Eleanor Finch
When a political campaign is suspended, the candidate must first settle any outstanding debts with vendors and service providers. They must also refund contributions that were designated for the general election to avoid donors' money being used in a manner they did not authorise. There are several options for the remaining funds, including transferring them to another campaign or candidate, or to a national, state or local party committee. Candidates are not allowed to use the funds for personal expenses, but they can be used for charitable donations or to pay for moving office.
| Characteristics | Values |
|---|---|
| What happens to leftover money from a campaign | The money can be used to pay off any debts, refunded to donors, or transferred to another campaign or candidate. |
| Where does the money go? | Charitable donations, donations to other candidates, saving for a future campaign, or transfers to party committees. |
| Rules | The Federal Election Commission has rules controlling how money is spent after a candidate drops out or a campaign ends. Personal use is prohibited. |
| Winding down costs | Money can be used to pay for moving expenses, office rent, service fees, staff salaries, and other campaign debts. |
| Transfer limits | Candidates can only transfer up to $2,000 directly to another federal campaign. |
| Loopholes | Transferring funds to national, state, or local party committees allows for unlimited transfers. |
| Self-funding | Wealthy candidates may self-fund their campaigns, replacing any transferred money. |
| Vice-presidential candidate | If the vice-presidential candidate assumes the nomination, they can access and spend the campaign funds directly. |
| Leadership PACs | Candidates can create "leadership PACs" to back a political agenda and other candidates. These have been criticized as "slush funds." |
| Unused funds | Candidates can keep unused funds in the bank or use them for any other lawful purpose besides personal use. |
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What You'll Learn
Candidates can't use leftover funds for personal expenses
When a candidate drops out of a race, 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.
There are rules in place that dictate how money can be spent after a campaign concludes. Permitted uses include charitable donations, donations to other candidates, and saving it for a future campaign; personal use is prohibited. Presidential candidates raise millions and even billions of dollars from donors and through political action committees during campaigns. There are rules in place for how money can be used after a campaign ends. Permissible uses include charitable donations and donations to other candidates while personal use is prohibited.
Personal use is defined as “a commitment, obligation, or expense that would exist irrespective of the candidate’s campaign or responsibilities as a federal officeholder”. In other words, campaign funds may not be used for an expense that exists independent of the campaign. Expenses that are automatically considered personal use include salary payments to the candidate's family unless they provide a bona fide service to the campaign and the payment reflects the value of the service in the free market.
There are a few options for leftover funds. The first use for money from a candidate who has just quit the campaign is generally to pay the cost of winding things up. Just because someone announces they’re out, their expenses don’t stop right away. They may still owe rent on office space, as well as fees for services like polling and transportation, and for staff salaries. Candidates can also 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.
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Money can be transferred to another campaign
When a political campaign is suspended, there are rules in place that dictate how the remaining funds can be spent. One option is to transfer the money to another campaign. Candidates can transfer up to $2,000 directly to another federal campaign. However, there are no limits on how much they can give to a national, state, or local party committee, such as the Democratic or Republican National 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.
In 2020, Michael Bloomberg used this mechanism to transfer millions of dollars from his suspended campaign to the Democratic National Committee. This strategy could be seen as a way to circumvent campaign contribution limits, but it appears to be legal. Another scenario where the transfer of funds can occur seamlessly is when the vice-presidential candidate assumes the nomination. In this case, the funds can be accessed and spent directly by the vice-presidential candidate, who is already part of the campaign structure.
Alternatively, candidates can transfer 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. It is important to note that candidates are not allowed to use any remaining funds for personal expenses, such as mortgage payments, groceries, clothing purchases, or vacations. Instead, the money should be used for campaign-related expenses, such as settling outstanding debts with vendors and service providers, or for charitable donations.
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Funds can be donated to charities
When a political campaign is suspended, there are rules in place that dictate how the remaining funds can be spent. Candidates are not allowed to use any remaining funds for personal use. Personal use is defined as "a commitment, obligation, or expense that would exist irrespective of the candidate's campaign or responsibilities as a federal officeholder."
One option for leftover campaign funds is to donate the money to charities or charitable organizations. This is permitted as long as the candidate does not receive any compensation from the charity before the money is spent, and the donation is not used by the charity to benefit the candidate. For example, former Sen. Joseph Lieberman used funds from his Senate campaign to set up a college scholarship fund for high school students from his state, Connecticut.
Another option for leftover campaign funds is to transfer the money to national, state, or local party committees, such as the Democratic or Republican National Committees. This option provides a mechanism for the party to support its new nominee or other candidates in federal races. There are no limits on how much money can be given to these committees.
Candidates can also choose to transfer remaining funds to Political Action Committees (PACs) or certain nonprofit organizations. These entities can then support candidates aligned with their mission, although nonprofits face some restrictions on their political activities.
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Surplus money can be given to state and local candidates
When a candidate drops out of a political campaign, there are rules in place that dictate how the leftover money can be spent. One option is to donate the surplus money to state and local candidates, subject to state law. There are no limits on how much can be given to a national, state, or local party committee, such as the Democratic National Committee. However, there are limits on how much can be given directly to another federal candidate, which is currently capped at $2,000.
In 2020, Michael Bloomberg took advantage of this loophole and transferred millions of dollars from his suspended campaign to the Democratic National Committee. This strategy could be seen as a way to circumvent campaign contribution limits, but it is legal. This option provides a mechanism for the party to support its new nominee or other candidates in federal races.
Surplus money can also be used to create a "leadership PAC," which is a political committee controlled by the former candidate but not used to support their campaigns. These have been criticized as functioning as "slush funds" since there are few restrictions on this kind of spending. Leadership PACs can be used to back a political agenda and other candidates the former candidate supports.
Another option for surplus money is to donate it to charitable organizations, as long as the candidate does not receive any personal benefit or compensation from the charity before the funds are spent. This option seems most likely when a candidate is retiring from public life.
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Candidates can keep the cash in the bank
Candidates can keep leftover campaign money in the bank, but they cannot use it for personal expenses, like mortgage payments, groceries, clothing purchases, or vacations. They can, however, use the money to pay for any outstanding expenses incurred during the campaign, such as rent on office space, fees for services like polling and transportation, and staff salaries.
If a candidate withdraws before their party's nominating convention, they must first settle all debts with vendors and service providers and then refund all contributions designated for the general election. This is to avoid donors' money being used for a different purpose than intended.
Once all debts are settled, candidates have several options for the leftover money. They can transfer the funds to a national, state, or local party committee, which can then support its new nominee or other candidates. Alternatively, they can transfer the funds to a Political Action Committee (PAC) or certain nonprofit organizations, which can support aligned candidates. There are no limits on how much they can give to these committees.
Candidates can also save the money for a future campaign or donate it to another candidate's campaign, with some restrictions. For example, they can only transfer up to $2,000 directly to another federal campaign.
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Frequently asked questions
There are rules in place that dictate how money can be spent after a campaign ends. Candidates cannot use the money for personal expenses. Permitted uses include:
- Donations to charities.
- Donations to other candidates.
- Saving it for a future campaign.
- Paying off any outstanding debts to vendors and service providers.
Yes, if a candidate withdraws before their party's nominating convention, the campaign must refund all contributions that were designated for use in the general election. This must be done within 60 days.
Candidates can transfer remaining funds to a different campaign, such as a committee for a future campaign season. They can also transfer funds to Political Action Committees (PACs) or national, state, or local party committees.
Yes, they can do nothing and keep the cash in the bank. However, they cannot use it for personal expenses.
