As Ken Vogel outlined over the weekend, the Edwards campaign's plan to obtain public matching funds for the presidential primaries has hit a potential snag because of the campaign's widespread use of ActBlue for its online fundraising.
By way of background, here's how the Edwards campaign explains its relationship with ActBlue:
When a contributor enters credit card information on the ActBlue website, the information is processed through Auburn Quad, ActBlue's service provider, and checked against a credit card billing information database to verify contributor information. If this process is successful, the card is charged the specified amount and the funds are deposited into ActBlue's account. In payments made at least once per week, ActBlue disburses the net amount of contributions to JEFP [John Edwards for President] after deducting a processing fee of 3.95% paid to Auburn Quad.
On its disclosure reports, JEFP reports the full amount of the contribution made by each contributor, providing all required information and disclosing ActBlue as the conduit. Fees paid to process each contribution are shown as a lump sum disbursement to Auburn Quad on JEFP's Schedule B for the appropriate reporting period.
Contributions to JEFP processed through ActBlue are deposited into ActBlue's federal conduit account and then disbursed as checks in net amounts equal to gross contributions less Auburn Quad's processing fees. By way of comparison, JEFP's merchant vendor gathers all contributions for a particular day and disburses them daily to JEFP's bank account, after deducting processing fees. Hence, the only difference is that ActBlue disburses contributions on a weekly basis by check, which provides JEFP with a less costly alternative to wire-transfer or direct-deposit.
The word "conduit" is important; what it means is that ActBlue has no control over where funds it receives are sent. It just passes them along to the recipient you designate.
So here's the problem -- as you know by now, not everything is matchable. The main category is "contributions over $250", but also listed in the regulations regarding the list of sources for funds that can be matched is the explicit statement that for a check to be matchable, it must be "written on a personal, escrow or trust account representing or containing the contributor's personal funds." And, what's worse, listed among those sources of funds which are explicitly not-matchable are
Contributions in the form of a check drawn on the account of a committee, corporation, union or government contractor even though the funds represent personal funds earmarked by a contributing individual to a Presidential candidate;
11 CFR 9034.3(f)
And ActBlue is, indeed, a committee that's writing checks which represent personal funds earmarked by a contributing individual to a Presidential candidate.
So, the Edwards campaign has sent an Advisory Opinion request to the Federal Election Commission asking if it can consider ActBlue funds to be matchable. (Basically, an Advisory Opinion request is the means by which you can obtain advance clearance from the FEC for your plans.) Here's the nub of what they're arguing:
The basic thrust of Commission regulations at 11 C.F.R. §9034.3(f) is to clarify that contributions from illegal sources such as corporations, unions or government contractors cannot be matched, even when the ultimate source of those contributions is individual personal funds. As discussed above, ActBlue's process is designed to avoid such contributions. Therefore, there is little danger that contributions processed through ActBlue would result in matching contributions that do not qualify for such. Nor is this a situation in which contributions made through ActBlue count both as a contribution from the individual contributor, and a contribution from ActBlue. Rather, such donations are treated only as contributions from the individual contributor.
...this regulation was adopted approximately 30 years ago and reflects an early focus of the law and the Commission on the use of committees as a subterfuge enabling wealthy or illegal donors to evade contribution limitations. Given technological developments, including computerized reporting, the Commission and the public have available efficient and effective methods for tracking and monitoring contributions.
I agree. I can see no conceivable purpose for campaign finance law that would be served by treating the ActBlue contributions as not-matchable under the law. This is technology being used to encourage small-dollar contributions which are at the heart of reforming our campaign system, and to treat it as dirty money seems ludicrous. Indeed, my occasional adversary on such matters, Paul Ryan of the pro-regulation Campaign Legal Center, agrees:
"As a general policy matter, the public financing rules and regulations should be interpreted in a way that encourages candidate participation and small donor-matchable contributions — including those made through the Internet," said Paul Ryan of the Campaign Legal Center.
""As a legal matter," he said, "I don’t see any reason why earmarked contributions received by a presidential candidate through a conduit should not be matchable. It’s all hard money, it’s all disclosed."
Because this is an expedited opinion request, there may not be an opportunity to submit written comments encouraging the FEC to take such an approach. If the opportunity exists, Markos has asked me to prepare such comments on behalf of this site, and I will be happy to do so. I'll also let you know how you can do the same. Regardless of who you support in this campaign, we all should be supporting ActBlue and its ability to serve as a small-dollar clearinghouse under the law.
P.S. Interestingly, the Dodd campaign is also seeking guidance on a public matching question.
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