Requested by: Bonnie L. Jack
Prepared by: Christina L. Ellingson, Assistant Director
Date issued: April 17, 2002
Subject: How to value the use of a bulk mail permit and its companion account as a contribution.
This Advisory Opinion responds to your February 13, 2002, letter asking how to assess the value under the Campaign Disclosure Law (AS 15.13) of a bulk mail permit that you loan to various candidates and groups. In your letter you state that you are the owner of a business bulk mail permit that you used in a former business. You want to give or loan the bulk mail permit to different political candidates and political party subdivisions and have asked how to determine the value of your nonmonetary contribution.
Staff believes that the value of your nonmonetary contribution to candidates or groups may be determined by either of two methods - 1) the value of the permit itself ($125.00) or 2) the actual postage savings the user will realize with the permit ($.34 minus .21 per piece). Because either method is reasonable, staff recommends that the contributor be allowed to use either method to determine the value of the contribution.
Campaign Disclosure Law
Contribution is defined broadly to mean a payment, gift, subscription, loan, advance transfer, deposit of money, services, or anything of value made by a person or group for the purpose of influencing an election. AS 15.13.400(3); 2 AAC 50.250.
The provision of goods or services without charge, or at a charge that is less than the normal charge for the goods and services in the market, is a contribution. 2 AAC 50.250(c).
Over the course of an election, each candidate must disclose the date and amount of all contributions received and all expenditures made. Each candidate must disclose contributors who give more than $100 in the aggregate each year by name, address, principal occupation and employer. The report must be filed in accordance with AS 15.13.110 and must be certified as accurate by the candidate's treasurer. AS 15.13.040(b)(1),(2,)(3) and (c).
In addition, each individual, person or group making a contribution or expenditure shall make a full report, upon a form prescribed by the commission, of contributions made to a candidate once the total reaches $500 in a year. AS 15.13.040(d)(1)(A).
· You have a business bulk mail permit that you purchased some time ago.
· In addition to the initial cost of $125 for this permit, you pay an annual fee of $125.
· You want to give or loan this bulk mail permit to municipal assembly, school board, state house and senate candidates and to political party sub-divisions.
· No cash would exchange hands between you and the recipients of these contributions.
· The recipient of the use of your permit would deposit payment for the postage directly to your postal account.
· You may or may not participate as a volunteer in the preparation of the bulk mailing.
A contribution is defined in AS 15.13 as "a purchase, payment, promise or obligation to pay loan…or gift of money, goods, or services for which a charge is ordinarily made." AS 15.13.400(3). By allowing candidates or political party subdivisions to use your permit, you are contributing in the form of a nonmonetary loan of your permit. Under 2 AAC 50.250(c) the provision of goods or services for less than the normal charge in the market is a contribution, unless the contributor extends the lower rate to all candidates. The amount of the nonmonetary contribution is the difference between the normal rate for the goods or services and the actual amount charged.
The practice of staff when asked how to assign a value to nonmonetary contributions is to go to the provider of the goods or service. In this case the provider is the United States Post Office. Staff discovered that the holder of the permit has an account attached to its permit and the holder deposits money into this account for mailings. A bulk mailing permit entitles the holder to a reduction in postal rates. Thus the difference between the market price of $.34 and $.21 is $.13.
To ensure this rate is fair, staff also investigated how commercial mail services charge for this service. In the private sector, prices for mailing services vary. For example, one company charges a shop fee of $45 and a per piece mailing cost. That per item cost ranges from $.21 or higher depending on the size of the mailing, the dimensions of the envelopes, and the destination of the mailing. Another shop charges a shop fee of $25 and anywhere between four cents to six cents over the $.21 again, depending on the size of the mailing. Still a third charges a shop fee of $25 and just the actual expense for the postage. Because there is no consistent fair market price for this service, other than the post office rate, the value of the nonmonetary contribution would be the difference between the post office rate of $.34 and the discount allowed by the bulk mail permit.
In years past, when asked this question, staff has directed contributors to calculate the difference between the full mailing cost and the discounted bulk mail rate up to the $125 cost of the permit itself. The reason for not going over that amount is at that point there is no added benefit for the candidate or group because the candidate or group could purchase its own permit.
Therefore, you can do the per piece rate until you reach the $125 cost of the permit. At that point the candidate or group would derive no added benefit from the use of your permit.
An alternative way for you to value a nonmonetary contribution of your bulk mail permit is to assign the annual rental of $125. Using this method, you as the contributor would know the exact amount of your contribution at the time it is given. Either one of these methods seem reasonable.
You have two options in how to value your nonmonetary contribution. You could value the annual rental rate of the permit at the face value of $125 when you allow a candidate or group its use. Or you could calculate the difference between the postal rate of $.34 and $.21. Whichever way you choose to value your permit, there are reporting requirements for the recipient. In addition, if your contribution to any one group or candidate reaches the $500 maximum, then there are reporting requirements for you as the contributor.
The Commission approved the advice in this letter by an affirmative vote of 4-0 on June 21, 2002. The advice in this opinion applies only to the specific activity for which the advice was requested.
A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. 907/276-4176.