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Campaign Finance Rules: How Much Can a Business Contribute? |
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Written On: September/October 2004 |
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Written By: by Kris Tefft, AWB General Counsel |
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Everyone knows that you can’t win an election without votes. Most know that attracting and retaining votes requires constant voter outreach. Many understand that such outreach, whether in the form of television, radio, or print advertising, travel, mailings, etc., costs money. But few — outside the world of candidates and lobbyists — understand the complex and overlapping system of rules that govern the financing of political campaigns, including the limitations set on donations to political candidates.
The purpose of this month’s column is to summarize some of the most pertinent rules relating to contributions that businesses may make to political candidates in the executive, legislative, and judicial branches at the state and federal level. This complicated area of the law is rife with traps for the unwary, and this column is too short to spot all of them. Your legal counsel should always be consulted if puzzles arise in the course of making political contributions.
State Contribution Limits and Rules
Under state law, businesses and individuals can contribute $1,350 per election to state executive candidates and $675 per election to legislative candidates. By saying the limit is per election, that means a business or individual can contribute $1,350 to a state executive candidate for the primary election and $1,350 to the same candidate for the general election, for a total of $2,700. Likewise for legislative candidates, two $675 contributions would allow a total $1,350 contribution for the election. For judicial races, such as Supreme Court Justice, there is no contribution limit. There is also no limit to the contributions businesses or individuals can make to Political Action Committees (PACs).
Businesses can contribute up to $3,400 per calendar year to a state party, and up to $675 per calendar year to a political party’s caucus political committee. For individuals, there are no such limits for calendar year contributions to a state party or caucus committee.
To say that a business or individual may contribute up to these limits means that if a business, such as Bob’s Plumbing, contributes the maximum $2,700 to an Attorney General campaign, Bob, the owner, can still contribute $2,700 to the same campaign. Bob’s wife, who does his bookkeeping, can still contribute $2,700 to the same campaign. And Bob’s three employees can each still contribute the maximum $2,700. Just because the business contributes, it doesn’t mean that an owner or employee can’t contribute.
An area where this gets tricky, however, is in the area of “bundling.” A business, its owners and its employees may all contribute, but must do so individually. In general, a business or its owner cannot collect contributions from employees or others and put them together and forward them on to a candidate or political committee. That is called “bundling” and is prohibited under state law.
Another area to be aware of is the in-kind contribution. A “contribution” is anything of value, not only money. If a company spends any valuable time toward a candidate’s election, for example, use of its facilities, mailing an announcement or use of staff time, it may be an in-kind contribution, which not only must be reported to the Public Disclosure Commission as to its fair market value, but which counts against the contribution limit.
Federal Election Limits and Rules
Federal election law adds another layer of complexity for businesses seeking to contribute to federal candidates and committees. Federal law actually prohibits corporations from making contributions or expenditures on federal campaigns. However, corporations may set up what election law refers to as “separate segregated funds” (SSFs), more commonly known as PACs, in order to hold money in a separate bank account and make political contributions.
A company’s SSF or PAC not only makes contributions, but receives them as well. A corporate PAC can only receive $5,000 per year from individuals and other PACs. How much a PAC can contribute depends upon whether or not it is a multi-candidate PAC. A multi-candidate PAC is a political committee that has been registered for at least six months, has received contributions from more than 50 contributors and has made contributions to at least five federal candidates.
Multi-candidate PACs can contribute up to $5,000 per election to candidate committees; $5,000 per year combined to state, district and local party committees; and $15,000 per year to national party committees. PACs that are not multi-candidate can contribute $2,000 per election to candidates; $10,000 per year combined to state, district and local party committees; and $25,000 per year to national party committees.
To win, your chosen candidates need contributions. With these rules in mind, happy giving!
The information presented above is intended for general educational purposes and should not be considered legal advice; any questions concerning the application of campaign finance rules to specific situations should be referred to the Public Disclosure Commission or legal counsel.
AWB members with questions about political contributions or campaign participation should contact Kris Tefft at (360) 943-1600 or at krist@awb.org.
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