Requested by: Patrick Flynn
Prepared by: Jenifer Kohout, Assistant Director
Date issued: March 29, 1999
Modified: October 31, 2001
Subject: Application of AS 15.13 to On-line Fundraising
This letter responds to your September 22, 1999 and December 10, 1999 letters requesting an interpretation of how the Alaska campaign disclosure law applies to the on-line fundraising services you and your partners plan to provide.
On March 23, 2000, the Commission approved the following advisory opinion by a vote of 4 to 0.
Assuming that it incorporates the procedural recommendations set out below, the on-line fundraising system created and maintained by AlaskaPolitics.com will comply with the Alaska campaign disclosure law.
Campaign Disclosure Law
The Alaska campaign disclosure law prohibits contributions and expenditures by a corporation, company, partnership, firm association, organization, business trust or surety, labor union, or publicly funded entity that does not satisfy the definition of group in AS 15.13.400. AS 15.13.074(f); 15.13.135.
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 50.313(a).
"Anything of value includes facilities, equipment, polling information, supplies, advertising services, membership lists, mailing lists, any item of real or personal property, and personal services of any kind, the cost or consideration for which is paid by a person other than the candidate or group for whom the services are rendered. 2 AAC 50.313(d). The provision of goods or services without charge, or at a charge, which is less than the usual and normal charge for the goods, or services in the market is a contribution. 2 AAC 50.313(e).
Over the course of the election, each candidate must make a full report listing the date and amount of all expenditures made by the candidate, the total amount of all contributions including all funds contributed by the candidate, and for all contributions in excess of $100 in the aggregate a year, the name address, principal occupation, and employer of the contributor and the date and amount contributed by each contributor. The report shall be filed in accordance with AS 15.13.110 and shall be certified correct by the candidate or campaign treasurer. AS 15.13.040(a).
Under the law, only the candidate, the candidate’s campaign treasurer, or designated deputy campaign treasurers may receive campaign contributions. AS 15.13.076. The only exception is that a campaign may authorize a person who is not registered as a deputy treasurer to solicit or accept contributions for a single event as long as the contributions are turned over to the candidate or treasurer within 72 hours. The campaign treasurer is responsible for receiving, holding, and disbursing all contributions and expenditures, and for filing all reports and statements required by law. AS 15.13.060(a).
You write that you have formed a company with two other individuals called AlaskaPolitics.com ("AlaskaPolitics"). You indicate that the company will provide two general services. First, you intend to provide a public forum for Alaskan political issues. This will include a chat room, on-line polling, and a variety of links including those to legislators. Second, you plan to offer Internet services to any candidate for state, local, and federal office. Those services will include creation and maintenance of a website, electronic polling, e-mail and on-line fundraising.
According to your website home page, your web site is "designed to educate voters about candidates for political office in Alaska, provide a forum for Alaskan political issues, and allow candidates to take advantage of new technology." The site will offer in-depth candidate profiles, district perspective and race analyses from liberal and conservative positions. You will handicap races, provide commentary, post op-ed pieces, find historical data and offer links to current news. You indicate that rather than be "objective", your candidate reviews will reflect the political inclination of the reviewers.
For a candidate who purchases your services, AlaskaPolitics will set up the candidate’s home page with a link to AlaskaPolitics’ on-line fundraising page, and will provide additional services including access to on-line polling. According to your site, your base fee for a web page (with links), an e-mail address, and on-line donation capability is $300. In addition, you will keep a percentage of the donations received via on-line fundraising to cover credit card transaction fees. Expanded web space and additional e-mail addresses are available.
In your letter to the Commission, you indicate that the company will establish a credit card account with a local financial institution allowing for Internet transactions.
Screening On-line Contributions
Individuals or groups who wish to contribute on-line will select a "support candidate" link on the candidate’s web page. The potential contributor then reaches a "candidate contribution form." The top of the form notifies potential contributors of the following:
Alaska has strict laws governing donations to candidates for political office. Your answers to the following questions will satisfy AlaskaPolitics.com’s legal obligation to make every reasonable effort to insure that each donation complies with Alaska law.
To fill out the on-line form, contributors are directed to enter their name and address, their occupation and employer, the candidate they wish to contribute to, the amount, credit card type, credit card number, expiration date, and amount they have previously contributed to the candidate. Once the information is filled in, the potential contributor may submit the contribution or reset the form. You indicate that the transaction will be rejected if the contributor fails to provide any of the information required by law.
To designate a candidate, the contributor must select one of the names listed in the candidate pick list. You indicate that the names of incumbent candidates will be removed from the "Choose Candidate" pick list during the legislative session and prohibited contribution periods.
In selecting a contribution amount, the contributor must select a set amount from a pick list. The list will allow AlaskaPolitics to ensure that no one-time donation exceeds $500. The form then asks filers if they have "previously given to this candidate this year?" The default is set at "yes". The filer must either enter in the amount previously given or mark "no." A footnote informs filers of the "$500 total Maximum contribution per person allowed to any one candidate per year."
Next, the form asks filers to indicate "whose money is being used for this donation?" The filer must mark one of the following:
The default is "none of the above statements are true." You state that all forms returned with a response other than "this is my money" will be void.
Third, the form requires that the filer attest to the fact that they are either not a lobbyist or that they reside in the candidate’s district.
Donations from most lobbyists are prohibited.
Forms that are submitted with the default selection of "I am a lobbyist, but I am not sure if I qualify" will be forwarded to the appropriate campaign "for further investigation (without a transfer of funds)."
Fourth, the form asks whether the contributor is an Alaskan resident. The filer responds either "I am not an Alaska resident" or "I am an Alaska resident." AlaskaPolitics will transfer information regarding the contributor’s residency status with the contribution.
Finally, the form states "your submission of this form is your affirmation of the accuracy of information you have provided and shall constitute a legally binding document."
You state that AlaskaPolitics will collect all information necessary to satisfy APOC regulations and to process credit card transactions over the web using.html secure forms technology. Information submitted by the contributor will be transmitted by email to an AlaskaPolitics’ bookkeeper. You have indicated that, at least initially, the bookkeeper will be one of the three principles in the business, none of whom are registered lobbyists. The bookkeeper will enter the transaction into software which allows AlaskaPolitics to confirm that adequate credit exists on the contributor’s card and then automatically transfers the funds from the credit card company to AlaskaPolitics’ merchant account. The applicable credit card company and AlaskaPolitics will deduct a percentage from each transfer. The bookkeeper then manually records each transaction in AlaskaPolitics’ double entry ledger accounting system.
After the contributor submits the entry, the system presents the contributor with a completed screen. The contributor may print a copy of the screen as a record of the transaction. Once the credit card is billed and the financial transaction to the merchant account completed, AlaskaPolitics will email a receipt to the contributor. The bill will reference the date, time and amount of the contribution along with the name of the candidate to whom the contribution was made. The contributor’s credit card bill will indicate that a contribution was made to AlaskaPolitics' merchant account and, if possible, that it was a donation to a specific candidate.
AlaskaPolitics will use a single merchant ID number and will pool all donations in a single merchant account for political funds. The account will be separate from AlaskaPolitics’ general operating account.
You indicate that AlaskaPolitics plans to process transactions in weekly batches although you acknowledge that the distribution could be done faster. In fact, you indicate that as the campaign season draws to a close, you envision processing transactions every 24 hours consistent with APOC 24 hour reporting deadlines. AlaskaPolitics will transfer funds to a candidate via a check drawn on the merchant account. AlaskaPolitics will provide to the campaign all information which was submitted by the donor including: contributor’s name and address, contributor’s employer and occupation, contributor’s residency status, date, time, and amount of the contribution, and amount deducted from each contribution for processing.
In providing the on-line fundraising service to candidates, AlaskaPolitics will charge a sufficient amount to cover all costs and make a profit. The set-up fee for a web site with on-line fundraising capability will cover the costs of designing and posting the page and establishing the sub-account. In addition, for each donation, AlaskaPolitics will charge a percentage with a minimum charge estimated to be $4. The fee will cover the costs associated with processing a credit card transaction.
If a candidate wishes to conduct an on-line poll or establish additional links from his or her web site, AlaskaPolitics will charge for the service. Other services available to the general public on the AlaskaPolitics’ home page, such as district perspectives, race analyses, posting of op-ed pieces, historical data, and links to news sites, will be posted by the business.
The Commission has had limited opportunity to address Internet and electronic campaign activities. In a 1998 advisory opinion to the Anchorage Women’s Political Caucus, the Commission held that the posting of endorsements on the AWPC web site was a political communication to the public because of the general availability of the Internet. In an opinion to AFL-CIO also in 1998, the Commission determined that e-mail was comparable to other forms of communication and would be evaluated by similar standards.
The Commission has not yet had an opportunity to address on-line fundraising. The Federal Election Commission (FEC), however, has issued several advisory opinions on the subject. In its most recent opinion, the FEC responded to questions from a consultant who wished to make its on-line fundraising services available to Federal candidates. The consultant, Aristotle, Inc., published software and offered related services allowing Federal candidates to receive contributions by credit card through the Internet. The FEC reviewed the specific processes by which (1) the software would screen contributions to minimize the risk of illegal contributions; (2) the company would process the contributions to avoid any commingling of funds and to facilitate tracking; and (3) the company would charge for its services. The FEC found that Aristotle’s plans satisfied the concerns of Federal campaign law with the exception that on-line contributions could not be applied for Federal matching funds because each contributor’s credit card bills would reflect a payment to Aristotle rather than a contribution to a specific candidate.
Like Aristotle, AlaskaPolitics is a campaign business which will provide on-line fundraising services to any candidate who pays for it. It is not a group working to promote specific candidates. To determine whether AlaskaPolitics’ plans are consistent with the Alaska campaign disclosure law, the Commission evaluated the company’s proposed screening, processing and charges.
Screening On-line Contributions.
With minor changes, the following screening measures proposed by AlaskaPolitics will satisfy Alaska campaign disclosure law:
First, the contribution solicitation form on the candidate’s web site will inform potential contributors that they must provide the information required by the campaign disclosure law including the name, address, occupation and employer of the contributor. If the required information is not entered, the system will not accept the contribution. Rather than "satisfy AlaskaPolitics.com’s legal obligations," however, the contributor’s cooperation will "assist AlaskaPolitics.com in complying with its legal obligations…." AlaskaPolitics has other legal obligation which are independent of whether a contributor accurately completes the on-line contribution form. The proposed language should be changed to reflect this point.
Second, the potential contributor must select one of the contribution amounts from a pick list. None of the possible options exceed the maximum of $500. The form then asks potential contributors to indicate how much money they have "previously given to this candidate this year?" A note accompanying the question states: "$500 total maximum contribution per person allowed to any one candidate per year."
Third, the form requires that the contributor identify the name on the credit card. If the card name does not match the contributor name, both AlaskaPolitics and the candidate are on notice that the contribution may be illegal. In addition, the contributor must attest to the statement that "The funds I am donating are my own personal property. This is my money." The statement would be strengthened if it were patterned after the 15-5 certification and read as follows: "This contribution is from personal funds and not from funds supplied by another individual or organization." If the contributor fails to indicate that the source of the funds was personal, the donation is void.
Fourth, before a contribution is submitted, the potential contributor must indicate that he or she is not a registered lobbyist or that he or she is a lobbyist that lives in the candidate’s district. A contribution given by a registered lobbyist who is "not sure if [they] qualify to give to this candidate" "will be forwarded to the appropriate campaign for further investigation (without a transfer of funds)." Rather than retain the funds pending confirmation, AlaskaPolitics must transfer all contributed funds which are deposited in the AlaskaPolitics merchant account to the designated campaign. It is the responsibility of the campaign treasurer to determine whether a contribution is legal. If the treasurer can not determine the legality of a contribution, he or she must record, report and return the money. AS 15.13.114 and 2 AAC 50.319. AlaskaPolitics should not assume this important campaign responsibility.
Fifth, contributors must indicate whether they are Alaska residents. AlaskaPolitics will transfer the residency information over to the campaigns so candidates may ensure that they do not exceed the limitations on non-resident contributions.
These mechanisms adequately cover statutory prohibitions on the amount and source of the on-line contributions. However, AlaskaPolitics does not indicate whether the system will screen contributions given before or after the statutory deadlines for fundraising. A candidate, who has filed for office, may not accept contributions prior to 18 months before the election or 45 days after his or her last contested election. AS 15.13.074. AlaskaPolitics should put in place a mechanism to ensure that contributions are not solicited or accepted outside these time constraints. A candidate’s name should not appear in the pick list if he or she is not eligible to accept contributions because of the following:
i) the candidate has not yet filed for office;
ii) it is prior to 18 months before the election; or
iii) it is later than 45 days after the candidate’s last contested election (which may be the primary if the candidate loses or if the candidate wins but has no opponent in the general election).
With regards to fundraising during the legislative session, AlaskaPolitics’ on-line fundraising form states that "incumbents may not accept donations during a legislative session. (AS 15.13.074)." In State v. Alaska Civil Liberties Union, the Supreme Court held that the provision in section 074, which barred contributions to legislative challengers and incumbents, was too broad. The provision was found unconstitutional. However, the ruling did not disturb a Legislative Ethics Act restriction on fundraising by legislators during the session. That provision appears in AS 24.60.031. If you have additional questions regarding the provision, please contact the Legislative Ethics Committee directly.
Processing On-line Contributions
With regards to the accurate and timely processing of on-line contributions, AlaskaPolitics has proposed safeguards to facilitate compliance with AS 15.13. Those safeguards are described below. AlaskaPolitics must supplement its proposed processes to comply with campaign disclosure law and regulations.
You indicate that AlaskaPolitics will employ the following procedural safeguards:
In addition to these procedures, the campaign disclosure law requires additional safeguards with regards to accountability, timing, recordkeeping, and handling of illegal contributions.
Under campaign disclosure law, only the candidate or a registered treasurer or deputy treasurers may accept campaign contributions. AS 15.13.076. The requirement fosters accountability.
[Fn: 1][BECAUSE] Although it is a business providing a service to any candidate who pays, AlaskaPolitics [DOES NOT QUALIFY] must be appointed as a deputy treasurer by each candidate or group for whom services are provided [UNDER THE CURRENT REGULATIONS].
[HOWEVER, THE] requirement that the campaign must authorize individuals to accept contributions on behalf of the campaign is applicable to this situation. With regards to accountability, each candidate who uses AlaskaPolitics on-line fundraising services must disclose that fact along with the name and location of the bank where AlaskaPolitics’ merchant account is held. As a result, AlaskaPolitics must provide this banking information to the campaign. Disclosure of the information on the candidate’s registration will authorize AlaskaPolitics to serve as an intermediary in the on-line transfer of funds from a contributor to the candidate.
With regard to timing, you indicate that AlaskaPolitics will make weekly transfers of funds to candidates by checks drawn on the merchant account. When the "campaign season draws to a close," AlaskaPolitics will process transactions on a 24 hour basis.
Under current regulations, in limited situations when a registered treasurer is not present, the campaign may authorize a person to solicit and accept contributions on its behalf for one event. Once received, the person must transfer the contributions to the campaign within 72 hours. 2 AAC 50.334. The requirement that the money be transferred to an authorized representative of the campaign within three days minimizes the risk of errors thus reinforcing the law’s emphasis on accountability.
Because this will be an ongoing process rather than a one time event, the existing regulation does not apply. However, it does offer guidance in this newly evolving area concerning on-line transfer of funds. AlaskaPolitics should process transactions within 72 hours, rather than in "weekly batches." To satisfy this requirement, the Internet business must ensure that contributions are received by each campaign within 72 hours of the time they are made by the contributor. A contribution is considered received, and reportable as such, on the day that it is in the possession of the candidate, treasurer or deputy treasurer. 2 AAC 50.333.
In addition, tighter restrictions apply during the 24 Hour Report period. The campaign disclosure law requires that all contributions that exceed $250 during the nine days before an election be disclosed within 24 hours of when they are received. The requirement ensures that the public knows, first, the identity of large last minute contributors and, second, that a campaign has received an infusion of funds. For this reason, it is imperative that contributions made during the nine days before the election be confirmed and transferred to the campaign as quickly as possible and no later than 24 hours after they are received. Once received, the campaign will have 24 hours to disclose the receipt of any contributions over $250.
Additional safeguards related to recordkeeping are also required. AS 15.13.040(f) requires that businesses that furnish computer services make their service records available for inspection by the commission. In this case, AlaskaPolitics must provide to each campaign complete documentation of each contribution to the campaign. To ensure that the system works and that contributions are accurately transferred to the designated candidate within the required time period, candidates must file this documentation with their campaign disclosure report. At a minimum, the documentation should contain the contributor’s name, address, occupation and employer; the date the contribution was made; the amount; the date the contribution was transferred from AlaskaPolitics to the campaign.
In addition, Commission regulations require that campaigns retain their bookkeeping records for four years from the date of a contribution. 2 AAC 50.320. Because AlaskaPolitics is an intermediary for the campaign, it must comply with this requirement and retain all ledgers and other records for four years.
With regards to the handling of illegal contributions, all funds which are received from contributors’ credit card companies and deposited into the merchant account must be transferred to the campaign. The campaign treasurer must use his or her best efforts to determine the legality of the contribution. 2 AAC 50.319. If the contribution can not be determined to be legal, the treasurer must record the contribution, report its receipt and resolution, and return it. AS 15.13.114. As a neutral intermediary providing a business service, AlaskaPolitics should not assume responsibility to hold or return illegal contributions once they have passed through the computer system’s automatic filters.
Finally, to streamline the contribution and disclosure process for contributors, AlaskaPolitics should place a link on its on-line contribution form to the APOC electronic 15-5 form. Contributors must file this report within 30 days after contributing a total of $500 to a single candidate. The link would assist contributors by streamlining the disclosure process.
Alaska campaign disclosure law prohibits corporations from contributing to candidates. As a result, AlaskaPolitics may not make monetary or nonmonetary contributions to candidates in the course of providing website design or on-line fundraising services.
You indicate that the AlaskaPolitics’ pricing system is designed to cover all costs and to make the company a profit. As long as that is the case, you will not risk violating the prohibition on corporate contributions.
You mention that the AlaskaPolitics’ home page will offer "district perspectives, race analyses, posting of op-ed pieces, historical data, and links to news sites." Please be aware that if those other services do not comply with the election-related educational exception in AS 15.13.150, they may result in prohibited contributions or expenditures. AS 15.13.150 provides that the campaign disclosure law does not prohibit a person from engaging in election-related communications and activities including "the sponsorship of open candidates debate forums"; and "the dissemination of the view of all candidates running for a particular office."
After incorporating the changes recommended above, the Commission believes that the on-line fundraising system proposed by AlaskaPolitics will comply with campaign disclosure law and regulations.
Each campaign, which employs AlaskaPolitics’ online fundraising services, remains subject to the campaign disclosure law. Approval of this advisory opinion does not absolve a campaign from adhering to the requirements of campaign disclosure law.
The Commission approved the advice in this letter by an affirmative vote of 4-0 on March 23, 2000. The advice in this opinion applies only to the specific activity for which the advice was requested.
Footnote 1: The Commission modified this advisory opinion on October 31, 2001.
A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. 907/276-4176.