Political Finance Quiz

campaign contributions donations made directly to a candidate or a party; must be reported to FEC
independent expenditures communications that expressly advocate for the election or defeat of a candidate. “Independent” because they’re supposed to be produced by outside groups without coordinating with a candidate or campaign at all. If the organization spends more than $10,000 in total in IEs on one election, it has to start reporting each expenditure to the FEC within 48 hours. (expenses on the behalf of a political message that are made by groups that are uncoordinated with any political candidates campaign)
Federal Election Campaign Act Passed in 1971 and amended in 1974 in response to Watergate, and again in 1976 in response to Buckley v. Valeo. Federal law aimed towards refining campaign finances. Created Federal Election Commission (FEC) and required campaigns to report contributions and expenditures, and provided for limits on campaign contributions (overturned in B v. V). 1974 amendments put the public financing and matching funds system into place and permitted corps and unions to form PACs. Amended 2002 to restrict use of soft money.
political action committees groups that raise money from individuals and then distribute it in the form of contributions to candidates that the group supports. PAC’s must register with the FEC and report donations/contributions. 5k limit
Federal Election Commission a six member bipartisan agency created by the FECA. administrators enforce campaign finance laws/ regulate elections in the US. Often gridlocked.
soft money cash contributed to a party, candidate, or outside group without being subject to limits. Traditionally used for party building (not direct advocacy) but can also come from corporations, unions, etc that are either banned or restricted in their political giving. 1996 the amount of money raised was enormous, later banned by McCain- Feingold Act, which outlawed national party committees from raising soft money.
527 groups Tax-exempt that specifically engage in elections at the state or federal level. Do not have to show any purpose besides politics. Similar to super PACs and precursor to them as well: can except unlimited donations from anyone, but not subject to contribution restrictions because they do not directly seek the election of particular candidates (explicit advocacy). May spend only on issues, but not in support of or against a particular candidate. Section 527 on the tax code specifies that all donors must be disclosed/ reported to the IRS (not FEC; IRS is slower to report). Popular with national groups that engage in state politics. Can’t coordinate to contribute with federal candidates, they can give money directly to local candidates. Can be created openly by federal candidates and office holders, but they can only solicit funds that are permissible under federal law.
Citizens United v. the Federal Election Commission 2010 supreme court case that ruled that corporations and unions could make unlimited independent expenditures on elections. This resulted in Super PACs.
501(c) groups ((c)(3)-(6)) non profit, regulated by IRS that are tax-exempt. labor unions, social welfare organizations like NAACP and AARP or trade associations like Chamber of Commerce. Tax-exempt under section 501(c) of the tax code. primary purpose may not be politics. The amount of political activity each group can engage in varies based on its type under the tax code. Contribution sources/limits: any/ no limits. No spending limits except no more than 49.9% of assets can be used for political activity. Section 501c of the tax code specifies that such groups cannot spend more than half their funds on political activities. Cannot advocate for specific candidates without reporting to FEC. No disclosure required except for contributions from labor unions over $5,000. Every non profit must file Form 990’s, public disclosure documents that detail basic info (revues, leadership roles, etc) but don’t reveal individual donors and are often released months or years after the time period they cover. Four types of relevant groups.
Super PACs “Independent expenditure-only committees” – organizations registered with the FEC that don’t contribute to the candidates but do male independent expenditures. known as super PACs because they may accept unlimited donations of any size from individuals, corps, unions, and 501(c) organizations and can endorse candidates. No spending limits. Their Contributions and expenditures must be periodically reported to the FEC– they do have to disclose their donors, but they can take money from 501(c)(4)s and LLCs that don’t disclose their donors. Emerged in wake of Citizens United and Speech Now SC decisions.
Buckley v. Valeo 1976; Struck down limits on the total amount a campaign could spend, as well as limits on candidates using their own money for campaigns, but upheld individual contribution limits. Issues: Restrictions on…1. Individual cap to contributions to candidates/ partiesConstitutional? Yes2. Overall campaign expendituresConstitutional? No3. Direct expendituresConstitutional? No4. Disclosure?Constitutional? Yes5. Cap on personal campaign funds?Constitutional? No
501 (c)(3) a nonprofit group dedicated to educational or research purposes. These organizations are prohibited from being involved in any political activity or campaigns, but can do “voter education” activities. Often connected to 501(c)(4) group, which can engage in some political activity.
501(c)(4) “dark money groups”; “social welfare organizations” because they can’t have political activity as their primary purpose. Unofficially they must spend less than 50% of their activities on politics or elections. They can raise unlimited amounts of cash from individuals and and organizations without having to disclose who contributed. But, 501(c)(4)s that spend money directly advocating for or against a candidate must report that to the FEC. Common practice is to link to a Super PAC, which allows the super PAC to receive unlimited amounts of money without the donor being revealed.
Bipartisan Campaign Reform Act (McCain-Feingold) amended Federal Campaign Act of 1971, banning federal “soft money” to parties and candidates. To compensate, the amount of “hard money” was increased. “Stand by Your Ad’ provision; BCRA also banned interest groups from spending unlimited soft money on issue ads, but that was overturned by Citizens United v. FEC.
Bundler Wealthy, connected individuals who round up checks from other wealthy, connected individuals . Bundlers who are registered lobbyists must report their collections to the FEC. Campaigns benefit because individuals can only donate $5,400 to a candidate per election cycle ($2,700) for primary and general elections), but bundlers have bundled far more.
contribution limit limits on contributions to candidates and political groups from individuals, organizations, political committees, etc. As of 2016, the limit on contributions from an individual to a campaign is $2,700 per election.
dark money money spent on political activity that comes from undisclosed donors. Large source is 501(c)(4)s, but can also come from 501(c)(6)s and LLCs. Grown dramatically.
disclaimer all political ads, websites, and most emails have to include a disclaimer with the name of the organization or candidate who paid for and/or authorized it. Non candidate political committees have to include the physical or web address of the organization, but not who paid.
disclosure political committees much disclose how much they’ve raised, spent, have on hand, what they’re spending money on, and the names, addresses, and occupations of donors who gave over $200. State level disclosure requirements vary widely, as to their systems for disclosing information.
election cycle refers to the two-year period which leads up to a general federal election in the U.S.
electioneering communications TV, radio, cable, or satellite ads designed to encourage voting for or against a candidate. Requirements: clearly reference a candidate, ad must air within 60 days of general election or 30 days of a primary election. Info on these ads must be disclosed to the FEC, including who made the buy, the amount, etc. No corporate or union funds can be used to pay for these ads. 527s can not do this, but 501(c)(4)s can if it’s less than 50% of their activity.
general election After candidates are chosen by parties, general election occurs. Held in November usually in even number years. At the presidential level, primaries are held between january and june and candidates collect delegates to their party’s convention.
hard money cash contributed directly to a candidate, party committee, or PAC. regulated by FEC and is subject to certain limits and can only come from an individual or PAC. Can be used directly on the support of candidates.
hybrid super PAC PACs that have two separate bank accounts–one that contributes to candidates as a normal PAC and one that makes independent expenditures like a super PAC. One spending is unlimited and the other is FEC regulated
issue ad political communications that focus on an issue rather than an individual. 527s and 501(c)(4)s will often run issue ads instead because they can’t spend money on ads directly supporting/ opposing a candidate. Distinction gets very blurred.
lobbyist people who advocate for some kind of public policy position. If they spend more than 20% of their time lobbing Congress on behalf of a current client, they’e supposed to register with the house or senate, and a certain amount of info on their work must be disclosed (what issues they’re lobbying on, which lawmakers they’re meeting with, etc). Often act as campaign bundlers, but have to register with FEC if they do so. Many avoid resisting through loopholes. Those who don’t register at all are “shadow influencers” since they affect policy without disclosing their activities.
McCutcheon v. FEC 2014 Supreme Court case that removed aggregate limits on contributions, meaning the overall amount a donor givers per election to all candidates and committees. Before, donors couldn’t give more than $123,200 total per election cycle, now they can give as much as they want, though individual contribution limits to candidates and committees still apply. Led to “super joint fundraising committees” which allowed wealthy donors to support multiple politicians with a single big check.
PAC Created in wake of 1947 Taft-Hartley Act prohibition on corporations and labor unions from donating directly political candidates. Political Action Committee is a committee organized to specifically spend money on an election. Some are formed by industries, corps, or labor organizations, others are formed on behalf of certain candidates. Contribution sources/limits: individuals, corps, unions, $5,000 per donation. May spend up to $5000 annually on candidates or $15,000 for parties. Donor disclosure required.
primary election elections within a party to determine who a candidate will be in the general election. At presidential level, they begin as early as January of the election year. Some are done through caucuses instead, otherwise, they are conducted like elections with a ballot. “Open” primaries are open to all voters and “closed” primaries are open only to voters registered to that party. In a “jungle primary” the candidates receiving the most and second-most votes become the contestants in the general election regardless of party. Primaries matter because they have distinct contribution limits from general elections. Can accept contributions per election rather than year. FEC allows $2,700 to a candidate for the entire primary campaign period and another $2,700 in the general.
Public financing when the government provides money for candidates to help fund their campaigns. requirements to be declared eligible include agreeing to an overall spending limit, abiding by spending limits in each state, using public funds only for legitimate campaign -related expenses, keeping financial records and permitting an extensive campaign audit by the FEC. Candidates must also reach certain standards of public support. Almost no presidential candidates use this because they raise so much more from donors. Money comes from the Presidential Election Campaign Fund, which in turn draws money from citizens who check off a box on their annual tax returns that directs $3 to the fund. (Comes from government not tax payer). 2015, states provided some form of public campaign financing.
social welfare organizations 501(c)(4)s. Technically 501(c)(4)s are “social welfare organizations’ that aren;t devoted entirely to political activity, buy many do engage in substantial political activity and face no consequences.
Speechnow.org v FEC Supreme Court decision that, combined with Citizens United, created super PACS. Specifically allowed unlimited contributions to committees that only make independent expenditures.
Restrictions on individual donations $2,700 to individual candidates$33,400 per year to national parties

Leave a Reply

Your email address will not be published. Required fields are marked *