Jonah Patel
Political campaigns are expensive endeavours, with billions of dollars spent on advertising, marketing, travel, salaries, and other campaign-related expenses. The money is raised from donors, political action committees (PACs), and party committees. In the US, the Federal Election Commission (FEC) enforces restrictions and guidelines on campaign spending and financing. While some argue that money does not always guarantee victory, it is undeniable that campaign financing is a crucial aspect of the political process, with a constant debate surrounding the role of private donations, public funding, and the potential influence of money in politics.
| Characteristics | Values |
|---|---|
| Source of money | Federal income tax |
| Political action committees (PACs) | |
| Private donations | |
| Trade association groups | |
| Not-for-profit corporations | |
| Individuals | |
| Spending limits | $10 million for all primary elections combined |
| $61.79 million for the 2024 national spending limit | |
| Spending by candidates | Joe Biden raised $170.6 million as of May 9, 2024 |
| Donald Trump raised $114.8 million as of May 9, 2024 | |
| Nikki Haley raised $57.2 million as of May 9, 2024 | |
| Spending by parties | $188.6 million for the Democratic National Committee |
| $130.1 million for the Republican National Committee | |
| Total spending | $8.6 billion for the 2024 House, Senate, and presidential elections |
| $9 billion for the 2020 election cycle | |
| $4.1 billion for the 2019-2020 election cycle | |
| $3.16 billion for the 2020 Democratic candidates |
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What You'll Learn
Political action committees (PACs)
Political action committees, or PACs, are organisations that pool campaign contributions and donate those funds to campaigns for or against candidates, ballot initiatives, or legislation. PACs have been in existence since 1944, when the Congress of Industrial Organizations (CIO) formed the first one to raise money for the re-election of President Franklin D. Roosevelt.
In the US, a PAC is a tax-exempt 527 organisation. At the federal level, an organisation becomes a PAC when it receives or spends more than $1,000 to influence a federal election and registers with the Federal Election Commission (FEC). Federal law formally recognises two types of PACs: connected and non-connected. Connected PACs, sometimes called corporate PACs, are established by businesses, non-profits, labour unions, trade groups, or health organisations. 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) and up to $15,000 annually to any national party committee. They can also give up to $5,000 annually to any other PAC. A PAC must register with the FEC within 10 days of its formation, providing the name and address of the PAC, its treasurer, and any connected organisations.
Super PACs, officially known as independent expenditure-only political action committees, can raise unlimited amounts from individuals, corporations, unions, and other groups to spend on ads overtly advocating for or against political candidates. However, they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties. Hybrid PACs are similar to super PACs but can give limited amounts of money directly to campaigns and committees.
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Marketing and advertising
Political action committees, or PACs, play a significant role in funding these marketing endeavours. PACs are committees formed by corporations, labour organizations, or membership groups that cannot contribute directly to federal campaigns. Instead, they raise funds through donations from their members and associates, and then use this money to support campaigns through advertising and other means. Super PACs, in particular, have fewer restrictions on how they can spend their funds and can continue to support the same or different federal candidates in future elections, even if the original candidate drops out.
The money spent on advertising and marketing in political campaigns has been increasing over time, with the 2021 and 2022 election cycle in the US, for example, attracting an estimated expenditure of $16.7 billion, exceeding that of the previous mid-term election. This money is used to create and disseminate promotional materials, such as posters, flyers, and other printed items, as well as to purchase advertising space in various media outlets. Television, radio, and digital platforms are commonly targeted for political advertisements, allowing candidates to reach a wide audience and spread their message.
In addition to traditional advertising methods, funds are also used for more modern marketing strategies, such as social media campaigns and online advertising. This includes creating and maintaining websites, producing online videos, and utilising social media platforms to engage with potential voters and spread the campaign message. Marketing and advertising expenditures also cover the costs of hiring professionals, such as political consultants and advertising agencies, who can provide strategic advice and create effective promotional content.
While the amount of money spent on a campaign does not always guarantee victory, it is generally believed that financial resources are crucial in politics. Well-funded campaigns can increase the visibility of a candidate and help them gain an edge over their opponents. However, it is worth noting that there are legal restrictions on campaign spending, and rules in place to promote transparency and prevent the undue influence of money in politics.
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Charitable donations
Political campaigns are prohibited from accepting or soliciting contributions from federal government contractors. Federal law also prohibits contributions from foreign nationals. Charities are also prohibited from making contributions in connection with federal elections. They face additional restrictions on political activity under the Internal Revenue Code.
Campaign committees, however, can give gifts to charity. The amount donated to a charitable organization cannot be used for purposes that personally benefit the candidate. House and Senate committees report these charitable donations in the “Other Disbursements” category on Form 3, Line 21.
Donations to political organizations or candidates are not tax-deductible. This includes monetary donations, in-kind contributions, and volunteer expenses. Charitable donations, on the other hand, are generally tax-deductible. Out-of-pocket expenses related to volunteering for a qualified nonprofit charitable organization are also tax-deductible.
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Salaries and administration
Firstly, salaries encompass the remuneration paid to campaign staff, including the candidate's family members if they provide bona fide services to the campaign, proportional to the value of their services in the free market. Campaign staff may include managers, strategists, communications experts, and other professionals who contribute to the campaign's success.
Administration expenses, on the other hand, cover a broad range of costs necessary for the campaign's operations. This includes travel expenses for candidates and staff, as they attend rallies, meetings, and other campaign events across the country. It also involves the cost of campaign materials and merchandise, such as posters, banners, buttons, and other promotional items used to engage and attract voters. Additionally, administration expenses cover the cost of office space, including rent and utilities, as well as any necessary equipment and supplies.
Furthermore, administration expenses may also include legal and accounting fees. These expenses are crucial to ensure the campaign's compliance with various regulations and laws governing campaign financing. Notably, certain fundraising expenses, up to a specified percentage of the expenditure limit, are exempt from spending limits, highlighting the importance of legal and accounting guidance in this regard.
It is worth noting that candidates must maintain diligent records of all sources of funding and how the money is spent. This transparency helps to ensure that funds are used appropriately and not for personal gain, as outlined by the Federal Election Commission (FEC) guidelines.
In summary, salaries and administration constitute a significant portion of political campaign expenditures, covering the remuneration of campaign staff and the various operational costs necessary to run an effective campaign.
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Ballot initiatives
Ballot measures allow voters to vote directly on a law or policy change. Once enough signatures are collected or other qualifications are met, ballot measures go directly on a ballot. Ballot referendums first go through the state legislature and then are put to a popular vote. A ballot measure committee is a group supporting or opposing one or more measures. These committees may spend to garner support among voters or on messaging to sway their opinion.
A political action committee (PAC) is any organization in the United States that campaigns for or against political candidates, ballot initiatives, or legislation. 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, according to the Federal Election Campaign Act. Individuals are limited to contributing $5,000 per year to Federal PACs; corporations and unions may not contribute directly to federal PACs but can pay for the administrative costs. Federal law allows for two types of PACs: connected and non-connected. Most of the 4,600 active, registered PACs are “connected PACs” established by businesses, labor unions, trade groups, or health organizations. By contrast, “non-connected PACs” have an ideological mission.
Super PACs may not make contributions to candidate campaigns or parties, but may engage in unlimited political spending independently of the campaigns. In Buckley v. Valeo (1976), the Supreme Court upheld a federal law that set limits on campaign contributions, but it also ruled that spending money to influence elections is a form of constitutionally protected free speech, striking down portions of FECA. Following Buckley v. Valeo, the Federal Elections Campaign Act was amended in 1976 and 1979 with the goal of allowing parties to spend unlimited amounts of soft money on activities like increasing voter turnout and registration.
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Frequently asked questions
Political campaign money is spent on funding various activities that advocate for a candidate or political party. This includes marketing and advertising, as well as travel, administration, and salaries.
Political campaign funding comes from two main sources: political action committees (PACs) and individual candidates. In the case of the 2024 US elections, over 65% of the money came from PACs, while individual candidates drew over $2 billion.
Yes, there are laws and regulations that dictate how money can be spent during and after a political campaign. These laws vary at the state and federal levels and are enforced by the Federal Election Commission (FEC).
Leftover money from a political campaign must be dispersed in certain ways, such as through charitable donations, donations to other candidates, or savings for future campaigns. Personal use of leftover campaign funds is prohibited.
