Jonah Patel
Political campaigns are costly affairs, with candidates collecting millions of dollars in contributions. But what happens to all that money when a campaign ends? There are rules in place that dictate how this money can be spent, with personal use prohibited. So, where does it go? Leftover funds can be used to pay off any debts, donated to charity, given to other candidates, or saved for a future campaign.
| Characteristics | Values |
|---|---|
| Use of unspent contributions | Donations to charities, donations to other candidates, saving for a future campaign, creating a leadership PAC, creating a nonprofit organization, returning to donors |
| Rules and regulations | Personal use is prohibited, must be spent on "lawful purposes", cannot be used for personal expenses like mortgage payments, groceries, clothing purchases, or vacations |
| Refunds | Generally occur only under specific conditions, such as when contributions exceed the legal limit |
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What You'll Learn
Candidates can't use unspent funds for personal expenses
Political campaigns can raise millions and even billions of dollars through personal and business donations. However, candidates are prohibited from using these funds for personal use. The Federal Election Commission (FEC) has rules in place to control how money raised by official committees is spent after a candidate bows out or after an election is over.
The FEC provides an irrespective test to differentiate between legitimate campaign expenses and personal expenses. Under this test, personal use is defined as any use of funds in a campaign account to fulfil 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 their service in the free market. Candidates are also prohibited from using campaign funds to pay for food, supplies, or utilities for their personal residence. They cannot use these funds for mortgage payments, groceries, clothing purchases, or vacations.
If a candidate receives contributions but drops out of the race or loses the primary, contributions must be refunded to individual donors within 60 days, or the candidate can redistribute funds with the donor's permission. Candidates can also choose to refund contributions for moral, ethical, or legal reasons. Any money left over after a candidate drops out or an election is over must be used to pay off campaign-related debts.
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Funds can be used to pay off campaign debts
Political campaigns can raise millions, if not billions, of dollars in contributions from donors and through political action committees (PACs). However, once a campaign is over, any leftover funds must be used for campaign-related expenses, and not for personal use.
If a candidate drops out before the election, they may also need to refund donors. For example, if a candidate receives contributions for the general election but does not make it past the primary, they must refund general election contributions within 60 days.
In the case of former candidates with excess funds, they can choose to do nothing and keep the cash in the bank. Alternatively, they can donate the money to charity or pass it on to national, state, or local political party committees, although there are limits to how much they can donate to another candidate's committee.
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Leftover money can be donated to charity
Candidates are not allowed to use any unspent campaign funds for personal use. This includes salary payments to family members unless they are providing a bona fide service to the campaign. Campaign funds may only be used for expenses that are directly related to the campaign.
Campaign funds can also be used to "'wind down' the office of a federal lawmaker." This includes moving costs, payments to campaign committee staff, or donations of nominal value to persons other than the candidate's family. These costs are applicable for six months after an officeholder leaves their position.
It is important to note that political contributions are not tax-deductible. This is because political campaigns or parties are not considered charitable organizations under the tax code.
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Candidates can donate to other campaigns
Candidates are not allowed to use any remaining funds for personal use after all campaign-related debts are settled. Personal use is defined as “a commitment, obligation or expense of any person that would exist irrespective of the candidate’s campaign or responsibilities as a federal officeholder”. Campaign funds may not be used for an expense that exists independent of the campaign.
A former candidate can also use any excess funds to create a so-called “leadership PAC”, which is a political committee that can be controlled by the former candidate but is not used to support that person’s campaigns. Leadership PACs have been criticized for functioning as “slush funds” for politicians to spend on travel and entertainment they can’t buy with regular campaign donations. Instead of using the money for the candidate’s own political purposes, people who drop out can donate their money to other campaigns or candidates.
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 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.
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Funds can be saved for future campaigns
Candidates can save funds for future campaigns, which is a common practice. This is permissible under the Federal Election Campaign Act of 1971, which requires campaigns to disclose contributions and expenditures but does not restrict the amount of money that can be saved for future campaigns.
Candidates can transfer remaining funds to a committee for a future campaign season. Cory Booker, for instance, can transfer funds from his presidential campaign to his senatorial reelection campaign fund.
They can also create a "leadership PAC" with excess funds, which is a political committee controlled by the former candidate but not used to support their own campaigns. These have been criticized for functioning as "slush funds" since there are few restrictions on this kind of spending. However, they are still required to support a political agenda and other candidates.
Alternatively, candidates can simply do nothing and keep the cash in the bank. There is no requirement to spend or return the money, and it can be used for "any other lawful purpose."
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Frequently asked questions
Unspent political campaign contributions cannot be used for personal expenses. They must be put toward political or charitable use. Candidates can donate the money to other campaigns or candidates, or transfer the funds to a committee for a future campaign season.
In general, presidential campaign contributions are not refundable. However, according to the Federal Election Campaign Act, refunds may occur if contributions exceed the legal limit.
Former Sen. Joseph Lieberman used unspent campaign funds to set up a college scholarship fund for high school students from his state, as well as to organise his papers to donate to the Library of Congress. Former Rep. Ron Paul used leftover funds from his presidential campaign to form the Campaign for Liberty, a nonprofit organisation.
Permitted uses include charitable donations, donations to other candidates, and saving it for a future campaign. Candidates can also use the funds to pay for winding-down costs, such as rent, fees for services, and staff salaries.
No, unspent campaign contributions cannot be used for personal expenses. They must be used for lawful purposes and put toward political or charitable causes.
