Eleanor Finch
Political campaigns are limited in the amount of money they can receive from individuals and organisations, and these limits are adjusted for inflation every two years. The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which regulates the amount of money that can be donated to a political campaign. While candidates can spend their own money on their campaigns without limits, they must report the amount they spend to the FEC. Political donations are also not tax-deductible. The limits on contributions made by persons to candidates have increased to $3,300 per election, per candidate, while independent-expenditure-only political committees, or Super PACs, may accept unlimited contributions.
| Characteristics | Values |
|---|---|
| Limits on contributions made by persons to candidates | $3,300 per election, per candidate |
| Limits on contributions made by persons to national party committees | $41,300 per calendar year |
| Limit on contributions made by certain political party committees to Senate candidates | $57,800 per campaign |
| Limit on contributions to PACs | $5,000 |
| Tax deductibility of political contributions | No |
| Date of receipt of contribution | The date the campaign or a person acting on its behalf receives the contribution |
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What You'll Learn
Contribution limits
The amount of money one can donate to a political campaign is limited by the Federal Election Campaign Act (FECA) of 1971. The Federal Election Commission (FEC) enforces this Act and updates contribution limits every two years, adjusting them for inflation. These limits apply to the amount of money individuals and political organisations can donate to a candidate running for federal office.
For 2023-2024, the inflation-adjusted limits are as follows: individuals can contribute up to $3,300 per election, per candidate; $41,300 per calendar year to national party committees; and political party committees can contribute up to $57,800 per campaign to Senate candidates. These limits are subject to change every two years, with adjustments made for inflation in odd-numbered years.
It is important to note that there are different rules for independent-expenditure-only political committees, often referred to as "Super PACs". These committees can accept unlimited contributions, including from corporations and labour organisations. However, campaigns are prohibited from retaining contributions that exceed the specified limits and must follow specific procedures for handling such funds.
The FEC also requires candidates for president, Senate, and the House of Representatives to report the names of individuals and organisations contributing to their campaigns, as well as the amounts donated. This reporting requirement helps ensure transparency and compliance with contribution limits.
Public concern over the influence of large donors in political campaigns has been expressed, with many Americans believing that those who donate large sums of money to elected officials should not have more political influence than others. This has led to calls for new laws to reduce the role of money in politics and ensure that the voices of ordinary citizens are not drowned out by "big money".
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Federal Election Campaign Act
The Federal Election Campaign Act (FECA) is a piece of legislation adopted in the United States in 1971 to regulate the raising and spending of money in US federal elections. It was enacted on February 7, 1972, and signed into law by President Richard Nixon. The FECA imposes restrictions on the amounts of monetary or other contributions that can be made to federal candidates and parties, and it mandates the disclosure of contributions and expenditures in campaigns for federal office.
The FECA introduced bans on certain corporate and union contributions, speech, and expenditures. It also requires candidates for president, Senate, and the House of Representatives to report the names of individuals and political organizations contributing to their campaigns, as well as the amounts. The Act limits campaign expenditures for broadcast media, newspaper advertisements, and telephone calls to $0.10 per voter in the district they are running in when adjusted for inflation using the consumer price index. It also limits the amount that campaigns can spend on broadcast media to 60% of their total campaign spending limitation.
The FECA has been amended several times, including in 1974 following the Watergate scandal, in 1976 after the Supreme Court struck down several provisions as unconstitutional in Buckley v. Valeo, and again in 1979 to allow parties to spend unlimited amounts of hard money on activities like increasing voter turnout and registration. In 1979, the FEC ruled that political parties could spend unregulated or "soft" money on non-federal administrative and party-building activities. This led to a substantial increase in soft money contributions and expenditures in elections, and subsequently, to the passage of the Bipartisan Campaign Reform Act of 2002 (BCRA), which banned soft money expenditures by parties.
The BCRA also changed some of the legal limits on the giving of "hard money". Under the FECA, certain contribution limits are indexed for inflation every two years, based on the change in the cost of living since 2001. The inflation-adjusted limits include: the limits on contributions made by persons to candidates (increased to $3,300 per election, per candidate); the limits on contributions made by persons to national party committees (increased to $41,300 per calendar year); and the limit on contributions made by certain political party committees to Senate candidates (increased to $57,800 per campaign).
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Tax deductibility
Political contributions are not tax-deductible. This applies to a wide range of donations associated with politics, including monetary donations, in-kind contributions, and volunteer expenses.
Donations to political organisations or candidates are not tax-deductible. This includes donations to a political party, campaign committee, newsletter, or even admission to dinners or programs that benefit a political party or candidate. In-kind donations include non-cash contributions such as goods and services, which are also not tax-deductible. Businesses cannot deduct political contributions on their tax returns.
The IRS limits how much money can be contributed for political purposes. As of 2024, for federal elections, an individual may donate up to $3,300 to a candidate committee in any one federal election. This limit is indexed for inflation every two years, based on the change in the cost of living since 2001.
It is important to note that while political contributions are not tax-deductible, charitable contributions to qualified organisations are tax-deductible. These are typically deductible charitable contributions made to organisations that are tax-exempt under §501(c)(3) of the Internal Revenue Code. This type of organisation is specifically barred from attempting to influence legislation or participating in any political campaign.
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Political Action Committees (PACs)
At the federal level, an organization becomes a PAC when it receives or spends more than $1,000 to influence a federal election, and it must register with the Federal Election Commission (FEC). There are two main types of PAC: connected and non-connected. Connected PACs are established by businesses, non-profits, labor unions, trade groups, or health organizations. They receive and raise money from a restricted class, such as managers and shareholders in the case of a corporation. Non-connected PACs are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders. Judicial decisions added a third type: independent expenditure-only committees, or Super PACs. These can accept unlimited contributions from individuals, corporations, unions, and other groups, but they cannot coordinate with or contribute directly to candidate campaigns or political parties.
PACs have been in existence since 1943/1944, when the Congress of Industrial Organizations (CIO) formed the first one to raise money for the re-election of President Franklin D. Roosevelt. They have become increasingly influential in US politics, with campaign donations from PACs rising from $333 million in 1990 to $482 million in 2022.
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Reporting requirements
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 donate to a candidate running for federal office. The FEC updates these contribution limits every two years, adjusting them for inflation. The FEC strongly recommends that campaigns encourage contributors to designate their contributions for specific elections. Designated contributions ensure that the contributor's intent is clear to the candidate's campaign and promote consistency in reporting, avoiding the possible appearance of excessive contributions on reports.
When a campaign receives a contribution, it must be deposited within 10 days, although the date of deposit is not used for reporting or contribution limit purposes. The date of receipt is the date used for reporting and is defined as the date the campaign or a person acting on its behalf receives the contribution. For electronic contributions, the date of receipt is the date on which the committee obtains the contributor's transaction authorisation. The treasurer should retain a record of the receipt, including sufficient information to associate the contribution with its deposit, such as a batch number.
The FECA requires candidates for president, Senate, and the House of Representatives to report the names of individuals and political organisations contributing to their campaigns, along with the amounts contributed. Candidates can spend their own personal funds on their campaigns without limits, but they must disclose the amount they spend to the FEC.
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Frequently asked questions
The Federal Election Campaign Act (FECA) limits the amount of money individuals and political organizations can give to a candidate running for federal office. The limits on contributions made by persons to candidates are $3,300 per election, per candidate.
Yes, a campaign is prohibited from retaining contributions that exceed the limits. If a campaign does receive excessive contributions, it must follow special procedures for handling such funds.
No, donations to political candidates are not tax-deductible on personal or business tax returns.
