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AO 2011-14 SSF Communications to Public

An SSF may make communications to the general public that ask individuals to contribute directly to particular federal candidates.

Background
Utah Bankers Association (UBA) is an incorporated tax-exempt trade association for Utah’s commercial banks, savings banks and industrial loan corporations, and is a state affiliate of the American Bankers Association. The Utah Bankers Association Action PAC (UBAAPAC) is the separate segregated fund of UBA.

UBAAPAC intends to solicit the general public by email and through a public website to make contributions directly to federal candidates (the “Project”). The Project will have its own name (“Friends of Traditional Banking”), as well as its own website and email address. UBAAPAC will assemble two councils to lead the Project: one council will identify federal candidates who support policies favorable to traditional banking, and the other council will select a small number of candidates from that list to be included in the Project’s communications. The councils will be composed of employees of state bankers associations who will serve on the councils as part of their regular employment responsibilities, as well as uncompensated individuals who are not employed by, but who may be members of, state bankers associations.

The Project will encourage members of the councils to forward the Project’s emails to individuals on the members’ personal contact lists. It will also encourage email recipients to forward the emails and to refer others to the Project’s website. The website and emails will contain a disclaimer stating, in a printed box, that the communications are “Paid for by Friends of Traditional Banking, a project of Utah Bankers Association Action PAC. Not authorized by any candidate or candidate’s committee. www.FriendsOfTraditionalBanking.com.”

The Project will not accept or forward earmarked contributions to a candidate or a candidate’s authorized committee, nor will it solicit contributions to itself or to UBAAPAC, or make contributions to candidates. The Project also intends to conduct its activities independently of federal candidates and political party committees.

UBA will pay the Project’s administrative costs, including legal and phone costs, and intends to accept payments from affiliated incorporated state bankers associations to help defray the Project’s administrative costs. UBAAPAC will pay for the Project’s website and email expenses (including staff time spent creating email and website content, Internet vendor costs and server time). To cover these costs, UBAAPAC may use funds transferred from UBAAPAC’s affiliated political committees. The Project plans to cover the costs of forwarding emails for each council member who works at a state bankers association by making an annual advance payment of fifty dollars to that member’s association.  The Project’s disbursements will be reported to the Commission on UBAAPAC’s Form 3X.

Analysis
First, the Commission considered whether the Project’s proposed website and email communications soliciting contributions to federal candidates would result in in-kind contributions to those candidates.

The Federal Election Campaign Act (the Act) and Commission regulations prohibit corporations, including incorporated trade associations, from making contributions to candidates or their authorized committees. 2 U.S.C. §441b(a); 11 CFR 114.2(a), (b), (f), and 114.8(b). A payment for a communication to the general public that is coordinated with a federal candidate is an in-kind contribution to the candidate. 2 U.S.C. §441a(a)(7)(B)(i); 11 CFR 109.21(b). Commission regulations provide a three-prong test to determine if a communication is a coordinated communication. 11 CFR 109.21(a). First, the communication must be paid for, in whole or in part, by a person other than the federal candidate, the candidate’s authorized committee or the political party committee (the payment prong); second, the communication must satisfy one of the five content standards (the content prong); and third, the communication must satisfy one of the five conduct standards (the conduct prong). 11 CFR 109.21(a), (c) and (d). A communication must satisfy all three prongs to be considered an in-kind contribution. 11 CFR 109.21.

In this case, the Commission concluded that the Project’s proposed website and email communications will not result in in-kind contributions to candidates because the communications did not meet the content prong of the coordinated communications test. To meet the content prong, a communication must be either a “public communication” as defined in 2 U.S.C. §431(22) and 11 CFR 100.26, or an “electioneering communication” as defined in 2 U.S.C. §434(f)(3) and 11 CFR 100.29. Because the Project’s communications will appear only on the Project’s own website and by email, the communications will not be public communications or electioneering communications. See 11 CFR 100.26 (an Internet communication that is not placed for a fee on another person’s website is not a public communication); 11 CFR 100.29 (electioneering communications are limited to broadcast, cable or satellite communications). Therefore, payment for the communication would not be considered coordinated and would not result in an in-kind contribution.

Next, the Commission considered several questions regarding activities by council members. First, the Commission examined whether uncompensated council members who are not employees of the state bankers associations would be considered volunteers, or whether the value of their service would be considered contributions to UBAAPAC. Under the Act and Commission regulations, the term “contribution” does not include “the value of services provided without compensation by any individual who volunteers on behalf of a candidate or political committee.” 2 U.S.C. §431(8)(B)(i); 11 CFR 100.74. Thus, “a person's time and services, if donated, without payment or compensation, to or on behalf of a [political] committee will not constitute a ‘contribution’ under the Act.” See Advisory Opinions (AOs) 2007-08 (King), 1982-04 (Apodaca) and 1980-88 (Citizens for Election of Harry Davis as President Committee). Therefore, the Commission concluded that, as long as the individuals do not receive any payment or other form of compensation for their service on the councils, they would be serving in their personal capacities as volunteers and the value of their service on the councils would not be a contribution to UBAAPAC.  The Commission was unable to agree, however, on whether use of the volunteers’ corporate titles, even if only for identification purposes, in Project communications that list the members of the councils, might result in the making of a prohibited corporate contribution.

The Commission also considered whether council members could forward the Project’s email solicitations to their personal friends and acquaintances without making a contribution to UBAAPAC, and whether the council members could use their corporate employers’ computers to forward the emails without causing a prohibited corporate contribution to UBAAPAC.

The term “contribution” does not include individual’s use of equipment or services for uncompensated Internet activities, regardless of who owns the equipment and services. 11 CFR 100.94. Internet activities include sending and forwarding emails. 11 CFR 100.94(b). The Commission has also established a safe harbor which permits corporations to allow their employees to use corporate computer and Internet facilities to engage in voluntary individual Internet activities, as defined in 11 CFR 100.94, without a corporate contribution resulting, provided that the activity does not prevent the employee from completing the normal amount of work for which the employee is paid or is expected to perform, does not increase the corporation’s overhead or operating costs and is not coerced. 11 CFR 114.9(a)(2)(ii).

Under these provisions, the Commission concluded that the council members may forward the emails and may use their employers’ computer equipment without the activities resulting in contributions to UBAAPAC. With regard to individuals who serve on the councils in their personal capacity as volunteers, the activities would not be considered contributions so long as the council members forward the emails as uncompensated volunteers and as long as the use of the corporate computers and Internet facilities fall within the safe harbor. State association employees who serve on the councils also may forward the emails.  The Commission determined that an advance annual payment by UBAAPAC to each council member’s state association to cover costs associated with the member’s forwarding of Project email solicitations would not result in facilitation of a contribution if the advance payment is the fair market value of the council member’s services. 11 CFR 114.2(f)(2)(i)(A).

The Commission also noted that the Project’s disclaimer language must be revised to comply with the Act and Commission regulations. All “public communications,” as defined in 11 CFR 100.26, made by a political committee; electronic mail of more than 500 substantially similar communications when sent by a political committee; and all Internet websites of political committees available to the general public must include a disclaimer identifying who paid for and, where applicable, who authorized the communication. 11 CFR 110.11(a); see also 2 U.S.C. 441d(a), 431(22). If the communication is not authorized by a candidate (or the candidate’s authorized committees or agents), the disclaimer must “clearly state the full name and permanent street address, telephone number, or World Wide Web address of the person who paid for the communication, and that the communication is not authorized by any candidate or candidate’s committee.” 11 CFR 110.11(b)(3); see also 2 U.S.C. §441d(a)(3).

In this case, UBAAPAC will pay for the Project’s email and website communications, but the proposed disclaimer identifies the Project, rather than UBAAPAC, as the payor, and does not provide UBAAPAC’s permanent street address, telephone number or website address. Therefore, the disclaimer must be revised to show UBAAPAC as the payor and include UBAAPAC’s permanent street address, telephone number or website address. The Commission added that the Project is not required to include disclaimers beyond those required under 11 CFR 110.11 to its email solicitations in anticipation of the emails being forwarded by the intended recipients to other individuals.

Finally, the Commission approved the proposed methods of funding the Project’s administrative and communication costs. Although the Act and Commission regulations prohibit a corporation from making contributions in connection with any federal election, the definition of “contribution” does not include expenses paid by a corporation for “the establishment, administration, and solicitation of contributions to” the corporation’s SSF. 2 U.S.C. §441b(a) and (b)(2)(C); 11 CFR 114.2(a). These establishment, administration and solicitation costs are “the cost of office space, phones, salaries, utilities, supplies, legal and accounting fees, fundraising and other expenses incurred in setting up and running a separate segregated fund established by a corporation.” 11 CFR 114.1(b).

Here, UBAAPAC would finance the Project’s communications costs, including the Project’s website and email expenses, and defray these costs through payments from UBAAPAC’s affiliated political committees. Affiliated political committees share contribution limits and may transfer funds freely among themselves.  2 U.S.C. §441a(a)(5); 11 CFR 100.5(g)(2), 102.6(a)(1), 110.3(a)(1), and 110.3(c)(1). Because the Project is not a separately established legal entity but is, rather, a specially named undertaking of UBAAPAC, UBAAPAC may receive unlimited transfers of funds from its affiliated political committees to help defray the Project’s costs. The Commission also concluded that UBA may pay the Project’s administrative costs. As UBAAPAC’s connected organization, UBA may use its general treasury funds to pay the Project’s administrative costs without those payments being contributions to UBAAPAC. 2 U.S.C. §§431(7) and 441b(b)(2)(C); 11 CFR 114.1(b) and 100.6(a).

The Commission considered, but could not approve a response by the required four affirmative votes on the consequences of UBA’s acceptance of payments from its affiliated state bankers associations to help pay the Project’s administrative costs, nor on the circumstances under which affiliated state bankers associations may provide support to UBAAPAC by compensating their employees for serving on the councils.

Date: September 22, 2011; Length: 9 pages

(Posted 10/4/2011; By: Zainab Smith)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Amy Kort, Asst. Director; Dorothy Yeager, Editor