Wednesday, October 24, 2007

Donors in Diapers

As much as I don't like campaign contribution limits, they are the law of the land and must be obeyed. But as the campaign cycle wears on, there are practical limits on the number of $2,300 contributors out there and the campaigns might be hitting that limit. While that is merely the nature of the beast, circumventing the law is done at one's peril. But there does seem to be a large number of youngsters giving lots of money to campaigns.
Elrick Williams's toddler niece Carlyn may be one of the youngest contributors to this year's presidential campaign. The 2-year-old gave $2,300 to Sen. Barack Obama (D-Ill.).

So did her sister and brother, Imara, 13, and Ishmael, 9, and her cousins Chan and Alexis, both 13. Altogether, according to newly released campaign finance reports, the extended family of Williams, a wealthy Chicago financier, handed over nearly a dozen checks in March for the maximum allowed under federal law to Obama.

Such campaign donations from young children would almost certainly run afoul of campaign finance regulations, several campaign lawyers said. But as bundlers seek to raise higher and higher sums for presidential contenders this year, the number who are turning to checks from underage givers appears to be on the rise.

"It's not difficult for a banker or a trial lawyer or a hedge fund manager to come up with $2,300, and they're often left wanting to do more," said Massie Ritsch, a spokesman for the Center for Responsive Politics. "That's when they look across the dinner table at their children and see an opportunity."

Asked about the Williams family giving, Obama spokesman Bill Burton said, "As a policy, we don't take donations from anyone under the age of 15." After being asked by The Post about the matter, he said the children's donations will be returned.
My two year old can't even decide what she wants for dinner or snack, let alone whether to give money (assuming she understands the concept of money). Obama has the right response and a sensible policy, but there are some wrinkles in the cloth.

As a law clerk at the FEC a few years ago, I was tasked with researching bank policies on checking accounts for minors. I contacted the top 20 national banks seeking their policies on checking accounts for minors. Without exception, each of these large banks required that an adult, usually a parent, be present to open the account and to be responsible for the account. It makes sense from a bank's point of view if you think of a check as a contract for the bank to pay money to a person of the check writer's choice. Under contract law, usually minors have the ability to disavow contracts made as a minor. So you can see the bank's position that they don't want to be put in the middle of a dispute over a dishonored check.

While we at the FEC debated what to do about older kids, say around teh age of 16 or so and whether they could contribute. The consensus, as I remember it, was that kids under say 13 or so simply lacked the ability to make the decision to give voluntarily.

That is not to say that it is not possible to prove that a youngster could give, but that there would need to be proof of individual intent. That could be hard to prove.

So here are the problems. Most campaign lack the resources to check the ages of its donors and thus would only find out after the fact that a donor is in diapers. While refunding the money is the proper response, there is no way in advance to make sure the donation is appropriate and legal.

Additionally, the violation, while it looks bad for Obama and other canddiates, is on the contributor who has made a contribution in the name of another, which is the likely scenario for kids giving. The donor, without a doubt must be punished. However, we are left with the question of what to do about the campaigns. Should they face any scrutiny for taking the funds in the face of evidence that it might be in violation of the rules (i.e. addresses of contributors, checks signed by the same person or agent?)

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