Eleanor Finch
Candidates for political office raise money to fund their campaigns and to demonstrate the breadth of their support. Campaign finance laws—which dictate who can contribute to a campaign, how much they can contribute, and how those contributions must be reported—vary at the state and federal levels. In general, candidates may loan their personal funds for campaign purposes, and these contributions are not subject to any limits but are subject to additional reporting. The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organizations can give to a candidate running for federal office. A rule change after the Supreme Court's FEC v. Ted Cruz decision has allowed elected officials to raise more money to pay themselves back post-election for loans to their own campaigns.
| Characteristics | Values |
|---|---|
| Can candidates loan money to their political campaign? | Yes |
| Are there any limits on the amount a candidate can loan to their campaign? | No |
| Do self-loans accrue interest? | No |
| Are self-loans subject to contribution limits? | No |
| Do self-loans count towards the total amount raised by a candidate? | Yes |
| Do self-loans require the same documentation as other campaign loans? | No |
| What if the loan cannot be repaid? | The candidate must provide a signed statement forgiving all or a portion of the loan |
| Can a candidate get repaid for a self-loan? | Yes |
| Can donors contribute to multiple cycles? | Yes |
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What You'll Learn
Candidates can loan their campaigns money
Previously, a candidate's committee could only repay personal loans up to $250,000 with post-election contributions. Now, candidates can loan their campaigns huge sums of money and then solicit donations to pay themselves back after an election win. This has the potential to reduce the risk of corruption, as candidates are not beholden to donors. However, it could also have the opposite effect, as wealthy candidates can personally gain from investing in their campaigns.
Some candidates have given millions of dollars to their campaigns as contributions without trying to pay themselves back. However, others have sought repayment, and multiple candidates have reinstated previously forgiven loans for repayment after the recent Supreme Court decision. For example, Sen. Ted Cruz (R-Texas) was repaid $555,000 from his campaign, and Illinois Gov. J.B. Pritzker (D) gave at least $172 million to his 2018 gubernatorial campaign and another $132 million to his 2022 reelection campaign.
Candidates may choose to forgive all or part of a loan from their personal funds to the campaign. To do so, they must file a signed statement indicating their forgiveness of the loan.
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Self-loans are not subject to contribution limits
Candidates may loan their personal funds for campaign purposes. When they do so, they are making contributions to their campaigns. Unlike other contributions, these self-loans are not subject to any limits but are subject to additional reporting. This means that federal candidates can pour unlimited sums of money into their own election bids.
Wealthy candidates are increasingly self-financing their campaigns. Candidates vying for U.S. House and Senate seats in the 2022 midterm elections poured over $283 million of their own money into self-funding their campaigns. A rule change after the Supreme Court's FEC v. Ted Cruz decision opened the door for elected officials to raise even more money to pay themselves back post-election for loans to their own campaigns.
If any person, including a relative or friend of the candidate, gives or loans the candidate money "for the purpose of influencing any election for federal office," the funds are not considered personal funds of the candidate even if they are given to the candidate directly. Instead, the gift or loan is considered a contribution from the donor to the campaign, subject to the per-election limit and reportable by the campaign. This is true even if the candidate uses the funds for personal living expenses while campaigning. Bank loans are not considered contributions from the banks if they comply with FEC regulations on bank loans.
The candidate may choose to forgive all or a part of a loan from his or her personal funds to the campaign. The candidate must file a signed statement indicating that he or she forgives the loan.
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Self-loans must be repaid or forgiven
Candidates may loan their personal funds for campaign purposes. When they do so, they are making contributions to their campaigns. These candidate contributions are not subject to any limits but are subject to additional reporting.
If a candidate chooses to forgive all or a part of a loan from their personal funds to the campaign, they must file a signed statement indicating this. However, there are restrictions on an authorized committee's repayment of personal loans exceeding $250,000 made by the candidate to the authorized committee.
Following the Supreme Court's FEC v. Ted Cruz decision, a rule change has allowed self-funding candidates to use campaign funds to pay themselves back. This has opened the door for elected officials to raise more money to pay themselves back post-election for loans to their campaigns. Federal candidates can invest unlimited sums of money into their election bids, and wealthy candidates are increasingly self-financing their campaigns.
For example, candidates vying for US House and Senate seats in the 2022 midterm elections poured over $283 million of their own money into self-funding their campaigns. This has led to concerns about the influence of "'dark money' in elections, where the source of funds is not revealed.
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Campaign contributions are limited for individuals and groups
In the United States, the Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organisations can contribute to a candidate running for federal office. These contribution limits vary depending on the type of election and the position being sought. For example, individuals may contribute up to a certain limit to a publicly funded presidential primary candidate, but only a maximum of $250 of each individual's contribution is counted towards federal matching funds.
There are also restrictions on the types of organisations that can donate to federal candidates, and certain individuals and groups are prohibited from donating altogether. For instance, independent-expenditure-only political committees, or "Super PACs", may accept unlimited contributions, including from corporations and labour organisations. However, they are subject to separate limits for specific accounts, such as those for the presidential nominating convention, election recounts, and national party headquarters buildings.
Candidates themselves can spend their own personal funds on their campaigns without limits. However, they must report the amount they spend to the FEC, and these funds are considered contributions from the candidate to their campaign, subject to additional reporting requirements. Interestingly, if a candidate receives a gift or loan from another person "for the purpose of influencing any election for federal office," the funds are considered a contribution from the donor, subject to per-election limits, even if used for personal living expenses.
While there are limits on campaign contributions for individuals and groups, a Supreme Court decision has opened the door for candidates to loan their campaigns large sums of money and then solicit donations from supporters to repay themselves after the election. This has raised concerns about the potential for corruption, as wealthy candidates can personally benefit from investing in their campaigns, and it allows donors to bypass contribution limits by contributing to multiple cycles.
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Campaign finance laws vary at state and federal levels
Campaign finance laws in the United States vary at the state and federal levels. Federal campaign finance laws apply to candidates and groups participating in federal elections, such as congressional and presidential elections. These laws are enacted and enforced by the Federal Election Commission (FEC), an independent federal agency. The FEC maintains a database of campaign contributions and expenditures, which is publicly available on its website. The Federal Election Campaign Act of 1971 (FECA) established comprehensive regulation and enforcement of campaign finance, including public financing of presidential campaigns.
State and local political candidates and campaigns must adhere to different campaign finance regulations than federal candidates. These laws are written, administered, and enforced at the state level. As of 2021, over half of the states allow some level of corporate and union contributions, with several states having no limits at all. Some states have introduced bills to regulate campaign finance further, and these vary from state to state.
There are also differences in the specific rules and regulations that govern campaign financing at the federal and state levels. For example, federal law prohibits corporations and unions from making direct contributions to federal candidates, while some states allow this type of contribution. Federal law also limits the amount of money individuals and political organizations can give to a candidate running for federal office, while state laws may have different or no limits.
Additionally, the way campaign funds can be used and repaid differs. For instance, a rule change after the Supreme Court's FEC v. Ted Cruz decision allowed self-funding candidates to use campaign funds to pay themselves back and raise unlimited sums of money for their campaigns.
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Frequently asked questions
Yes, you can loan money to your own political campaign. Candidates can spend their own personal funds on their campaign without limits. However, if you are expecting the money to be paid back from excess contributions, it should be recorded as a loan.
Yes, the loan should be reported on Schedule A of the campaign finance workbook. Self-loans do not require the same documentation as other campaign loans, but they must be repaid or a signed statement must be provided forgiving the loan.
Yes, a rule change after the Supreme Court's FEC v. Ted Cruz decision means that elected officials can pay themselves back post-election for loans to their campaigns.
