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FEC Lets Donors Max Out on Text Donations

September 6, 2012

A Federal Election Commission opinion issued Tuesday expands the scope of text-message based political contributions to allow contributors to donate the maximum amount allowable by law.

Previously, the FEC had limited donations that are made via mobile short codes that appear on the phone bills of contributors to $50 per billing cycle and $200 per election cycle. The system that was first backed by the FEC was designed to allow for the same level of donations that can be made on a cash basis, without triggering reporting requirements.

Under the new guidelines, campaigns will be responsible for ensuring the eligibility of donors and identifying people who donate more than the $50 and $200 limits, as is currently required for other types of donations.

Mobile short codes are five-digit or six-digit numbers that allow mobile phone users to buy media, donate to causes, and vote on things like "American Idol". The Red Cross famously used a mobile short code to enable donations after the January 2010 earthquake in Haiti. These are assigned and administered by the mobile carrier industry trade group CTIA.

Allowing donors to contribute the FEC maximum means that mobile, "now is a working, functioning channel" for political donations, said Scott Goodstein, founder and CEO of Revolution Messaging, the company that sought the policy change.

Goodstein ran mobile media and communications for President Obama's 2008 campaign, including text message outreach and their mobile campaign app. His company runs mobile fundraising services for union and non-profit clients. In addition to the increase in mobile giving limits, Revolution Messaging sought to allow federal political committees to share short codes. This was also granted by the FEC.

Currently, only Obama and Republican challenger Mitt Romney have short code campaigns up and running. One hurdle is the cost and the time involved in establishing a short code. Another major obstacle is that currently AT&T is holding out for clarification from the FEC on the issue of whether charging very low fees to process these donations on customer bills would constitute an in-kind donation to a campaign.

AT&T's holdout may be part of the reason the Obama short code hasn't received much publicity during the convention. AT&T is nationally unionized, and offers discounts to union members, so their subscriber rolls are seen by political organizers as tilting more to the Democratic Party than other wireless providers.

Carriers typically take a 40 percent to 50 percent cut of a short code based transaction for the sale of a ring tone or other media. However, in the case of charitable donations, they have often waived processing charges altogether.

In an earlier FEC filing, CTIA sought guidance on whether carriers had the right to refuse candidates and committees access to solicit donations via short codes and if "deviations from normal business practices" in terms of low rates constituted an in-kind donation to a campaign.

"Our position was based on our reading of prior FEC Advisory Opinions regarding what constitutes a prohibited 'in-kind' corporate contribution -- and we asked for clarification knowing the issue would come up -- as it has in the context of charitable giving, where carriers contribute 'in-kind' to the charitable cause by not charging for their billing and collection service," Michael Altschul, CTIA senior vice president and legal counsel, said in an e-mailed statement.

AT&T parted ways with its trade association on this issue. In a letter to the FEC sent on Aug. 16, AT&T described the facilitation of text-message donations as bearing "little resemblance to commercial activity" and more "akin to activity undertaken by a corporation in the public interest."

If the FEC adopts this view, Goodstein expects more campaigns to scale up their short code donation capabilities in the coming weeks, however, he doesn't expect short code donations to be a game changer in this election cycle. "It's going to take a little bit of time," he said. "The carriers in the U.S. are slower in this process. The mobile payment gateway is better in the rest of the world."

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