Eleanor Finch
Political campaigns can be costly, with presidential campaigns raising and spending billions of dollars. Candidates for political office raise money to fund their campaigns and demonstrate their support base. Campaign financing comes from various sources, including personal and business donations, political action committees (PACs), and public funds. The laws governing campaign financing vary at the state and federal levels, with some contributions limited or prohibited. Candidates must keep detailed records of their finances, and any leftover funds after a campaign must be used for permitted expenses, such as charitable donations or saved for future campaigns, rather than personal use.
| Characteristics | Values |
|---|---|
| Sources of Funding | Personal and business donations, Political Action Committees (PACs), Super PACs, Presidential Election Campaign Fund, Taxpayers, Political Party Committees |
| Spending Rules | Cannot be used for personal use, Cannot be kept by politicians, Must be used for campaign-related expenses, Must be used to pay off debts if funds remain, FEC-determined spending limits, State limits |
| Other Rules | Must keep diligent records of funds, Cannot accept private contributions if receiving public funds, Cannot coordinate with Super PACs |
| Recent Data | Presidential campaigns raised and spent $4.1 billion in 2020, with a large fraction likely being grassroots contributions |
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What You'll Learn
Public funding for presidential campaigns
To be eligible for public funding, presidential candidates must demonstrate broad-based public support. They must raise more than $5,000 in matchable contributions from individuals, with a maximum of $250 per individual, in each of at least 20 states. This means they must receive contributions from a minimum of 20 contributors in each of these states. Additionally, candidates must agree to limit their spending to the amount of the grant and refrain from accepting private contributions for the campaign. They can, however, spend up to $50,000 of their personal funds, which does not count against the expenditure limit.
Once candidates have established eligibility, they may receive public funds to match individual contributions up to $250 per person. These funds can cover up to half of the national spending limit for the primary campaign. The public funding program aims to match the first $250 of each eligible contribution a candidate receives during the primary campaign. It also provides funding for major party nominees' general election campaigns and assists eligible minor party nominees.
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Campaign finance laws
The FEC enforces contribution limits for individuals and groups, as well as overseeing public funding used in presidential elections. The current contribution limits are: up to $250 per individual for eligible candidates, who may receive public funds equaling up to half of the national spending limit for the primary campaign. Presidential candidates may receive up to $81.78 million if the election were held in 2007. Candidates can spend their own personal funds on their campaign without limits but must report the amount to the FEC.
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). These committees solicit donations from members and associates to make campaign contributions or fund campaign activities such as advertising. Funds raised and spent by PACs are subject to federal limits.
There are also other types of PACs, such as super PACs, which cannot directly contribute to or coordinate with campaigns and candidates. However, donations to super PACs are not subject to federal limits.
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Political action committees (PACs)
Political action committees, or PACs, are organisations that pool campaign contributions from members and donate those funds to campaigns for or against candidates, ballot initiatives, or legislation. PACs emerged from the labour movement of 1943, with the first one being formed by the CIO (Congress of Industrial Organizations) to raise money for the re-election of President Franklin D. Roosevelt.
At the federal level in the US, an organisation becomes a PAC when it receives or spends more than $1,000 to influence a federal election and registers with the Federal Election Commission (FEC). PACs can give up to $5,000 to a candidate committee per election and may receive up to $5,000 from any one individual, PAC or party committee per calendar year. They are subject to federal limits on fundraising and spending, and must disclose anyone who has donated at least $200.
There are several types of PACs, including connected PACs, non-connected PACs, super PACs, and hybrid PACs. Connected PACs are established by businesses, non-profits, labour unions, trade groups, or health organizations, and receive money from a restricted class of individuals. Non-connected PACs are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders. Super PACs, or independent expenditure-only political committees, can raise unlimited amounts from individuals, corporations, unions, and other groups, but cannot coordinate with or contribute directly to candidate campaigns or political parties. Hybrid PACs solicit and accept unlimited contributions from a variety of sources, including individuals, corporations, and other political committees, but maintain a separate bank account that is subject to statutory amount limitations and source prohibitions.
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Super PACs
The creation of Super PACs has been influenced by several U.S. Supreme Court rulings, including Citizens United v. FEC (2010) and Buckley v. Valeo (1976), which have lifted restrictions on political speech and spending. These rulings have allowed individuals, corporations, and unions to donate and spend unlimited amounts on independent political activities.
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Private fundraising
Sources of Private Funding
Political campaigns can raise funds from a variety of private sources, including individuals, political party committees, and political action committees (PACs). Individuals play a significant role in private fundraising by making personal donations to campaigns. There are limits set on the amount an individual can donate to a single candidate, as stipulated by the Federal Election Campaign Act. For the 2023-2024 federal election cycle, the cap is $3,300 per election, allowing a maximum contribution of $6,600 to a federal candidate for both the primary and presidential campaigns.
Political party committees also contribute to private fundraising by channeling funds to support candidates from their respective parties. Additionally, political action committees (PACs) are formed to raise money and make campaign contributions. These committees are often affiliated with corporations, labor organizations, or membership groups, allowing these entities to indirectly influence federal elections. It's important to note that PACs have federal limits on the funds they can raise and spend.
Super PACs
Super PACs, or independent expenditure-only political committees, are a notable aspect of private fundraising. Unlike traditional PACs, super PACs are not bound by contribution limits and can raise unlimited funds. However, they are prohibited from directly coordinating with the candidates they support. Super PACs have become influential in political campaigns, allowing individuals, organizations, and industries to inject significant financial support for their favored candidates.
Candidate's Personal Funds
In addition to the funds raised from external sources, candidates can also utilize their personal finances to support their campaigns. They are permitted to spend a certain amount of their own money, which does not count against the expenditure limit. This allows candidates to demonstrate their commitment and invest directly in their political aspirations.
Compliance with Regulations
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Frequently asked questions
Political campaigns can be funded in a variety of ways, including personal and business donations, public funds, and contributions from individuals, political party committees, and political action committees (PACs). Candidates must keep detailed records of where the money comes from and how it is spent.
Candidates may spend up to $50,000 of their own money on their political campaigns. This spending does not count against the expenditure limit. However, it is important to note that candidates are prohibited from using campaign funds for personal use. Any leftover money after a campaign must be used to pay off debts or dispersed through other means, such as charitable donations or refunds to donors.
The amount of money an individual can donate to a political campaign is capped. For the 2023-2024 federal election cycle, the Federal Election Campaign Act caps contributions at $3,300 per election. It is important to note that the primary election and general election are considered separate elections, so an individual could potentially contribute up to $6,600 to a federal candidate.
