Donations To Political Campaigns: How Much Is Too Much?

Political campaigns are expensive, and they rely on contributions from individuals and organisations to fund them. In the US, the Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money that can be contributed to a political campaign. These limits are indexed for inflation every two years, and they apply to all types of contributions, except those made from a candidate's personal funds. The limits vary depending on the type of contributor and the office sought by the candidate. For example, as of 2023, an individual can contribute up to $3,300 per election, per candidate, while a national party committee can contribute up to $41,300 per calendar year. However, there are no limits on contributions to certain types of political action committees (PACs), often referred to as Super PACs. Understanding the regulations around campaign contributions is crucial for ensuring compliance with the law and maintaining transparency in the political process.

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Federal Election Campaign Act of 1971

In the United States, the Federal Election Campaign Act of 1971 (FECA) is the primary federal law regulating political campaign fundraising and spending. The Act was signed into law by President Richard Nixon on February 7, 1972. It was first introduced to the Senate Subcommittee on Communications of the Committee on Commerce on March 2, 1971, by Senator John Pastore. The Act passed in the House on November 30, 1971, by a vote of 372-23.

The FECA of 1971 regulates the raising and spending of money in US federal elections. It imposes restrictions on the amounts of monetary or other contributions that can be made to federal candidates and parties. It also introduced bans on certain corporate and union contributions, speech, and expenditures. The Act mandates disclosure of contributions and expenditures in campaigns for federal office.

The FECA has been amended several times. In 1974, following the Watergate scandal, the Act was amended to create the Federal Election Commission (FEC) and to set limits on contributions by individuals, political parties, and political action committees (PACs). The FEC opened its doors in 1975. In 1976, the Act was amended again in response to the provisions ruled unconstitutional by Buckley v. Valeo, including the structure of the FEC and the limits on campaign expenditures. In 1979, the FEC ruled that political parties could spend unregulated or "soft" money on non-federal administrative and party-building activities.

In 2002, major revisions to the FECA were made by the Bipartisan Campaign Reform Act (BCRA), which banned soft money expenditures by parties and changed some legal limits on the giving of "hard money". However, major portions of the BCRA were later struck down by the Supreme Court on constitutional grounds.

Limits on contributions

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 give to a candidate running for federal office. These limits apply to all types of contributions, except those made from a candidate's personal funds.

The FEC recommends that campaigns encourage contributors to designate their contributions for specific elections. Designated contributions ensure that the contributor's intent is conveyed to the campaign and promote consistency in reporting. Undesignated contributions count against the donor's contribution limits for the candidate's next election.

For the 2023-2024 election cycle, the FEC has set the following contribution limits:

• $3,300 per election, per candidate for contributions made by persons to candidates
• $41,300 per calendar year for contributions made by persons to national party committees
• $57,800 per campaign for contributions made by certain political party committees to Senate candidates

It's important to note that these limits are indexed for inflation every two years, based on the change in the cost of living since 2001.

At the state level, contribution limits may vary. For example, in New York, there is a $5,000 aggregate limit on contributions by corporations, LLCs, and PLLCs, but this does not apply to funds given to specific types of committees. Additionally, each primary, general, or special election campaign has its own limit, and contributors may give up to that limit for each election in which the candidate participates.

Political action committees (PACs)

At the federal level in the US, an organization 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 $5,000 to a candidate committee per election (primary, general, or special). They can also give up to $15,000 annually to any national party committee and $5,000 annually to any other PAC. PACs may receive up to $5,000 from any one individual, PAC, or party committee per calendar year.

Federal law formally allows for two types of PACs: connected and non-connected. Judicial decisions added a third classification, independent expenditure-only committees, which are colloquially known as "super PACs". Most of the active, registered PACs are "connected PACs", sometimes also called corporate PACs, and are established by businesses, non-profits, labour 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, labour 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".

Super PACs, officially known as "independent expenditure-only political action committees", are unlike traditional PACs in that they may raise unlimited amounts from individuals, corporations, unions, and other groups to spend on, for example, ads overtly advocating for or against political candidates. However, they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties.

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Super PACs

In the United States, there are limits on campaign contributions to candidates for president and Congress. 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.

However, different rules apply to non-party, outside groups called political action committees or PACs. If a PAC contributes directly to a candidate, the maximum donation is $5,000 per person per year. On the other hand, if a PAC declares that it will spend its money independently of a candidate's campaign, there are no limits on donations to the PAC. These groups, commonly known as "Super PACs", can receive unlimited contributions from individuals, corporations, or unions.

The emergence of Super PACs can be traced to several court decisions, including the United States Supreme Court's rulings in Citizens United v. FEC and SpeechNow.org v. Federal Election Commission, as well as Buckley v. Valeo in 1976. In Citizens United, the Court declared that independent political spending, when not coordinated with candidates, did not raise concerns about corruption. As a result, individuals, corporations, and unions gained the legal right to donate and spend unlimited amounts on independent political speech.

Reporting and compliance

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 give to a candidate running for federal office. The FEC also oversees the enforcement of laws specified under FECA, including setting campaign contribution limits for individuals and groups, and overseeing public funding used in presidential elections.

Every two years, the FEC updates certain contribution limits, such as the amount individuals may give to candidates and party committees, which are indexed to inflation. The FEC website provides an overview of the contribution limits, which are as follows:

• 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)
• The limit on contributions made by certain political party committees to Senate candidates (increased to $57,800 per campaign)

It is important to note that a campaign is prohibited from retaining contributions that exceed the limits. In the event that a campaign receives excessive contributions, it must follow special procedures for handling such funds. The date of receipt of a contribution is also important, as it determines whether a contribution is acceptable under the rule. For example, a contribution designated for the primary and made before that election will not be subject to the net debts outstanding rule, even if the campaign receives the contribution after the primary.

Additionally, there are different rules for independent-expenditure-only political committees, also known as "Super PACs". These committees may accept unlimited contributions from individuals, corporations, unions and other groups, provided they are operated correctly and do not coordinate with a candidate.

In terms of reporting and compliance, the FEC provides a database where the public can search for information on where each candidate receives campaign money and how they spend it. This includes information on contributions from individuals and political organisations, as well as how candidates spend their money on their campaigns. The FEC also requires campaigns to report the date of receipt of contributions, which is the date on which the committee obtains the contributor's authorisation of the transaction. The treasurer should retain a record of the receipt, including sufficient information associating that contribution with its deposit in the political committee's campaign depository.

Furthermore, the FEC allows presidential primary candidates to continue to request funds even if they are no longer actively campaigning, as long as they use the funds to pay off campaign debts. This is known as the Presidential Election Campaign Fund (PECF), and eligible presidential candidates can use the money to help cover qualified expenses of their political campaigns in both the primary and general elections. However, due to the lack of a federal cap on individual political donations, presidential candidates have been unwilling to use these funds as they are restricted.

At the state and local level, there are also initiatives to encourage political engagement and diversify the donor pool. For example, Seattle voters approved the Democracy Voucher program in 2015, which gives city residents four $25 vouchers to donate to participating candidates.

Frequently asked questions