Who Funds Political Campaigns? Business Donors Revealed

Political campaigns can raise millions or billions of dollars through personal and business donations. Corporations are prohibited from using their treasuries for direct contributions to federal candidates and national political parties. However, they can donate to state and local candidates, parties, and committees within certain limits. They can also give to tax-exempt political committees, which can engage in independent spending. Companies may also give unlimited sums to trade associations, which can engage in election-related activity. Political action committees (PACs) can accept contributions from corporations, and Super PACs can accept unlimited contributions from corporations, but they cannot coordinate with a federal candidate or donate to a national political party committee.

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Corporations are prohibited from donating to federal candidates

In the United States, corporations are prohibited from donating to federal candidates and national political parties. This is a result of the Federal Election Campaign Act, which prohibits corporations and labour organisations from making contributions in connection with federal elections. This prohibition extends to incorporated charitable organisations, which face additional restrictions on political activity under the Internal Revenue Code.

While corporations cannot contribute directly to federal candidates, they can donate to other political committees and organisations. For example, corporations can give to tax-exempt political committees organised under § 527 of the Internal Revenue Code, also known as 527 groups. These groups are devoted to election-related activities and may engage in independent spending, but they must disclose their donors to the IRS. Corporations can also use treasury funds for direct independent expenditures, such as funding advertising that targets or promotes a specific candidate, as long as it is done independently from the candidate's campaign or party committee.

Additionally, corporations can contribute to Super PACs, which are outside groups that can accept unlimited contributions from corporations and individuals. Super PACs are not bound by spending limits and can spend money on independently produced ads and communications that promote or attack specific candidates. However, they are required to disclose their donors, although those donors can include dark money groups, which obscure the original source of the donations.

It is important to note that while corporations are prohibited from donating directly to federal candidates, they can still influence elections through various legal channels, such as donating to Super PACs and making independent expenditures. This has resulted in a fusion of private wealth and political power, with a small group of wealthy donors and corporations exerting significant influence on the political process.

Charities face additional restrictions on political activity

In the United States, corporations are prohibited from contributing directly to federal candidates and national political parties. However, they may donate to state and local candidates, parties, and committees within certain limits, and these contributions must be disclosed to varying degrees. Corporations can also contribute to tax-exempt political committees or 527 groups, which can engage in independent spending but must disclose their donors. Trade associations, on the other hand, are not required to disclose their donors, although corporate funds used for election-related activities are non-deductible for tax purposes.

Incorporated charitable organizations, like other corporations, are prohibited from contributing to federal elections. However, charities face additional restrictions on their political activities. For example, charities are prohibited from engaging in any political campaign activity, including opposing candidates. This ban was created by Congress more than half a century ago and has been strengthened over the years. The Internal Revenue Service (IRS) defines a 501(c)(3) organization, which includes charities and churches, as one that does not "participate in, or intervene in any political campaign on behalf of or in opposition to any candidate for public office."

While charities are restricted from engaging in political campaign activity, they can engage in limited lobbying and advocate for or against issues in the political arena. Additionally, certain voter education and registration activities conducted in a non-partisan manner are not considered prohibited political campaign activity. However, if these activities show bias towards or against a candidate, they would be considered prohibited participation or intervention.

The restrictions on charitable political activity have been controversial, with some arguing that they limit democratic engagement and that the guidelines are confusing. In England and Wales, for example, there have been criticisms that the Charity Commission's guidelines do not sufficiently encourage political conduct by charities and their trustees. The legal framework for campaigning has been described as "a minefield of confusion," and there is a lack of a consistent policy regarding the role of voluntary and community organizations in civic engagement.

Political committees can receive corporate donations

The FEC prohibits corporations and labour organizations from making contributions in connection with federal elections. However, corporations may donate to tax-exempt political committees organized under § 527 of the Internal Revenue Code, also known as 527 groups. These groups are dedicated to election-related activities and can make independent expenditures, but they must disclose their donors to the IRS. Corporations can also use treasury funds for direct independent expenditures, such as funding advertising that targets or promotes a specific candidate, as long as it is done independently of the candidate's campaign or party committee.

Additionally, Super PACs (independent expenditure-only political committees) may accept unlimited contributions from corporations and labour organizations. However, they do not make contributions to candidates. Instead, they focus on influencing federal elections through independent expenditures.

It is important to note that there are restrictions on who can serve as trustees for political committees. Committees must disclose the names of both the trust and the decedent in their reports. Contributions from living (inter vivos) trusts are allowed as long as the trust's beneficial owner has control over the use of the funds.

Furthermore, unincorporated tribal entities are considered "persons" under the Federal Election Campaign Act and are subject to contribution prohibitions and limitations. Partnerships may also contribute to state, district, and local party committees, and their contributions are attributed to the partnership and each partner's share of profits.

While political committees can receive corporate donations, there are strict rules in place to ensure transparency and prevent abuse. These rules vary across different jurisdictions, and it is essential to refer to the specific laws and regulations in each area.

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Super PACs can receive unlimited corporate donations

Political Action Committees (PACs) are tax-exempt 527 organizations that pool campaign contributions from members and donate those funds to campaigns for or against candidates, ballot initiatives, or legislation. There are two types of PACs: connected and non-connected. A third classification, known as "super PACs", can receive unlimited corporate donations.

Super PACs, officially known as "independent expenditure-only political action committees", are distinct from traditional PACs in that they can raise unlimited amounts from individuals, corporations, unions, and other groups. They can use this money to fund advertising that advocates for or against political candidates, as long as it is not given directly to their campaigns. This means that super PACs cannot make contributions to candidates, but they can spend unlimited amounts on activities that promote or oppose them.

The creation of super PACs was a result of the Citizens United ruling by the Supreme Court, which overturned the ban on corporations or unions making "independent expenditures" to influence elections. The Court argued that such contributions could not corrupt candidates as long as the money was not given directly to their campaigns. This decision allowed corporations and unions to use their treasuries to directly influence elections, as they could now make unlimited "independent expenditures".

While super PACs can accept unlimited donations from corporations, there are still some restrictions in place. For example, super PACs cannot accept contributions from foreign nationals, federal contractors, national banks, or federally chartered corporations. Additionally, donors to super PACs must be identified, and the amounts of their donations must be made public.

Tax-exempt status is denied to charities that intervene in political campaigns

In the United States, corporations are prohibited from contributing directly to federal candidates and national political parties. However, they may donate directly to state and local candidates, parties, and committees within certain limits. State-level candidate, party, and committee contributions must be disclosed and can be found on state campaign finance databases. Corporations can also give to tax-exempt political committees, known as 527 groups, which are devoted to election-related activities and may engage in independent spending. These groups must disclose their donors to the IRS.

Incorporated charitable organizations are prohibited from contributing to federal elections, and charities face additional restrictions on political activity under the Internal Revenue Code. Federal law prohibits contributions, donations, expenditures, and disbursements made by foreign nationals in connection with any federal, state, or local election. The Johnson Amendment explicitly states that charitable nonprofits may not participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office. This includes providing assets as campaign contributions. If a charitable nonprofit is found to have engaged in partisan campaign activities, IRS regulations mandate the loss of its tax-exempt status.

Charitable nonprofits are allowed to engage in lobbying, provided they do not expend more than an "insubstantial" amount of energy, finances, or other resources. Substantial lobbying may result in IRS penalties and excise taxes. Nonprofits can also engage in nonpartisan voter registration, voter education, and civic engagement activities, which are not considered partisan campaign activities. However, voter education activities that exhibit bias towards or against a candidate or group of candidates are prohibited.

While Super PACs and Hybrid PACs do not contribute directly to candidates, they can accept unlimited contributions from individuals, corporations, labor organizations, and other political committees. These PACs can then use these funds to support candidates and their committees.

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