not violate any bundling or earmarking restrictions and that it will be allowed to deduct processing and transaction fees from each contribution.

A draft opinion, included in the Board materials for Tuesday’s meeting, concludes that the model proposed by Democracy Ventures complies with Minnesota law and does not trigger any registration or reporting requirements. The draft opinion notes that “[b]ecause there is no business relationship between Democracy.com and the recipient candidate, the amount of the contribution to the candidate is the net amount actually received by the candidate and the fees paid by the contributor are the costs of a business transaction between the contributor and the Democracy.com and do not involve the candidate.”

The Board is expected to act on this request at its meeting on May 7. The Board will also consider several late fee waiver requests, as well as a resolution to clarify whether the Executive Director has authority to administratively resolve compliance issues involving the inadvertent deposit of funds in a state committee or fund that were intended for a federal fund. The Board meeting is scheduled for 9AM in Room 225 of the Minnesota Judicial Center.

Topics:  Online Platforms, Political Contributions

Published In: Business Organization Updates, Elections & Politics Updates, Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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