Volume 43 - Issue 23 - June 6, 2024

State of Kansas

Governmental Ethics Commission

Opinion No. 2024-01

Written May 22, 2024 to The Honorable Mari-Lynn Poskin, 12924 Howe Dr., Leawood, KS 66209.

Synopsis: Campaign contributions processed by a third-party payment processor must be attributed to the person who made such contributions and any processing fees associated with such contribution must be reported as expenditures on any relevant campaign finance reports.

Cited herein: K.S.A. 25-4143; K.S.A. 25-4148; K.S.A. 25-4153a; K.S.A. 25-4154.

Dear Representative Poskin,

In response to your February 26, 2024, email request, this opinion is provided by the Kansas Governmental Ethics Commission (“Commission”), concerning application of the campaign finance act, K.S.A. 25-4101 et seq. The Commission’s jurisdiction is limited to applicability of this law. This opinion, provided pursuant to K.S.A. 25-4159, does not address whether some other statutory system, common law theory, agency rule or regulation applies to your inquiry.

Factual Statement

We understand that several legislators have received checks processed by a third-party payment processor during the current legislative session. The contribution checks received do not include the identity of the donor making the contribution. Instead, the check is accompanied with instructions for the steps necessary to access the identity of the donor(s).

Questions

1. Generally, can contributions processed by a third-party payment processor using this format be accepted?
2. Can contributions processed by a third-party payment processor using this format during the legislative session be accepted?
3. How should contributions processed by a third-party payment processor using this format be reported on campaign finance reports?

Analysis and Opinion

K.S.A. 25-4143(f)(1)(A) defines a “contribution” as “[a]ny . . . payment of money or any other thing of value given to a candidate, candidate committee, party committee or political committee for the express purpose of nominating, electing or defeating a clearly identified candidate for a state or local office[.]” Additionally, K.S.A. 25-4143(k) defines person as “any individual, committee, corporation, partnership, trust, organization or association.”

Here, the funds processed by the payment processor are contributions as the checks are payments of money given to the candidate or committee (e.g., a check payable to the order of John Doe for Kansas House). The issue is if contributions that have been processed by a third-party payment processor may generally be accepted when the processor requires additional steps to access required donor information.

K.S.A. 25-4154(b) provides that: “[n]o person shall give or accept any contribution in excess of $10 unless the name and address of the contributor is made known to the individual receiving the contribution.” If the candidate were to accept a check processed by the payment processor without first identifying the donor’s name and address, then that candidate would be in violation of K.S.A. 25-4154(b). For a candidate or committee to legally accept a contribution check processed by the payment processor, they must be able to identify the donor. Once the candidate or committee has learned the donor’s identity, then the candidate may accept the contribution check, provided that the contribution satisfies other campaign finance requirements, such as contribution limits. If the candidate or committee knows the identity of the contributor of the funds—the person making the contribution—then accepting the contribution is lawful under K.S.A. 25-4154(b). Alternatively, the candidate or committee can return the contribution without needing to obtain the donor’s identity.

Regarding the question of if contributions processed by the payment processor using this format may be accepted during the legislative session, a review of K.S.A. 25-4153a is appropriate. K.S.A. 25-4153a prohibits a legislator or candidate for membership in the legislature from accepting or soliciting a contribution from anyone other than a non-lobbyist individual “after January 1 of each year and prior to adjournment sine die of the regular session of the legislature or at any other time in which the legislature is in session[.]”

According to the facts provided, a candidate for the legislature or a legislator would not be able to identify the category of person, as defined in K.S.A. 25-4143(k), contributing to their campaign by reviewing the check delivered by the payment processor. Therefore, the legislator or candidate for the legislature must first discern the contributor’s identity. If the donor is a non-lobbyist individual, then the legislator or candidate for the legislature may accept the contribution during a legislative session. If the contributor is a prohibited entity, the contribution must be returned to the donor.

Finally, the issue has also arisen of how contributions processed by a payment processor should be reported on Receipts and Expenditures Reports. The candidate or committee must report the source of the contribution, which is the person whose donation was processed by the payment processor, not the payment processor itself. The candidate or committee must report the full amount of the contribution, even if a portion of the donation went to processing fees associated with using the payment processor’s service. If the candidate or committee cannot or does not wish to obtain the donor’s information from the payment processor, they must return the contribution. Additionally, the candidate or committee must report processing fees paid to the payment processor as expenditures on Receipts and Expenditures reports.

This opinion only addresses the legality of accepting contributions from a payment processor once the donor has been identified. This opinion does not address or endorse the legality of a third-party payment processor’s database or structure and is only limited to the facts and analysis outlined above.

Sincerely,

Nick Hale, Chairman
By Direction of the Commission

Doc. No. 052186