Jonah Patel
Campaigning for elected office is an expensive endeavour, with candidates for the 2020 US presidential election cycle drawing in $4.1 billion in donations. But what happens to all that money when a candidate drops out of the race? In general, presidential campaign contributions are not refundable, and the money is typically used to pay off any outstanding debts and expenses. However, there are several other avenues that the leftover money can take, including being transferred to a replacement candidate or to national, state, or local party committees.
| Characteristics | Values |
|---|---|
| What happens to campaign money when a candidate withdraws before their party's nominating convention? | The campaign must first settle all outstanding debts with vendors and service providers. |
| What happens after settling the debts? | The campaign must refund all contributions that were designated for use in the general election. |
| What are the other options? | Transfer funds to national, state, or local party committees, or to Political Action Committees (PACs) and certain nonprofit organizations. |
| What are the limits? | Candidates can only transfer up to $2,000 directly to another federal campaign. |
| What happens to Super PACs money? | Super PACs can redirect their efforts to support a replacement candidate. However, they are legally prohibited from coordinating directly with campaigns. There are no regulations on how a super PAC uses funds after the candidate drops out or the election is over. |
| What happens to leftover funds? | Candidates can keep the cash in the bank or use it for any other lawful purpose besides personal use. |
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What You'll Learn
Candidates can't keep campaign funds for themselves
When a candidate drops out of a presidential campaign, they often have a significant amount of leftover money. Candidates cannot keep campaign funds for themselves. Contributions must be used during the campaign to pay for related expenses and are not intended for personal use. The first use of the remaining funds is generally to pay the cost of winding things up. This includes expenses such as rent on office space, fees for services like polling and transportation, and staff salaries. Any money left over after a candidate drops out must be used to pay off debts.
If a candidate withdraws before their party's nominating convention, the campaign must first settle all outstanding debts with vendors and service providers. Following this, the campaign would likely have to refund all contributions that were designated for use in the general election. This is to avoid a bait-and-switch where a donor’s money gets used in a manner they did not authorize. However, it might be hard to distinguish the donor’s intent.
There are a few options for what to do with the remaining funds. One option is to transfer funds to national, state, or local party committees. This option allows for unlimited transfers and provides a mechanism for the party to support its new nominee or other candidates in federal races. Another option is to transfer the funds to Political Action Committees (PACs) and certain nonprofit organizations. These entities can support candidates aligned with their mission, although nonprofits face some restrictions on their political activities. A former candidate can also use any excess funds to create a "leadership PAC," which is 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.
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Money is used to pay off campaign debts
When a candidate drops out, the leftover campaign money is typically used to pay off any outstanding debts incurred during the campaign. This includes settling debts with vendors and service providers, such as rent, polling fees, transportation fees, and staff salaries. In some cases, campaigns may have maxed out credit cards or taken out loans, which also need to be repaid.
Campaigns may also have received contributions designated for the general election, and these must be refunded to individual donors within 60 days if the candidate drops out before the primary race. However, this can be a complex process, and refunds generally only occur under specific conditions, such as when contributions exceed legal limits.
If there is money remaining after settling debts and issuing refunds, campaigns have a few options. They can transfer funds to national, state, or local party committees, providing a way to support their new nominee or other candidates in federal races. Alternatively, they can donate to Political Action Committees (PACs) or certain nonprofit organizations that support candidates or causes aligned with their mission.
In some cases, a former candidate may establish a "leadership PAC" to back a political agenda or other candidates they support. However, leadership PACs have been criticized for functioning as "slush funds," allowing politicians to spend on travel and entertainment.
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Funds can be transferred to party committees
When a candidate drops out, their campaign funds can be used to pay off any outstanding debts to vendors and service providers. This includes expenses such as rent, polling fees, transportation fees, and staff salaries. After settling these debts, the campaign must refund all contributions designated for the general election to avoid using a donor's money without their authorization. However, it is important to note that refunds are generally complex and only occur under specific conditions, such as when contributions exceed legal limits.
In some cases, funds can be transferred to national, state, or local party committees, providing a way to support the party's new nominee or other candidates in federal races. This option allows for unlimited transfers, as there are no restrictions on the amount given to these committees. For example, in 2020, Michael Bloomberg transferred millions of dollars from his suspended campaign to the Democratic National Committee. While this practice may be viewed as circumventing campaign contribution limits, it is currently legal.
Alternatively, funds can be redirected to Political Action Committees (PACs) or specific nonprofit organizations that support aligned candidates or promote a particular political agenda. Super PACs, which operate independently of campaigns, can also continue to use the funds to support the same or different federal candidates in future elections. However, it is important to note that super PACs are prohibited from directly coordinating with campaigns or donating to national political party committees.
In certain situations, a candidate may choose to do nothing with the leftover funds and simply keep them in the bank. While this may be an option, the law is vague on this matter, stating that the funds can be used "for any other lawful purpose" besides personal use.
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Super PACs can redirect efforts to a replacement candidate
When a candidate drops out, the campaign money is typically used to settle any outstanding debts and expenses, such as rent, fees for services, and staff salaries. While presidential campaign contributions are generally not refundable, there are specific conditions under which refunds may occur, such as when contributions exceed legal limits. Candidates who withdraw before their party's nominating convention must refund all contributions designated for the general election to avoid using donors' money without their authorization.
Super PACs, which can raise and spend unlimited sums independently, are not legally prohibited from coordinating directly with campaigns. They can redirect their financial support to a replacement candidate or another federal candidate in future elections. However, there is a supposed firewall between these independent expenditures and the official campaign apparatus. The money can still be used, but there is a risk of it being spent in ways the original candidate would not have intended.
Super PACs have the flexibility to continue using the funds to support the same candidate in future elections or donate them to organizations aligned with their political cause. They are not legally obligated to refund donors, but they often choose to do so. For instance, in 2016, the Jeb Bush super PAC "Right to Rise" refunded $12 million to its donors.
While there are disadvantages to moving money to an outside group, Super PACs provide a mechanism to redirect financial support to a replacement candidate, ensuring that the money is still utilized in the political arena.
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Candidates can refund donors' contributions
When a candidate drops out, the campaign funds are typically used to settle any outstanding debts with vendors and service providers. This includes expenses such as rent, polling fees, transportation, and staff salaries. After these debts have been settled, there may be leftover funds that need to be accounted for.
In some cases, candidates may be required to refund donors' contributions. This typically occurs when contributions exceed the legal limit or when a candidate withdraws before their party's nominating convention and refunds are required for contributions designated for the general election. It is important to note that distinguishing donor intent can be challenging. While some donors may request refunds, it is not a common occurrence.
Candidates who have leftover funds after settling debts and refunds have several options for disbursement. They can choose to do nothing and keep the cash in the bank, transfer funds to national, state, or local party committees without limits, or donate to state and local candidates, following state campaign finance laws. Additionally, they can give up to $2,000 to one or more candidates for federal office.
Alternatively, former candidates can use the excess funds to establish a "leadership PAC," a political committee that supports a political agenda or other candidates aligned with their beliefs. However, leadership PACs have been criticized for being used as "slush funds" for non-campaign-related expenses.
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Frequently asked questions
The money is used to pay off any outstanding debts and expenses, such as rent, staff salaries, and transportation fees. If the candidate withdrew before their party's nominating convention, all contributions designated for the general election must be refunded to the donors.
Yes, but only under specific conditions, such as when contributions exceed the legal limit.
The remaining funds can be transferred to national, state, or local party committees, or to Political Action Committees (PACs) and certain nonprofit organizations. Alternatively, the candidate can choose to do nothing and keep the cash in the bank.
No, the candidate cannot use the money for personal use. Any leftover funds must be used for "any other lawful purpose".
If the vice-presidential candidate assumes the nomination, they can access and spend the money directly. If the replacement candidate is wealthy, they may choose to self-fund their campaign.
