Eleanor Finch
Political candidates raise money for their campaigns through personal and business donations, with some candidates even using their own personal funds. Candidates can also receive funding from political action committees (PACs), which are private interest groups that raise and spend money to support candidates and influence elections. PACs can represent industry groups, labor unions, or individual companies, and they account for a large portion of the funding for many campaigns. In addition, candidates may receive public funding from the government, although this often comes with restrictions on spending and fundraising. The cost of running for office can be high, so candidates must raise millions of dollars in contributions to cover expenses such as travel, administration, and salaries.
| Characteristics | Values |
|---|---|
| Sources of funding | Individuals, Political Action Committees (PACs), party committees, taxpayers, corporations, labor unions, membership groups, and candidates' personal funds |
| Amount raised for 2024 elections | $8.6 billion |
| Amount raised for 2020 elections | $9 billion |
| Top fundraisers for 2024 presidential race as of May 9, 2024 | Joe Biden ($170.6 million), Donald Trump ($114.8 million), Nikki Haley ($57.2 million) |
| Permitted uses of leftover funds | Charitable donations, donations to other candidates, saving for a future campaign, refunds to donors |
| Prohibited uses of funds | Personal use |
| Requirements | Candidates must keep diligent records of where the money comes from and how it is spent |
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What You'll Learn
- Political candidates raise money through personal and business donations
- Political action committees (PACs) are a major source of campaign funding
- Candidates can also receive federal government funds
- Candidates must keep diligent records of where the money comes from
- There are rules in place for how money can be used after a campaign ends
Political candidates raise money through personal and business donations
There are different types of donors who contribute to political campaigns. Firstly, individuals can make donations to candidates they support. These donations are typically capped at a specific limit, and only a portion of each individual's contribution may be counted towards the candidate's fundraising total. For example, in the context of primary elections, only a maximum of $250 of each individual's contribution is counted towards the $5000 threshold required to qualify for primary matching funds in each state. Secondly, political action committees (PACs) are committees that pool donations from members and associates to support specific candidates or parties. PACs can be formed by individuals, companies, nonprofits, or trade groups, and they are subject to federal contribution limits. There are also super PACs, which, following a Supreme Court decision in 2010, can collect unlimited funds from individuals, corporations, unions, and other groups. However, super PACs cannot contribute directly to any specific candidate.
In addition to individual and PAC donations, candidates may also receive public funding. The Presidential Election Campaign Fund allows taxpayers to voluntarily designate $3 of their taxes to fund eligible presidential candidates. To be eligible for these funds, candidates must agree to certain spending and fundraising restrictions. For example, they may have to limit their campaign expenditures to the amount of public funds received and refrain from accepting private contributions. The Federal Election Commission (FEC) determines eligibility and administers the distribution of funds.
Furthermore, candidates can also use their personal funds for campaign expenses. There is a limit on the amount they can spend from their personal finances, which is set at $50,000. This amount does not count against the candidate's overall expenditure limit.
Finally, it is important to note that there are rules in place regarding the use of leftover campaign funds. Candidates are required to find ways to disperse any remaining funds if a campaign ends prematurely. This includes spreading the money to other candidates, making refunds to donors, or making charitable donations.
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Political action committees (PACs) are a major source of campaign funding
Political candidates require substantial financial resources to fund their campaigns. Political action committees (PACs) are a significant source of campaign funding, providing candidates with the necessary financial support to run for office. PACs are organisations that raise and distribute money to candidates seeking political office. They are often formed by corporations, labour unions, trade associations, or other groups and individuals. From January 2023 to April 2024, PACs contributed over $5.6 billion to US political campaigns, accounting for more than 65% of the total funds raised.
The role of PACs in campaign financing has evolved over time. Initially, the Federal Election Campaign Act of 1971 set limits on the amount of money corporations, unions, or individuals could donate directly to candidates. However, the emergence of PACs allowed for the aggregation of smaller contributions from a larger number of individuals, circumventing the direct donation restrictions. As a result, the influence of PACs in political campaigns grew significantly, with their numbers increasing from about 600 in the early 1970s to over 4,000 by 2010.
There are different types of PACs, including leadership PACs, hybrid PACs, and super PACs, each with distinct characteristics and regulations. Leadership PACs are often formed by politicians aspiring to higher office or seeking more influence within their party. These PACs contribute funds to the campaigns of political allies but cannot support the official campaign of the sponsoring elected official. Hybrid PACs maintain two separate bank accounts, allowing them to accept unlimited contributions from various entities while also making contributions to federal candidates within statutory limits.
Super PACs, or independent expenditure-only political committees, are unique in their ability to raise unlimited funds from individuals, corporations, unions, and other groups. They use these funds to advocate for or against political candidates through advertising and other political activities. However, they are prohibited from directly coordinating with or contributing to candidate campaigns or political parties. The regulations governing super PACs have been the subject of legal debates, with the Supreme Court's Citizens United v. FEC decision in 2010 significantly impacting the landscape of campaign financing.
The impact of PACs on political campaigns is significant, providing a substantial portion of the funding required to run for office. Candidates rely on the financial support provided by PACs to cover various expenses, including travel, administration, salaries, and campaign-related activities. The relationship between PACs and political candidates is mutually beneficial, as PACs also gain influence and the ability to shape policy by supporting certain candidates. However, it is important to note that there are rules and disclosure requirements in place to regulate how PACs operate and spend their funds.
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Candidates can also receive federal government funds
Political candidates can also receive federal government funds, which are distributed by the Federal Election Commission (FEC). The FEC was established by the Federal Election Campaign Act, passed by Congress in 1971, and is responsible for enforcing federal campaign finance law. Under the presidential public funding program, eligible presidential candidates can receive federal funds to cover the qualified expenses of their campaigns in both the primary and general elections. To be eligible for these funds, candidates must agree to certain conditions, such as limiting their campaign spending to the amount of the grant and refraining from accepting private contributions.
The public funding program aims to match the first $250 of each contribution from individuals that a candidate receives during the primary campaign. Additionally, it provides funding for the major party nominees' general election campaigns and assists eligible minor party nominees. The program is financed through taxpayer contributions, with the 1040 federal income tax form giving taxpayers the option to designate $3 of their taxes to the Presidential Election Campaign Fund. This tax opt-in does not affect the amount of tax owed or refunds received.
To participate in the primary matching fund program, presidential candidates must demonstrate broad-based support by raising more than $5,000 in matchable contributions from individuals in each of 20 different states. This means receiving contributions from a minimum of 20 contributors in 20 states. The FEC determines eligibility for public funds, and the U.S. Treasury makes the payments. Candidates who receive public funds must agree to comply with spending limits and maintain detailed records of their financial activities.
While federal government funds can provide significant support for political campaigns, many major-party candidates opt to decline this funding in favour of private fundraising. This allows them to bypass the spending restrictions associated with public funds and pursue alternative sources of financing, such as donations from individuals, PACs, and party committees.
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Candidates must keep diligent records of where the money comes from
Political candidates must keep diligent records of where the money comes from when fundraising for their campaigns. This is a legal requirement, as the Federal Election Campaign Act and its subsequent amendments set limits on campaign fundraising and spending, as well as establishing disclosure requirements for campaign contributions. The Act also created the FEC, which enforces federal campaign finance law. The FEC monitors campaign spending through a dedicated bank account and audits all campaigns that receive public funds.
Candidates must be transparent about their sources of funding, as this helps to ensure compliance with campaign finance laws, which dictate who can contribute to a campaign, how much they can give, and how those contributions must be reported. These laws vary at the state and federal levels. For example, corporations, labour organisations, and membership groups cannot contribute directly to federal campaigns but can influence elections by creating PACs.
The FEC also enforces restrictions on money spent on political campaigns, and candidates must comply with spending limits. Spending restrictions cover a wide range of activities, including travel, administration, salaries, and any other campaign-related expenses. Candidates are prohibited from using campaign funds for personal use.
If a candidate receives contributions for a general election but drops out of the race or loses the primary, they must refund the money to individual donors within 60 days. Alternatively, they can redistribute funds with the contributor's permission.
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There are rules in place for how money can be used after a campaign ends
Political campaigns can raise millions, if not billions, of dollars through personal and business donations. This money is used to pay for travel, administration, salaries, and any other campaign-related expenses. Candidates must keep detailed records of where the money comes from and how much is spent.
If a campaign ends, it must find ways to disperse the funds. This includes spreading it out to other candidates, gifts, and refunds to donors. However, there are rules in place for how money can be used after a campaign ends, and candidates are prohibited from using these funds for personal use. The Federal Election Commission (FEC) has rules in place to control how money raised by candidate campaign committees is spent after a candidate bows out, or after an election is officially over. Campaign funds given for a general election during a primary must be refunded if the candidate will not be in the general election, and can only be applied to other acceptable uses with permission from the donors.
Permissible uses of leftover funds include charitable donations and donations to other candidates. Candidates can also save the money for a future campaign. For instance, Cory Booker was able to use money left over from his presidential campaign to run for reelection to the Senate. Candidates can also use excess funds to create a "leadership PAC", a political committee that can be controlled by the former candidate but is not used to support their campaigns. Instead, it backs a political agenda, including other candidates, that the former candidate supports. Leadership PACs have been criticized for functioning as "slush funds" for politicians to spend on travel and entertainment they can't buy with regular campaign donations.
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Frequently asked questions
Political candidates raise money for their campaigns through personal and business donations, as well as through political action committees (PACs). Candidates must keep diligent records of where the money comes from and how much is spent.
There are rules in place that dictate how money can be used after a campaign ends. Permitted uses include charitable donations, donations to other candidates, and saving it for a future campaign; personal use is prohibited.
Political action committees (PACs) are groups that raise and spend money to support candidates and influence elections. They can represent industry groups, labor unions, or individual companies. PACs solicit donations from members and associates to make campaign contributions or fund campaign activities such as advertising.
There are no limits to how much money a candidate can give to their own campaign, as long as it is their own money.
The Presidential Election Campaign Fund is a fund on the books of the U.S. Treasury. Taxpayers can choose to contribute $3 of their taxes to this fund, which is then distributed to eligible presidential candidates to pay for their campaign expenses.
