The Dos and Don’ts of US Campaign Finance

Campaign finance in the United States is a complex web of laws designed to regulate how money is raised and spent in political campaigns. Understanding the dos and don’ts is crucial for candidates, parties, and donors alike to avoid legal trouble and maintain transparency.

The Dos: Permissible Activities and Contributions

• Direct Contributions to Candidates and Parties: Individuals can contribute directly to candidate campaigns and political party committees, subject to federal limits. These limits vary by election cycle and are regularly updated by the Federal Election Commission (FEC).
• Establishment of Political Action Committees (PACs): PACs can raise and spend money to elect and defeat candidates. They are typically formed by corporations, labor unions, or other organizations and can contribute directly to candidate campaigns, albeit with limitations.
• Independent Expenditures: Individuals, PACs, and Super PACs can engage in independent expenditures, which involve advocating for or against a candidate without coordinating with their campaign. These expenditures are not subject to contribution limits.
• Volunteer Activities: Individuals can volunteer their time and effort to campaigns without being considered a contribution, as long as they are not compensated.
• Reporting and Disclosure: Political committees are required to report their receipts and disbursements to the FEC, providing transparency regarding the sources and uses of campaign funds.

The Don’ts: Prohibited Activities and Contributions

• Corporate and Union Treasury Funds (Direct Contributions): Corporations and labor unions are generally prohibited from directly contributing from their treasury funds to federal candidates or parties. They must use PACs for this purpose.
• Foreign National Contributions: Foreign nationals (individuals who are not US citizens or permanent residents) are prohibited from making contributions or expenditures in US elections.
• Cash Contributions (Over a Certain Limit): Federal law limits the amount of cash contributions that can be accepted by political committees, typically restricting cash donations over $100.
• “Soft Money” Contributions: “Soft money,” or unlimited contributions to political parties for party-building activities, is largely prohibited at the federal level. This was a key reform following the Bipartisan Campaign Reform Act (BCRA).
• Coordination with Candidates: Individuals and groups engaging in independent expenditures are strictly prohibited from coordinating their activities with candidate campaigns. Such coordination would be considered an in-kind contribution and subject to contribution limits.
• Straw Donor Contributions: It’s illegal to make contributions in the name of another person. This includes reimbursing someone for their contribution or using a third party to conceal the true source of the funds.
• Making False Statements: Misrepresenting the source or intended use of campaign funds, or violating reporting requirements, is illegal and can result in penalties.

Navigating US campaign finance law requires diligence and expert advice. Candidates and organizations must stay informed of current regulations, maintain meticulous records, and seek legal counsel when needed to ensure compliance and avoid potentially severe consequences.