Campaign finance law essentials

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Campaign finance law seems complicated, mainly, because it is. If you are hoping to enter into the political sphere, the subject alone may give you pause or anxious feelings, as there are plenty of caveats and fine-print lessons to learn from the various amendments to campaign finance reform over the decades. Despite your initial hesitation, consider taking a class in Rules, Laws, and Strategy or Fundraising and Budgeting to get a firm grasp of the issue.

Signing financial legal documents

Before taking a course on campaign finance, however, you may want to conduct your own self-study, but might not know where to begin. To start, campaign finance in this country centers around the funding of electoral campaign at local, state or federal levels by political action committees (PACs), large individual donors, small donors and candidates’ personal fortunes. Finance law is created by Congress and enforced by the Federal Election Commission (FEC).

To increase transparency at all levels of government, the FEC and watchdog groups make sure that candidates publicly disclose where and when their donations came from. There are also certain limits and regulations that attempt to keep individuals or PACs from unduly influencing a candidate or political party. For example, the Citizens for Responsibility and Ethics in Washington and the Campaign Legal Center watchdog groups file complaints with the FEC, which prompts an investigation, if they find evidence of excessive donors.

While federal races are governed by federal law, electoral races at non-federal levels are regulated by state and local law, which can vary greatly depending on the state. Many states, unlike for federal campaigns, allow corporate and union contributions. Additionally, while federal races have strict individual contribution limits, Missouri, Oregon, Utah and Virginia have no limits at all. Though campaign finance law can get confusing and contradictory when moving from a state to federal level, this article will serve as a brief overview of the subject and key information you must know to succeed in the political realm.

A brief history

To fully understand campaign finance today, you must take a step back and look at how the resolution began and evolved over the past century. According to the FEC, President Theodore Roosevelt first recognized the need for campaign finance reform in 1905 and urged lawmakers to ban corporate contributions. In response to Roosevelt’s plea, Congress then passed several reformation bills from 1907 to 1966.

These statutes focused on limiting the influence of wealthy donors and special interest groups, regulating spending for federal office and mandating public disclosure of financial contributions. Further calls for campaign finance reform resulted in the Federal Election Campaign Act (FECA), which passed in 1971. This created even more strict disclosure requirements for federal candidates, political parties and PACs. Despite these moves, the laws proved to be challenging to uphold.

Only a year later, reports of serious financial abuse during the 1972 presidential campaign came to light, which led Congress to amend FECA in 1974. This change sets limits on donations from individuals, political parties and PACs. The amendments also created the FEC to enforce the law and administer the public funding program.

Over the years, legislators have made further changes to FECA, but none as influential as the Bipartisan Campaign Reform Act of 2002 (BCRA). This bill, which was passed with support on both sides of the aisle, prohibited national parties from raising or spending non federal funds, increased contribution limits, banned issue ads and indexed certain campaign finance limits for inflation.

Regulation of campaign finance

As mentioned previously, the four main sources for funding on any political trail include PACs, large individual donors, small donors, and candidates’ personal funds. The primary source of funding varies greatly depending on the race and level of government office your candidate is running for. Most campaigns receive the most funding from individual wealthy donors, though this varies greatly based on the race.

Any successful political campaign requires effective communication and marketing strategies, which cost plenty of funds, even at a local level. Despite the need for money during the election cycle, the need for regulation and campaign finance reform is evident from historical accounts of certain candidates being swayed by money once they are in office.

As a result, campaign finance laws are in place to reduce any risk of. If you intend to work as a campaign advisor or in another high-level position on your candidate’s campaign, you must be diligent when it comes to following FEC and state regulations for campaign contributions. The primary three means for regulating campaign finance include contribution limits, disclosure and public financing.

1. Contribution limits

Contribution limits vary greatly at a local or state level, but at a federal level there are strict limits on how much each entity can give to a campaign. For large contributions from individual donors, these limits are indexed to inflation, but the limit is $2,700 per person per candidate or $5,000 per year to a PAC. There are an estimated 4,000 or more PACs that actively contribute to federal elections today. Many of these groups are sponsored by trade associations, professional groups and corporations.

The money donated from PACs does not come from the sponsoring organization, however, as this would be in violation of nearly century-long federal standards. Instead, the money comes from the employees or members of the PAC. While individual donors usually contribute more, the main advantage for politicians seeking out financial support from PACs is that they can contribute up to $5,000 per election and a maximum of $10,000 during one election year, as primary and general elections are counted separately under FEC rules.

Small individual donors only give $200 or less, which makes up a small portion of the fundraising pool for most federal candidates. However, looking at Senator Bernie Sanders’ presidential primary run, small-scale individual donors can make a huge impact if the candidate draws enough grassroots support. Lastly, there are no limits for candidates who finance their own campaign with their own money. Though, once elected, candidates generally never self-fund future campaigns again and even pay themselves back with party funds later on.

2. Disclosure

To adhere to federal law, all contributions over $200 to federal candidates, PACs or political parties must be itemized and disclosed to the FEC to increase transparency and prevent corruption or misuse. In this disclosure, donors must provide their name, address, employer and job. This information is then made publicly available on the FEC and other political websites. Interestingly, however, 501(c)(4) organizations, such as social welfare groups, are not required to disclose donors under the current rules, even though there is evidence of rising political influence.

3. Public Financing

Though public financing seems similar to disclosure on the surface, this category is limited to subsidies for presidential campaigns. Public financing is one of the least-used methods for regulating money for campaigns, yet is still provided in 13 states. This regulation necessitates that candidates can accept public money for their campaign in exchange for the promise to limit how much they spend on the election and how much they receive in donations from any one PAC or individual. The goal of this measure is to limit “undue influence” any one group or donor would have over a candidate by allowing them access to public funds.

While seemingly beneficial, the 1976 U.S. Supreme Court decision in Buckley v. Valeo struck down the old FEC mandate that required candidates to use public financing for presidential elections. This ruling declared that states can’t mandate candidates to use these public financing programs, and that candidates can opt out and then ask for contributions from other parties without having to follow any state-set expenditure limits.

Campaign finance law can be complicated, but it could be an essential part of the career of your dreams. With a Master’s in Political Management, you can become a clear catalyst for change in the political sphere. The degree can equip you with the skills and strategies you need to be ready to thrive in a stressful and challenging political landscape. In this program, you will enroll in a wide variety of classes, ranging from Campaign Strategy to Grassroots Engagement, which will take your political knowledge to the next level.

Professional holding financial documents

In the George Washington University Master’s in Political Management program, we encourage our students to move beyond political theory into campaign reality. Our classes and skilled faculty will aid you in your journey to political management success. For more details about how an online program can support you while you are already working in the political sector or before you decide to make a career switch, visit the George Washington University online.


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