Political Law Compliance: Campaign Donations

Campaign donations are subject to strict limitations under U.S. law. Violations can lead to severe consequences for parties on both sides of the transaction, and this means that donors and candidates alike need to make compliance a priority.

In the United States’ political system, campaign donations are essential to funding election and reelection efforts for political office. This is true at all levels of government, from local sheriff and coroner elections to the political battle for the U.S. presidency. Whether a campaign raises thousands or hundreds of millions of dollars, laws and regulations apply to its solicitation and acceptance of campaign donations, and statutory and regulatory non-compliance can have significant negative ramifications.

This is true not only for political campaigns and candidates that solicit and accept campaign donations, but for donors as well. When it comes to campaign finance compliance, public reputations, civil fines, and even criminal prosecution are all potentially on the line. As a result, compliance needs to be a priority for all parties involved, and campaigns and donors alike must proactively address their compliance needs in order to avoid costly mistakes during the election cycle.

Federal Political Law Attorneys Experienced in Campaign Donation Compliance

Oberheiden P.C. is a federal law firm that represents private parties, political candidates and campaigns, and government officials in political law matters. This includes all matters pertaining to campaign donation compliance. Our lawyers include former government attorneys with the U.S. Attorney’s Office and the U.S. Department of Justice (DOJ), including former prosecutors appointed by President Obama and President Trump.

In addition to representing our clients proactively with regard to campaign donation compliance, we provide defense representation for federal investigations and law enforcement matters as well. This experience allows our attorneys to offer clients advice and recommendations with the government’s specific enforcement priorities in mind. Of course, we go far beyond these issues, and we provide comprehensive compliance representation focused on helping our clients avoid any concerns about statutory or regulatory liability for campaign donation violations.

Understanding the Federal Campaign Contribution Limits

The Federal Election Campaign Act (FECA) places limits on the amounts that individuals can donate to political candidates, campaigns, political action committees (PACS), and party committees. Federal law prohibits corporate donations to federal campaigns, although corporations do have the ability to finance political communications.

Under FECA, the campaign contribution limits for individuals as of 2020 are as follows:

Donations by Individuals

  • $2,800 per election to candidate committees
  • $5,000 per year to PACs
  • $10,000 per year to state, district, and local party committees (this is a combined limit for all contributions)
  • $35,500 per year to national party committees
  • $106,500 per account, per year to additional national party committee accounts

Donations by Candidate Committees

  • $2,000 per election to candidate committees
  • $5,000 per year to PACs

Donations by Multi-Candidate PACs

  • $5,000 per election to candidate committees
  • $5,000 per year to PACs
  • $5,000 per year to state, district, and local party committees (this is a combined limit for all contributions)
  • $15,000 per year to national party committees
  • $45,000 per account, per year to additional national party committee accounts

Donations by Single-Candidate PACs

  • $2,800 per election to candidate committees
  • $5,000 per year to PACs
  • $10,000 per year to state, district, and local party committees (this is a combined limit for all contributions)
  • $35,500 per year to national party committees
  • $106,500 per account, per year to additional national party committee accounts

Donations by State, District, and Local Party Committees

  • $5,000 per election to candidate committees
  • $5,000 per year to PACs

Donations by National Party Committees

  • $5,000 per election to candidate committees
  • $5,000 per year to PACs

As the U.S. Federal Election Commission (FEC) explains, “additional national party committee accounts” are those that are used to finance: “(i) the presidential nominating convention; (ii) election recounts and contests and other legal proceedings; and (iii) national party headquarters buildings. A party’s national committee, Senate campaign committee and House campaign committee are each considered separate national party committees with separate limits.”

With regard to the per-election donation limits under FECA, the limits, “apply separately to each federal election in which the candidate participates.” This means that an individual, for example, can contribute up to $2,800 to a candidate for the primary and the general elections, as well as for any runoff and special elections that may be necessary.

In addition to the caps on campaign donations listed above, FECA establishes a number of other limitations and restrictions on campaign donations as well. For example:

  • Cash contributions are limited to $100.
  • Anonymous contributions are limited to $50.
  • In-kind contributions must be valued at their “usual and normal charge.”
  • Designated contributions must be used toward the specific election that is named in the donation, while undesignated contributions count toward the next election in which the candidate will participate.
  • Campaigns must report donations on the date of receipt, and this is the date that must generally be used for purposes of FECA compliance.

What about campaigns for state and local elected offices? Different states and municipalities have different laws and regulations. For example, as compiled by the National Conference of State Legislatures (NCSL), “19 states impose no restrictions on the ability of state party committees to contribute money to a candidate’s campaign,” while the remaining states impose various types of restrictions. Similarly, while “22 states completely prohibit corporations from contributing to political campaigns,” the remaining states allow a mixture of unlimited and restricted corporate donations.

Ensuring FECA Compliance When Making and Receiving Campaign Donations

In order to ensure compliance with FECA and any applicable state and local laws when making and receiving campaign donations, donors, campaigns, PACs, and other political committees must address the applicable rules and limitations proactively. For donors, this means complying with the contribution limits, understanding how to make effective use of designated and undesignated contributions, and otherwise complying with the law while also making the maximum possible contributions.

For donation recipients, there are multiple aspects to compliance. Not only must campaigns and committees avoid accepting donations that exceed the relevant limitations, but they must also account for and report all donations as required by applicable statutory and regulatory law. At Oberheiden P.C., our compliance services in the area of campaign contributions include (but are not limited to):

  • Complying with individual and committee campaign donation limits
  • Accounting for campaign donations and receipts
  • Reporting campaign donations
  • Reporting in-kind contributions
  • Proper attribution of designated contributions and undesignated contributions
  • Proper attribution of campaign donations based on date of receipt
  • Handling contributions earmarked for potential candidates
  • Handling contributions made in other individuals’ names
  • Internet-related campaign donation compliance issues
  • Responding to potential violations of federal, state, and local campaign finance laws

Handling Campaign Donations that Violate FECA

One particular compliance issue that political campaigns and PACs must be prepared to address is the issue of donors making donations that exceed the limits imposed by FECA or applicable state or local law. When this happens, the campaign or PAC must handle the donation appropriately in order to avoid facing allegations of campaign finance violations.

The FEC refers to this as, “remedying an excessive contribution.” As the FEC explains:

“When a committee receives an excessive contribution—one which exceeds the contributor’s limit or the campaign’s net debts outstanding for an election—the committee may remedy the violation by refunding the excessive amount or by seeking a redesignation or reattribution of it within 60 days.”

Of course, as with most aspects of campaign contribution compliance, this is easier said than done. When donors make multiple gifts over time, it can become exceedingly difficult to discern when their aggregate contributions exceed the relevant statutory limit. Yet, this is what is required, and this means that campaigns, PACs, and other committees must have the policies, procedures, and mechanisms in place to ensure that no excessive contributions go over looked. At Oberheiden P.C., our political law attorneys develop these policies and procedures on behalf of our clients, and we assist with training and implementation of mechanisms designed to catch and remedy excessive contributions.

In general, when an excessive contribution is received, a request for redesignation must be sent to the donor. However, there are limited circumstances under which campaigns, PACs, and other political committees can make “presumptive redesignation.” Campaigns and committees have the ability to reattribute excessive contributions unilaterally in limited circumstances as well. Our attorneys can help you understand when reattribution or reattribution is required, and we can also assist with determining whether a request to the donor is necessary. As with all aspects of compliance, substantiation and documentation are key, and we are highly experienced in ensuring that our clients have the records on hand to demonstrate full and good-faith compliance if and when it becomes necessary to do so.

Speak with a Political Law Attorney at Oberheiden P.C.

If you have questions about campaign contribution compliance and would like to speak with one of our federal political law attorneys, we encourage you to contact us for a complimentary initial consultation. To schedule an appointment at your convenience, call 888-680-1745 or inquire online today.

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