Political Parties: Fundraising For Campaigns

Political parties and candidates for office raise money for their campaigns to demonstrate their support base and fund their activities. The sources and amounts of money that can be raised and spent on campaigns are governed by campaign finance laws, which vary across different jurisdictions. In the United States, for example, campaigns may raise funds from individuals, political party committees, and political action committees (PACs). These committees, in turn, solicit donations from members and associates to make campaign contributions or fund campaign activities such as advertising. There are different types of PACs, including connected PACs, ideological PACs, leadership PACs, and super PACs, each with distinct rules and purposes.

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Political action committees (PACs)

Federal law allows for two types of PACs: connected and non-connected. Judicial decisions added a third classification, independent expenditure-only committees, known as "super PACs". Most of the 4,600 active, registered PACs are "connected PACs", which are established by businesses, non-profits, labor unions, trade groups, or health organizations. These PACs receive and raise money from a "restricted class", generally consisting of managers and shareholders in the case of a corporation, or members in the case of a non-profit organization, labor union, or other interest group. Groups with an ideological mission, single-issue groups, and members of Congress and other political leaders may form "non-connected PACs".

PACs can give $5,000 to a candidate committee per election (primary, general, or special) and up to $15,000 annually to any national party committee. They can also give up to $5,000 annually to any other PAC and receive up to $5,000 from any one individual, PAC, or party committee per calendar year. Super PACs, on the other hand, can raise and spend unlimited amounts of money to advocate for or against any candidate or issue, as long as there is no coordination, consultation, or request by any campaign or candidate.

Leadership PACs are created by politicians themselves to raise funds for other members of their party and are often indicative of a politician's aspirations for leadership positions in Congress or for higher office. They are not for all campaign expenses, but for collecting funds for polling, consultants, and other non-campaign-related costs.

Campaign finance laws

At the federal level, the primary legal guidance for political donations is the Federal Election Campaign Act (FECA), initially passed by Congress in 1971. The FECA sets limits on campaign fundraising and spending, establishes disclosure requirements for campaign contributions, and created the Federal Election Commission (FEC), the agency that enforces federal campaign finance law. The FECA prohibits corporations and labour unions from making direct contributions or expenditures in connection with federal elections. However, they can influence federal elections by creating political action committees (PACs) or super PACs, which can raise and spend funds independently.

State and local campaign finance laws also exist, with varying requirements and restrictions. For example, Massachusetts has had a hybrid public funding system for statewide offices since 1978, where taxpayers can choose to contribute $1 to the statewide election fund through their income taxes. Seattle has a similar program, the Democracy Voucher program, where city residents receive four $25 vouchers to donate to participating candidates.

The enforcement of campaign finance laws is crucial to ensuring transparency and accountability in the political process. The FEC maintains a database and publishes information about campaigns and donors on its website. However, there are loopholes in campaign finance disclosure rules, such as "dark money," where the public does not know the identity of the campaigns, candidates, or entities receiving the money.

Public funding

In the US, public funding is administered by the Federal Election Commission (FEC), which publishes information about campaigns and donors on its website. The FEC's primary funding program matches the first $250 of each contribution from individuals that a candidate receives during their primary campaign. Candidates must demonstrate broad-based public support to be eligible for public funding, by raising more than $5000 in at least 20 states.

Some US states have experimented with public funding of elections. For example, in 2015, Seattle voters approved the Democracy Voucher program, which gives residents four $25 vouchers to donate to candidates. California overturned its ban on publicly funded elections in 2016, and some of its cities, like San Francisco and Los Angeles, already had some form of public financing. Other states that have adopted public funding legislation include Arizona, Maine, and Colorado.

Canada also has a system of public funding for federal political parties, with the most significant source of funding being election expense reimbursement, which subsidizes 50% of the national campaign expenses of any party that obtains at least 2% support.

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Presidential campaigns

There are several ways that candidates can raise money for their campaigns. Firstly, they can receive contributions from donors, both large and small. Large donations are defined as those over $200, while small donations are those of $200 or less. Money can also come from organisations, such as Political Action Committees (PACs), which are independent groups that raise and spend money to support candidates and influence elections. PACs can represent industry groups, labour unions, or individual companies.

Another way that candidates can receive funding is through public funds. To be eligible for these funds, candidates must agree to spending and fundraising restrictions, and they must not accept private donations. The amount of public funding that a candidate is entitled to is based on the ratio of the party's popular vote in the preceding presidential election to the average popular vote of the two major party candidates. Taxpayers can also choose to direct $3 of their taxes to the Presidential Election Campaign Fund, which is the only source of money for federal public election funding.

It is worth noting that having a lot of money does not guarantee a successful presidential campaign. For example, in the 2016 election, Bernie Sanders raised close to $230 million, of which 58% came from small individual contributions, while Republican candidate Donald Trump raised $71 million from super PACs and largely self-funded his campaign, and he won the election.

Independent expenditures

Political parties and candidates for political office raise money for their campaigns. Campaign finance laws vary at the state and federal levels. In general, campaigns may raise funds from individuals, political party committees, and political action committees (PACs).

National and state party committees can make independent expenditures to support or oppose federal candidates. However, they must be made without any coordination with the candidate or their committee. PACs, including super PACs, can also make independent expenditures, and since the 2010 Citizens United v. FEC Supreme Court decision, they can accept contributions without restrictions on the source or size.

There are concerns that FEC regulations are regularly circumvented through loopholes, with some arguing that a significant amount of independent expenditure is, in reality, coordinated. For example, in 2015, Jeb Bush's dealings with his Right to Rise super PAC raised concerns about apparent coordination. In another instance, a memo outlining Thom Tillis's 2014 Senate campaign advertising strategy was published on his website, easily accessible to outside allies.

To maintain independence, a firewall must be in place to prohibit the flow of information between employees or consultants providing services to the person paying for the communication and those working for the candidate or political party committee. Independent expenditures must be disclosed on specific FEC forms, and political committees must also report them on Schedule E of their regular FEC report.

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