Political Campaign Spending: Where Does The Money Go?

Political campaigns can be costly affairs, with candidates spending millions on advertising, travel, staff, political consulting, and more. The sources of this funding vary, from private individuals to corporations and charitable organizations, and the spending is meant to promote candidates, political parties, or policy initiatives. While campaigns have discretion in spending, certain restrictions are in place, and disclosure requirements aim to curb the influence of large donors. However, dark money spent by influential organizations and groups can obscure the origins of funds, and public concern over the role of money in politics has led to calls for spending limits.

What do political campaigns spend money on?

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Advertising

Candidates and their campaign committees have embraced online advertising as a powerful tool to reach voters, with spending on Google and Meta platforms alone surpassing $619 million as of August 2024. This represents a substantial increase in digital political advertising compared to previous election cycles. The COVID-19 pandemic has likely contributed to this shift, as campaigns adapted to the limitations on in-person events and traditional campaigning methods.

Traditional media outlets, such as television and radio, have long been a staple of political advertising. However, the rise of social media and digital platforms has fragmented the media landscape, prompting campaigns to allocate a significant portion of their advertising budgets to online channels. This includes targeted digital ads on social media platforms like Facebook, as well as search engine advertising on Google.

Super PACs (Political Action Committees), which operate independently of candidates and parties, have also emerged as significant players in the political advertising landscape. Unlike traditional PACs, super PACs are not subject to contribution limits and can spend unlimited amounts on advertising and other election-related activities. This has resulted in a substantial increase in political advertising, particularly from super PACs supporting Democratic candidates in the 2024 election cycle.

The impact of advertising on political campaigns cannot be overstated. Effective advertising helps candidates and their supporters shape public opinion, highlight key issues, and ultimately, influence voter behaviour. With the continuous evolution of media consumption habits, political campaigns must adapt their advertising strategies to remain visible and relevant to their target audiences.

Political consulting

Consultants are hired to help with specific tasks or to oversee entire campaigns. They can provide valuable insights and strategies to help candidates win their races. For example, political consultants can advise on polling and analytics, marketing and advertising techniques, and media strategies. They can also help prepare candidates for debates and public appearances, as well as attract wealthy donors.

The cost of hiring consultants can be significant, with some campaigns spending millions of dollars on consulting services. In the 2016 presidential race, for instance, the Jeb Bush campaign spent $52.5 million on political consultants, with $45 million going towards media and advertising.

While the expenses associated with political consulting may be high, it is an important investment for campaigns. Consultants can provide specialized knowledge and skills that may not be available from permanent staff members. They can also help campaigns navigate federal regulations and spending limits, ensuring that funds are spent legally and effectively.

When hiring a political consultant, it is essential to consider their track record and the specific strategies they have devised. It is also worth noting that high spending on consultants does not always guarantee success or good poll support. However, the insights and strategies provided by effective consultants can be invaluable in swaying public opinion and shaping the outcome of an election.

Donations and fundraising

Political campaigns are funded by donations and fundraising. The money is raised by candidates, political parties, and independent groups. In the 2020 election cycle, the Democratic and Republican parties combined raised almost $2.7 billion. The sources of money for campaigns for federal office can be divided into four broad categories: small individual contributors (those who contribute $200 or less to a campaign), large individual contributors (those who contribute more than $200), billionaires and other super-wealthy individuals, and corporations.

Small individual contributors are typically defined as those who contribute $200 or less to a campaign. Large individual contributors are those who contribute more than $200. Billionaires and other super-wealthy individuals often contribute large sums of money to campaigns, and this has been a growing trend in recent years. In the summer of 2015, during the 2016 presidential campaign cycle, the donations of fewer than 400 super-wealthy families accounted for nearly half of all campaign contributions. This has led to concerns that the voices of regular voters are being drowned out by the financial influence of the super-wealthy.

Corporations are also major donors to political campaigns, although they are not allowed to donate directly to candidates or national party committees. Instead, they may contribute to political action committees (PACs) or super PACs, which are independent expenditure-only committees that can raise and spend unlimited amounts of money to influence elections, as long as there is no coordination with the campaigns or candidates they support. In 2022, there were 2,476 super PACs formed, and they raised over $2.7 billion, spending over $1.3 billion.

In addition to these sources of funding, political campaigns also receive money from grassroots donations and fundraisers organized by lobbyists. Grassroots donations are small contributions from individual supporters, often mobilized through digital platforms and the internet. Fundraisers, on the other hand, are events organized to raise money for a specific candidate or cause. They can range from small gatherings to large galas and are often attended by wealthy donors and political allies.

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Staff and travel expenses

Staff Expenses

Campaigns invest heavily in their staff, recognising that a competent and dedicated team is essential for a successful outcome. Staff expenses encompass a range of costs, from salaries and wages to reimbursements for staff travel and other work-related expenses. Salaries vary depending on the role and seniority of the staff member, with positions ranging from campaign managers, strategists, and communications directors to field organisers, data analysts, and administrative support.

In the United States, the Federal Election Campaign Act governs the use of campaign funds, including staff expenses. It is important to note that campaigns are generally prohibited from using funds for personal expenses unrelated to the campaign or a candidate's duties. However, there are certain exceptions, such as when family members of the candidate are providing bona fide services to the campaign, and their salaries reflect the fair market value of those services.

Travel Expenses

Travel is an integral part of political campaigns, as candidates and their teams need to reach out to voters across the district or state they are running in. Travel expenses can quickly add up, especially when candidates have to travel between multiple locations for campaign events, rallies, and meetings. These expenses typically include transportation costs, such as flights, car rentals, or fuel for personal vehicles, as well as lodging and meal expenses when candidates or staff are on the road.

Campaigns must carefully navigate the rules and regulations surrounding travel expenses. In the US, the Federal Election Commission (FEC) provides guidelines on what constitutes a "'campaign traveller'" and how to allocate expenses when a trip involves both campaign-related and non-campaign-related stops. Additionally, there are limits on how much an individual can spend on unreimbursed transportation expenses before it is considered a contribution to the campaign.

Both staff and travel expenses are essential to the functioning of a political campaign, enabling candidates to mobilise their teams and connect with voters across the regions they aim to represent. Effective management of these expenses is crucial to ensuring that campaigns stay within legal boundaries and make the most of their financial resources in pursuit of electoral success.

Payments to vendors

Political campaigns incur a variety of expenses, and candidates often hire a range of experts and vendors to assist with their campaigns. These vendors must be paid, and these payments can constitute a significant portion of a campaign's expenses.

Campaigns must report their expenditures to the Federal Election Commission (FEC), and the FEC's data sheds light on the strategies that campaigns use to turn dollars into votes, as well as the vendors that profit from elections. Campaigns must report the purpose and payee of all disbursements over $200, and these disbursements must be made by check, electronic transfer, or from a petty cash fund for small disbursements under $100.

The money spent by campaigns goes towards a variety of expenses, including advertising, speaker/venue fees, travelling, headquarter rentals, postage, and political consulting. Advertising is often the most visible and largest category of spending, with candidates advertising through websites, billboards, yard signs, newspaper ads, television commercials, radio spots, clothing and merchandise, and social media.

Political consulting is another key area of spending, as candidates often hire a variety of experts to assist with their campaigns. These consultants can help with tasks such as analyzing historical voting patterns, polling likely voters, designing targeted communication strategies, preparing candidates for debates and public appearances, and attracting wealthy donors. While the exact amount spent on consulting may not always be clear, it can be a significant expense for campaigns.

In addition to these expenses, campaigns also incur costs associated with fundraising, media, contributions, strategy and research, wages and salaries, and other administrative expenses. These expenses can quickly add up, and campaigns must carefully manage their finances to ensure they are complying with all relevant laws and regulations.

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