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 What Are Federal Campaign Finance Laws?

Federal campaign finance laws limit how much money individuals and other entities can give to a political candidate, party, or political action committee (PAC). These laws are meant to restrict the amount of money that can be contributed because corporations and wealthy individuals can use their wealth to influence the legislation enacted and enforced by elected officials.

What Is the Federal Election Campaign Act?

The Federal Election Campaign Act (FECA) became law in the U.S. in 1971. Its purpose was to regulate how political parties and candidates can raise and spend money in the nation’s federal elections. It restricted the amount of money and in-kind donations that individuals and entities, e.g., corporations and unions, could contribute to candidates and political parties.

The FECA also requires campaigns to disclose the contributions they receive and how they have spent their funds on campaigns. The FECA originally prohibited some corporate and union contributions, speech, and spending. Notably, it limited how much a candidate would spend.

The FECA was first amended in 1974. Then, in 1976, in the case of Buckley v. Valeo, the U.S. Supreme Court struck down the limit on candidate spending because it was an unconstitutional inhibition of free speech that violated the First Amendment to the U.S. Constitution. The Court also invalidated limits on spending independent of candidates and their campaigns. Finally, the court struck down limits on candidates’ spending of their own personal money.

The Court further held that the overall goal of reducing the cost of election campaigns was not legitimate in light of the First Amendment’s protection of freedom of speech. In the opinion of the Supreme Court, the federal government lacks the authority to determine that any amount of spending by a person to promote their political views is excessive.

The Court did uphold limitations on candidates’ spending if they voluntarily choose to limit their spending in return for public funds as they do in some public financing schemes.

In 2002, Congress enacted the Bipartisan Campaign Reform Act (BCRA), which governed all federal elections until 2010, when the Supreme Court issued its decision in Citizens United v. Federal Election Commission. In the Citizens United ruling, the Court invalidated the BCRA’s restrictions on independent corporate and union spending for political advertising.

Then, in 2014, in the case of McCutcheon v. Federal Election Commission, the Supreme Court struck down the FECA amendments, including those in the BCRA, that set limits on how much an individual can contribute to multiple federal candidates, political parties, and political action committees (PACs).

How Much Money Can Foreigners Give to U.S. Elections?

How much money a person or other entity can give to political candidates, campaigns, and PACs depends on who a person is or what kind of entity it is.

There are limits on what foreign nationals and entities can give to candidates in U.S. election campaigns. The BCRA prohibits foreign nationals from making contributions or expenditures concerning any federal, state, or local election in the U.S. The U.S. Supreme Court has never invalidated any of the BCRA’s prohibitions on foreign nationals and entities’ contributions and other activities.

The individuals and entities that are “foreign nationals” within the definition of federal election law and subject to the prohibition of contributions and expenditures are the following:

  • Foreign governments;
  • Foreign political parties;
  • Foreign corporations;
  • Foreign associations;
  • Foreign partnerships.

The U.S. subsidiary of a foreign corporation or a U.S. corporation owned by foreign nationals may not contribute funds or anything other things of value in connection with state or local elections if any of the following applies:

  • The foreign parent or owner provides the contributions;
  • Individual foreign nationals are involved in any way in donating to non-federal candidates and committees.

Many states also have additional restrictions on foreign people and entities’ donations to non-federal candidates and committees.

The domestic U.S. subsidiary of a foreign corporation may not establish a non-federal or federal committee to make contributions in connection with any election if:

  • The foreign parent provides the funding for the establishment of the committee, its administration, or its solicitation costs; or
  • Individual foreign nationals: participate in the committee’s operation, serve as committee officers, participate in selecting people who operate the committee, or make decisions regarding committee contributions or spending.

Federal campaign finance law also prohibits American-owned national banks and federally chartered corporations from making contributions or spending in connection with any federal, state, or local election. They are, however, allowed to establish separate segregated funds, or PACs, for this purpose.

How Much Can U.S. Nationals Give to Federal Elections?

As for U.S. nationals, the limits on political contributions are as follows:

  • An individual can make the following contributions:
    • Increments of $3,300 per election to a candidate;
    • $5,000 per year to a PAC;
    • $10.000 per year to a party committee;
    • $41,300 per year to a national party committee;
    • $123,900 per account per year in an aggregate total of $95,000 per election cycle;
    • $25,000 to a national political party;
    • $5,000 to each PAC;
    • $10,000 a year to a local or state political party;
    • $100 in cash to any political committee.
  • Candidate committees can give the following amounts to the identified recipients:
    • $2000 per election to candidate committees;
    • $5,000 per year to a PAC;
    • Unlimited transfers to party local, state, and district committees;
    • Unlimited transfers to national party committees.
  • A multicandidate PAC can give as follows:
    • $5,000 to a candidate committee;
    • $8.000 per year to a PAC;
    • $5,000 per year to a party committee;
    • $15,000 per year to local, state, and district party committees;
    • $45,000 per account per year to national party committees.
  • A non-multicandidate PAC can give as follows:
    • $3,300 per election to a candidate committee;
    • $5,000 per year to a PAC;
    • $10,000 per year to local, state, and district party committees;
    • $41,300 per account per year to national party committees;
    • $123,900 per account per year to additional national party committee accounts.
  • Party committees, state, local, and district can give as follows:
    • $5,000 per election to a candidate committee;
    • $5,000 per year to a PAC;
    • Unlimited transfers to party committees;
    • Unlimited transfers to national party committees.
  • A national party committee can give as follows:
    • $5,000 per election to a candidate committee;
    • $5,000 per year to a PAC;
    • Unlimited transfers to state, district, or local party committees;
    • Unlimited transfers to national party committees.

A PAC is a committee that makes contributions to other federal political committees. A super PAC can accept unlimited contributions, including from corporations and labor organizations.

What Are Penalties for Violating the FECA and the BCRA?

The limits on contributions are only part of the FECA and the BCRA. There are other provisions regarding other activities, including campaign finance reporting requirements. The Federal Election Commission (FEC) investigates and enforces campaign finance laws.

Enforcement proceedings under the FECA would be either civil or criminal if the perpetrator committed knowing and willful violations. Conviction of a violation of federal election law can bring hefty fines and even jail time. Therefore, being aware of all relevant laws and regulations is extremely important.

The FECA allows the formation of PACs and super PACs, as well as candidate and party committees. Each type of committee may function differently, but each entity must have a treasurer who records all contributions and disbursements.

Violations of the statutes that regulate how PACs and committees must operate can include such offenses as failing to record contributions or expenses properly and mentioning a particular candidate in a Super PAC ad.

Prison sentences are possible for criminal violations. They can range from 1 to 5 years in addition to the payment of large fines. In civil violation cases, the perpetrator faces the payment of large fines, restitution, and being barred from engaging in any campaign activity.

Do I Need the Help of a Lawyer with My Political Contribution Issue?

This area of the law is quite complicated. If you wish to donate money to a candidate, campaign, political party, or PAC, you should consult an experienced financial attorney who can guide how to give money to political candidates, political parties, campaigns, and PACs. Therefore, before deciding to give a significant amount of money to a political entity, you want to ensure you are aware of the limits set by federal law.

In addition, if you work for a candidate’s campaign, political party, or PAC, you want to be well informed about federal campaign finance law, contributions, and what activities are required or prohibited on the part of your organization.

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