Isabella Carter
Political campaigns are financed by donations from individuals, corporations, and other organizations. The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money that can be donated to a political campaign. These limits vary depending on the type of donor and the level of office being sought, and they are updated periodically to account for inflation. For example, for the 2023-2024 election cycle, individuals can contribute up to $3,300 per election, per candidate, while national party committees can receive up to $41,300 per calendar year. It's worth noting that there are no longer aggregate limits on the total amount an individual can give to all candidates, PACs, and party committees combined. However, campaigns are prohibited from retaining contributions that exceed the specified limits and must follow special procedures if they receive excessive funds.
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What You'll Learn
Federal Election Campaign Act of 1971
The Federal Election Campaign Act of 1971 (FECA) is the primary federal law in the United States that regulates political campaign fundraising and spending. The Act was signed into law by President Richard Nixon on February 7, 1972, and has been amended several times since.
FECA was introduced to regulate the raising and spending of money in federal elections, imposing restrictions on the amounts that could be contributed to federal candidates and political parties. It also mandated the disclosure of contributions and expenditures in campaigns for federal office, and banned certain corporate and union contributions, speech, and expenditures.
The Act was first passed in the House on November 30, 1971, by a vote of 372-23. As the Senate version differed, a conference committee was called, and the Act was agreed upon by both the Senate and the House in December 1971 and January 1972, respectively.
The Federal Election Campaign Act was amended in 1974 following the Watergate scandal, leading to the creation of the Federal Election Commission (FEC) in 1975. Further amendments were made in 1976, in response to the Supreme Court ruling several provisions as unconstitutional in Buckley v. Valeo, and again in 1979, allowing parties to spend unlimited amounts of hard money on activities like increasing voter registration and turnout.
In terms of specific donation limits, these are indexed for inflation every two years, based on the change in the cost of living since 2001. For 2023-2024, the limits on contributions made by persons to candidates are $3,300 per election, per candidate. The limits on contributions made by persons to national party committees are $41,300 per calendar year, and the limit on contributions made by certain political party committees to Senate candidates is $57,800 per campaign.
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Inflation-adjusted limits
The Federal Election Campaign Act (FECA) of 1971 regulates campaign donations at the federal level. Under FECA, certain contribution limits are indexed for inflation every two years, based on the change in the cost of living since 2001, which is the base year for adjusting these limits. The per-election limits on contributions to candidates are in effect for the two-year election cycle beginning the day after the general election and ending on the date of the next general election.
The inflation-adjusted limits for 2023-2024 are as follows:
- The limits on contributions made by persons to candidates have been increased to $3,300 per election, per candidate.
- The limits on contributions made by persons to national party committees have been increased to $41,300 per calendar year.
- The limit on contributions made by certain political party committees to Senate candidates has been increased to $57,800 per campaign.
It is important to note that these limits apply to specific types of contributions and committees. For example, "Super PACs," or independent-expenditure-only political committees, may accept unlimited contributions, including from corporations and labour organizations. On the other hand, federal law prohibits corporations and labour unions from donating directly to candidates or national party committees.
The FEC strongly recommends that campaigns encourage contributors to designate their contributions for specific elections. Designated contributions ensure that the contributor's intent is clear, promote consistency in reporting, and help avoid the appearance of excessive contributions.
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Rules for receiving and reporting donations
The Federal Election Campaign Act (FECA) establishes rules for receiving and reporting political campaign donations in the US. FECA was amended in 1974 to include public financing of presidential campaigns and the creation of the Federal Election Commission (FEC), which enforces and clarifies campaign finance laws.
Rules for Receiving Donations
FECA sets limits on the amount of money that can be contributed to a political campaign by individuals, corporations, and other organizations. These limits apply to all types of contributions, except those made from a candidate's personal funds. Candidates can spend unlimited amounts of their own money on their campaigns but must report the amount they spend to the FEC.
Political Action Committees (PACs) are subject to different rules. Super PACs and Hybrid PACs, for example, can accept unlimited contributions from individuals, corporations, and other organizations, but they cannot contribute directly to candidates. Instead, they make independent expenditures to influence elections.
Other entities that are prohibited from making contributions in connection with federal elections include federal government contractors, foreign nationals, and incorporated charitable organizations.
Rules for Reporting Donations
FECA requires candidates for president, Senate, and the House of Representatives to report the names of individuals and organizations contributing to their campaigns, as well as the amounts contributed. They must also report how they spend the money they receive.
The FEC maintains a database that allows the public to search for information on where each candidate's campaign money comes from and how it is spent.
At the state level, California's Political Reform Act requires candidates and committees to file campaign statements by specified deadlines, disclosing contributions received and expenditures made. These documents are public and may be audited to ensure transparency and fairness in elections.
"Dark Money" Loophole
Despite these reporting requirements, a major loophole exists in the form of "dark money." This refers to donations where the recipient knows the identity of the donor but the public does not, as these donations are exempt from disclosure requirements. In the 2020 election, over $1 billion in dark money was spent at the federal level, with a significant portion coming from "opaque political nonprofits and shell companies."
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Political Action Committees (PACs)
In the United States, a Political Action Committee (PAC) is a tax-exempt 527 organization that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. The term PAC was created in pursuit of campaign finance reform in the United States. Democracies of other countries use different terms for the units of campaign spending or spending on political competition.
At the federal level, an organization becomes a PAC when it receives or spends more than $1,000 for the purpose of influencing a federal election, and registers with the Federal Election Commission (FEC). There are two types of PACs: connected and non-connected. Connected PACs, sometimes also called corporate PACs, are established by businesses, non-profits, labor 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, labor union, or other interest group. Non-connected PACs are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders.
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.
A third type of PAC, created by a judicial decision, is the independent expenditure-only committee, which is colloquially known as a "super PAC". Super PACs may raise and spend unlimited amounts from individuals, corporations, unions, and other groups to advocate for or against political candidates. However, they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties.
Another type of PAC is a hybrid PAC, which is similar to a super PAC but can give limited amounts of money directly to campaigns and committees while still making independent expenditures in unlimited amounts. Hybrid PACs solicit and accept unlimited contributions from individuals, corporations, labor organizations, and other political committees to a segregated bank account for the purpose of financing independent expenditures, other ads that refer to a federal candidate, and generic voter drives in federal elections.
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Spending limits
The contribution limits for 2023-2024 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'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. The inflation adjustments are made only in odd-numbered years.
Additionally, there are separate limits for different types of committees, such as political action committees (PACs) or "super PACs". Super PACs, or independent-expenditure-only political committees, may accept unlimited contributions, including from corporations and labour organisations.
At the state level, there are also laws that govern contribution and expenditure limits. For example, in New York City, the Campaign Finance Act requires that contribution and expenditure limits be adjusted every four years based on changes in the Consumer Price Index (CPI). The specific limits and thresholds can vary depending on the office sought and whether the contributor has business dealings with the city.
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Frequently asked questions
The maximum amount you can donate to a political campaign in the US depends on the type of entity making the donation, the type of entity receiving the donation, and the level of government the candidate is running for. For example, as of 2023, the maximum amount a person can donate to a candidate per election, per candidate, is $3,300. However, this figure differs for corporations and political committees.
Yes, independent-expenditure-only political committees, sometimes called "Super PACs", may accept unlimited contributions, including from corporations and labor organizations. Additionally, candidates can spend their own personal funds on their campaigns without limit.
Yes, in some cases, public funds are available to match contributions to political campaigns. For example, in New York City, each dollar a resident gives is matched with eight dollars in public funds, up to $2,000 per contributor.
