OPINION NUMBER - 103

ADOPTED - 1987/06/19

SUBJECT - Campaign Practices/Campaign Contributions

REQUESTED BY: Kim Robak, Legal Counsel for the Nebraska Democratic Party

QUESTION: Are funds received from a bankcard company by a political party through an "affinity group bankcard concept" contributions from the bankcard company to the political party?

CONCLUSION

No

FACTS

You indicate that the Nebraska Democratic Party is considering entering into a contract with a bankcard company based upon what is known as the affinity group bankcard concept. You state that associations and organizations (affinity groups) encourage their members or supporters to acquire from a specific financial institution a bankcard or credit card which bears the name and logo of the association on each card. Each time those members or supporters use their card, the association or organization earns a negotiated fee from the issuing bank based upon the net sales volume generated from the use of the card. The Nebraska Democratic Party is considering such a contract which would allow democrats in Nebraska to acquire a bank card under the organization's name.

ANALYSIS

Section 49-1415 defines a contribution as "a payment, gift, subscription, assessment, expenditure, contract, payment for services, dues, advance, forbearance, loan, donation, pledge or promise of money or anything of ascertainable monetary value to a person, made for the purpose of influencing the nomination or election of a candidate, or for the qualification, passage, or defeat of a ballot question".

Nothing in the facts provided leads us to believe that the bankcard company wishes to influence anything except the amount of its profit. In fact, every aspect of this proposed relationship bears the characteristics of an arms length transaction. The company hopes to increase the number of bankcard holders and thus the amount of fees and interest it will collect. The party hopes to generate cash through the use of one of its assets; that is, its membership list. It is our understanding that the consideration to be received by the party is the usual and normal compensation that is received under such circumstances. That is, the compensation is that which the company would pay to any group of similar size and potential. Nothing special is being offered to the party by virtue of its being a political party.

It is common practice for political parties to sell their mailing and membership lists. We view this as a different type of sale in which the party will receive a percentage of the income generated from the use of these lists rather than a lump sum.

In rendering this opinion we are mindful of the fact that our conclusion is different from that of the Federal Election Commission in its Advisory Opinion #1979-17. In that advisory opinion the FEC considered a situation quite similar to the one before us involving the Republican National Committee. The FEC, while noting that the arrangement had certain commercial aspects, deemed the matter to be a fundraiser. It, therefore, stated that it viewed these payments from the bank company to the party as being contributions.

This view point is mentioned in order to aid political parties in avoiding a pitfall. For the purposes of the Nebraska Political Accountability and Disclosure Act the funds generated under this plan are not contributions and need not be reported as such. However, if the FEC considers these to be contributions, then it is our understanding that they are prohibited contributions under federal law and may not be used in any federal elections since corporations are not permitted to make contributions to federal candidates. Indeed, it may be that the Federal Election Commission took the position that it did in order to avoid any possibility that a prohibited corporate contribution would find its way into a federal campaign. Therefore, political parties making use of the group affinity bankcard concept should ascertain to their satisfaction whether these funds may be used in federal campaigns under federal law. Naturally, this Commission has no jurisdiction over that question. Political parties should also investigate in order to determine whether or not there are federal tax consequences and, if the bankcard company is a nationally chartered bank, whether or not certain prohibitions and regulations applying to national banks need to be considered.

You have further asked if there are any other matters concerning the Nebraska Political Accountability and Disclosure Act which need to be considered with reference to an affinity bankcard concept. It does seem that we should consider the status of the credit cardholder. Do the funds generated by the cardholder's use of the card part of which funds are ultimately received by the political party constitute a contribution by the cardholder? It is our position that they do not. The argument has been raised that the card use is a contribution because the holder may be induced to use the card in lieu of other forms of payment in order to secure a thing of value for the party. We do not find this line of reasoning persuasive. The stated intent of the bankcard company is to make the card competitive with other cards. If the cardholder is paying a competitive membership fee and receiving a competitive interest rate, he is receiving value for every cent he spends. Essentially, he gives up nothing. The cardholder's use of one credit card over another is no more a contribution to the political party than is the cardholder's payment for a loaf of bread at grocery store A contribution because the cardholder could just as well have purchased that loaf of bread at grocery store B. It is, therefore, the position of the Commission that the use of a credit card in the plan described to us which results in funds being paid to a political party does not constitute a contribution.