Introduction: Understanding Campaign Finance
Campaign finance refers to the funds raised and spent to promote candidates, parties, or policies in elections. These financial activities are governed by complex regulations designed to ensure transparency, prevent corruption, and maintain the integrity of the democratic process. This cheatsheet provides a comprehensive overview of federal campaign finance rules in the United States, including contribution limits, disclosure requirements, and compliance best practices.
Core Campaign Finance Concepts
Key Regulatory Bodies
- Federal Election Commission (FEC): Primary regulatory agency for federal campaigns
- Internal Revenue Service (IRS): Oversees tax aspects of political organizations
- Department of Justice (DOJ): Enforces criminal violations of campaign finance laws
- State Election Commissions: Regulate state and local campaign finance
Types of Political Committees
- Principal Campaign Committee: Candidate’s main campaign committee
- Political Action Committee (PAC): Organization that raises/spends money for candidates
- Super PAC: Independent expenditure-only committee with no contribution limits
- Leadership PAC: Formed by officeholders to support other candidates
- Joint Fundraising Committee: Partnership between multiple committees
- Party Committee: National, state, or local political party organization
Campaign Finance Terminology
- Hard Money: Direct contributions to candidates (limited and regulated)
- Soft Money: Funds raised outside federal limits for party-building activities
- Independent Expenditure: Spending not coordinated with campaigns
- Bundling: Collection of individual contributions by intermediaries
- Conduit Contribution: Earmarked funds passed through intermediaries
- Electioneering Communication: Broadcast ads mentioning candidates near elections
Federal Contribution Limits (2025-2026 Cycle)
Individual Contribution Limits
| Recipient | Per Election/Year Limit | Special Provisions |
|---|---|---|
| Candidate Committee | $3,300 per election | Primary, general, and runoff count as separate elections |
| National Party Committee | $41,300 per year | Separate limits for presidential nominating conventions, buildings, recounts |
| State/Local Party Committee | $10,000 combined limit per year | Aggregated across all state/local party committees |
| Regular PAC | $5,000 per year | Calendar year limit |
| Super PAC | Unlimited | Must remain independent from campaigns |
| Combined Limit to All Recipients | No aggregate limit | Previous aggregate limits struck down in McCutcheon v. FEC (2014) |
PAC Contribution Limits
| Recipient | Multicandidate PAC Limit | Non-Multicandidate PAC Limit |
|---|---|---|
| Candidate Committee | $5,000 per election | $3,300 per election |
| National Party Committee | $15,000 per year | $41,300 per year |
| State/Local Party Committee | $5,000 per year (combined) | $10,000 per year (combined) |
| Other PACs | $5,000 per year | $5,000 per year |
Party Committee Limits
| Recipient | National Party Limit | State/Local Party Limit |
|---|---|---|
| Candidate Committee | $5,000 per election | $5,000 per election |
| Coordinated Party Expenditures | Varies by office and state population | Subject to coordinated spending limits |
| Other Party Committees | Unlimited transfers | Unlimited transfers |
| PACs | $5,000 per year | $5,000 per year |
Prohibited Sources of Funds
- Corporations (direct corporate treasury funds)
- Labor unions (direct treasury funds)
- Federal government contractors
- Foreign nationals
- Contributions in the name of another person
- Cash contributions over $100
- Anonymous contributions over $50
Disclosure Requirements
FEC Reporting Schedule
| Report Type | Filing Deadline | Coverage Period |
|---|---|---|
| Quarterly Reports | 15th day of month after quarter ends | Calendar quarter |
| Pre-Election Reports | 12 days before election | Beginning of quarter through 20 days before election |
| Post-Election Reports | 30 days after general election | 20 days before through 20 days after election |
| 48-Hour Notices | Within 48 hours of receiving contribution | Contributions of $1,000+ received within 20 days of election |
| 24-Hour Notices | Within 24 hours | Independent expenditures of $10,000+ (any time) or $1,000+ (within 20 days of election) |
| Monthly Reports | 20th day of following month | Optional for PACs/party committees instead of quarterly |
| Year-End Reports | January 31 of following year | Covers period after last report through December 31 |
Required Disclosure Information
For Contributions:
- Contributor’s full name
- Mailing address
- Occupation and employer
- Date of receipt
- Amount
- Aggregate year-to-date total
For Expenditures:
- Recipient’s full name
- Mailing address
- Date of disbursement
- Amount
- Purpose (brief but specific description)
- Candidate supported/opposed (for independent expenditures)
Recordkeeping Requirements
- Maintain all financial records for 3 years from relevant election
- Keep copies of all reports and statements
- Preserve donor information, including deposit slips and contributor cards
- Document expenditures with receipts, invoices, and canceled checks
- Record contributor information for all donations over $50
- Track loan agreements and debt settlement plans
Compliance Best Practices
Campaign Committee Setup
- Designate Treasurer: Legally required position with financial responsibility
- Establish Bank Account: Separate account solely for campaign funds
- File Statement of Organization (FEC Form 1): Within 10 days of reaching $5,000 threshold
- Implement Accounting System: Use campaign-specific software or services
- Create Compliance Manual: Document processes for handling contributions/expenditures
Contribution Processing
- Examine Source: Verify contribution is from permissible source
- Check Amount: Ensure within applicable limits
- Obtain Required Information: Name, address, occupation, employer
- Deposit Promptly: Within 10 days of receipt
- Return/Refund Prohibited Contributions: Within 30 days of receipt
- Track Aggregate Totals: Monitor year-to-date figures per contributor
Expenditure Management
- Authorize Spending: Establish approval process for expenditures
- Document Purpose: Record specific purpose for each disbursement
- Maintain Supporting Documentation: Keep invoices, contracts, receipts
- Track Obligations: Report debts and obligations over $500
- Monitor Vendor Relationships: Ensure independent contractor status
- Screen for Personal Use: Prohibit conversion to personal use
Special Categories and Exceptions
Corporate/Union Involvement
- May establish separate segregated funds (SSFs/PACs)
- May provide limited administrative support to their PACs
- May conduct certain non-partisan activities
- Can make independent expenditures (post-Citizens United)
- Cannot contribute directly from treasury funds to candidates
- Cannot coerce employees/members to contribute
Super PACs and Independent Expenditures
- May accept unlimited contributions from individuals, corporations, unions
- Must remain independent from campaigns (no coordination)
- Must report all expenditures and contributors
- Cannot contribute directly to candidates or parties
- Must include disclaimers on all communications
- Subject to disclosure requirements for donors of $200+
Joint Fundraising Activities
- Establish written agreement between participating committees
- Create separate committee or designate committee as fundraising representative
- State allocation formula in fundraising materials
- Provide contribution limit notice to donors
- Allocate gross proceeds according to formula
- Transfer net proceeds to participating committees
- Report transfers by all participating committees
Tax Implications
- Campaign Committees: Not generally subject to income tax
- Section 527 Organizations: Must file periodic reports with IRS
- 501(c) Organizations: Different rules based on specific classification
- Donor Tax Treatment: Political contributions not tax-deductible
- Gift Tax: Generally not applicable to political contributions
Common Compliance Challenges and Solutions
Challenge: Excessive Contributions
- Solution: Implement real-time contribution tracking system
- Solution: Create automatic flags for contributions approaching limits
- Solution: Establish redesignation/reattribution procedures
- Solution: Conduct regular compliance reviews of contribution records
Challenge: Inadequate Contributor Information
- Solution: Implement verification process for all contributions over $200
- Solution: Send follow-up requests for missing information
- Solution: Train staff to recognize incomplete contributions
- Solution: Use web forms that require complete information
Challenge: Reporting Errors
- Solution: Conduct pre-filing review by someone other than preparer
- Solution: Reconcile bank records with disclosure reports
- Solution: Implement double-entry bookkeeping system
- Solution: Use FEC-approved campaign finance software
Challenge: Coordination Issues
- Solution: Establish formal firewall policies
- Solution: Document independent decision-making processes
- Solution: Maintain separation between campaign and independent groups
- Solution: Train staff on coordination restrictions
Challenge: Inadequate Documentation
- Solution: Create standardized expense justification forms
- Solution: Implement document retention policy
- Solution: Digitize all financial records
- Solution: Conduct periodic internal audits
Legal Developments and Trends
Key Supreme Court Decisions
- Buckley v. Valeo (1976): Established distinction between contributions and expenditures
- Citizens United v. FEC (2010): Allowed corporate independent expenditures
- McCutcheon v. FEC (2014): Eliminated aggregate contribution limits
- FEC v. Cruz (2022): Struck down restrictions on post-election loan repayments
Recent Legal Developments
- Increased disclosure requirements for online political advertising
- Evolving regulations around cryptocurrency contributions
- Expanded coordination rules between campaigns and outside groups
- Digital advertising disclaimer requirements
- Foreign national involvement prohibitions strengthened
Resources for Further Learning
Official Guidance
- FEC Campaign Guide for Congressional Candidates
- FEC Campaign Guide for Political Party Committees
- FEC Advisory Opinions database
- IRS Publication 4079: Tax-Exempt Status for Political Organizations
Compliance Tools
- FEC.gov eFiling system
- FECFile software
- Commercial campaign finance compliance software options
- FEC API for developers
Training and Education
- FEC conferences and workshops
- Online webinars on compliance topics
- Campaign finance law certification programs
- State election board training resources
Reference Websites
- FEC.gov: Official guidance and filing information
- OpenSecrets.org: Campaign finance data and research
- Campaign Legal Center: Legal analysis of campaign finance issues
- State election websites for state-specific regulations
State vs. Federal Rules
Important Note: This cheatsheet focuses on federal campaign finance regulations. State and local elections have their own rules that may differ significantly from federal requirements. Always check specific state regulations for non-federal elections.
Key State Variations
- Some states prohibit direct corporate/union contributions while others allow them
- Contribution limits vary widely between states
- Reporting thresholds and schedules differ by jurisdiction
- Public financing options exist in some states but not others
- Enforcement mechanisms and penalties vary significantly
Campaign finance compliance requires ongoing attention to changing rules and regulations. Always consult with campaign finance experts or legal counsel for specific situations, and regularly check for updates to FEC guidance.