Published in February 2004 (updated February 2019)
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Executive summary: Audit of FEC management of desktop and laptop computers. Federal Election Commission, 1050 First Street NE, Washington, DC 20463 or call. The FEC regularly publishes information about its objectives and performance. These documents include strategic plans, budgets and procurement reports. Additional documents are available in response to the Committee on House Administration's April 2019 questions to the Commission.
Note: Portions of this publication may be affected by the Supreme Court's decision in Citizens United v. FEC. Essentially, the Court's ruling permits corporations and labor organizations to use treasury funds to make independent expenditures in connection with federal elections and to fund electioneering communications. The ruling did not affect the ban on corporate or union contributions or the reporting requirements for independent expenditures and electioneering communications.
Contents
IntroductionThe Federal Election Commission (FEC) is the independent regulatory agency charged with administering and enforcing the federal campaign finance law. The FEC has jurisdiction over the financing of campaigns for the U.S. House, the U.S. Senate, the Presidency and the Vice Presidency. Federal campaign finance law covers three broad subjects, which are described in this brochure:
This brochure provides general information only. The descriptions of the law and the Commission are not intended to be exhaustive. For more information on the subjects discussed in this brochure, call, write or visit:
Historical BackgroundAs early as 1905, President Theodore Roosevelt recognized the need for campaign finance reform and called for legislation to ban corporate contributions for political purposes. In response, Congress enacted several statutes between 1907 and 1966 which, taken together, sought to:
In 1971, Congress consolidated its earlier reform efforts in the Federal Election Campaign Act (FECA), instituting more stringent disclosure requirements for federal candidates, political parties and political action committees (PACs). Still, without a central administrative authority, the campaign finance laws were difficult to enforce. Following reports of serious financial abuses in the 1972 Presidential campaign, Congress amended the FECA in 1974 to set limits on contributions by individuals, political parties and PACs. The 1974 amendments also established an independent agency, the Federal Election Commission (FEC) to enforce the law, facilitate disclosure and administer the public funding program. Congress made further amendments to the FECA in 1976 following a constitutional challenge in the Supreme Court case Buckley v. Valeo; major amendments were also made in 1979 to streamline the disclosure process and expand the role of political parties. The next set of major amendments came in the form of the Bipartisan Campaign Reform Act of 2002 (BCRA). Among other things, the BCRA banned national parties from raising or spending nonfederal funds (often called 'soft money'), restricted so-called issue ads, increased the contribution limits and indexed certain limits for inflation. Public funding of federal elections originally proposed by President Roosevelt in 1907 began to take shape in 1971 when Congress set up the income tax checkoff to provide for the financing of Presidential general election campaigns and national party conventions. Amendments to the Internal Revenue Code in 1974 established the matching fund program for Presidential primary campaigns. The FEC opened its doors in 1975 and administered the first publicly funded Presidential election in 1976. The CommissionCommissionersThe FEC has six voting members who serve staggered six-year terms. The Commissioners are appointed by the President with the advice and consent of the U.S. Senate. No more than three Commissioners may belong to the same political party. The Commissioners elect two members each year to act as Chairman and Vice Chairman. Public MeetingsThe Commission normally holds a public meeting each week. At this meeting, the Commissioners adopt new regulations, issue advisory opinions, approve audit reports concerning Presidential campaign committees, and take other actions to administer the campaign finance law. In addition, the Commissioners meet regularly in closed sessions to discuss pending enforcement actions, litigation and personnel matters. The Campaign Finance LawThe Federal Election Campaign ActThe basic provisions of the FECA are described below. DisclosureThe FECA requires candidate committees, party committees and PACs to file periodic reports disclosing the money they raise and spend. Candidates must identify, for example, all PACs and party committees that give them contributions, and they must identify individuals who give them more than $200 in an election cycle. Additionally, they must disclose expenditures exceeding $200 per election cycle to any individual or vendor. Contribution LimitsThe FECA places limits on contributions by individuals and groups to candidates, party committees and PACs. Prohibited Contributions and ExpendituresThe FECA places prohibitions on contributions and expenditures by certain individuals and organizations. The following are prohibited from making contributions or expenditures to influence federal elections:
In addition to the above prohibitions on contributions and expenditures in federal election campaigns, the FECA also prohibits foreign nationals, national banks and other federally chartered corporations from making contributions or expenditures in connection with state and local elections. Independent ExpendituresUnder federal election law, an individual or group (such as a PAC) may make unlimited 'independent expenditures' in connection with federal elections. An independent expenditure is an expenditure for a communication which expressly advocates the election or defeat of a clearly identified candidate and which is made independently from the candidate's campaign. To be considered independent, the communication may not be made with the cooperation, consultation or concert with, or at the request or suggestion of, any candidate or his/her authorized committees or a political party, or any of their agents. While there is no limit on how much anyone may spend on an independent expenditure, the law does require persons making independent expenditures to report them and to disclose the sources of the funds they used. The public can review these reports at the FEC's Public Records Office. Corporate and Union ActivityAlthough corporations and labor organizations may not make contributions or expenditures in connection with federal elections, they may establish PACs. Corporate and labor PACs raise voluntary contributions from a restricted class of individuals and use those funds to support federal candidates and political committees. Click here to download the Campaign Guide for Corporations and Labor Organizations [PDF]. Apart from supporting PACs, corporations and labor organizations may conduct other activities related to federal elections, within certain guidelines. For more information, call the FEC or consult 11 CFR Part 114. Political Party ActivityPolitical parties are active in federal elections at the local, state and national levels. Most party committees organized at the state and national levels as well as some committees organized at the local level are required to register with the FEC and file reports disclosing their federal campaign activities. Party committees may contribute funds directly to federal candidates, subject to the contribution limits. National and state party committees may make additional 'coordinated expenditures,' subject to limits, to help their nominees in general elections. Party committees may also make unlimited 'independent expenditures' to support or oppose federal candidates, as described in the section above. National party committees, however, may not solicit, receive, direct, transfer, or spend nonfederal funds. Finally, while state and local party committees may spend unlimited amounts on certain grassroots activities specified in the law without affecting their other contribution and expenditure limits (for example, voter drives by volunteers in support of the party's Presidential nominees and the production of campaign materials for volunteer distribution), they must use only federal funds or 'Levin funds' when they finance certain 'Federal election activity.' Party committees must register and file disclosure reports with the FEC once their federal election activities exceed certain dollar thresholds specified in the law. The Presidential Election Campaign Fund ActUnder the Internal Revenue Code, qualified Presidential candidates receive money from the Presidential Election Campaign Fund, which is an account on the books of the U.S. Treasury. The Fund is financed exclusively by a voluntary tax checkoff. By checking a box on their income tax returns, individual taxpayers may direct $3 of their tax to the Fund (up to $6 for joint filers). Checking the box does not increase the amount a taxpayer owes or reduce his or her refund; it merely directs that three (or six) dollars from the U.S. Treasury be used in Presidential elections. Checkoff funds may not be spent for other federal programs. The funds are distributed under three programs:
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Using campaign funds for personal use is prohibited.
Commission regulations provide a test, called the 'irrespective test,' to differentiate legitimate campaign and officeholder expenses from personal expenses. Under the 'irrespective test,' personal use is any use of funds in a campaign account of a candidate (or former candidate) to fulfill a commitment, obligation or expense of any person that would exist irrespective of the candidate’s campaign or responsibilities as a federal officeholder.
More simply, if the expense would exist even in the absence of the candidacy or even if the officeholder were not in office, then the personal use ban applies.
Conversely, any expense that results from campaign or officeholder activity falls outside the personal use ban.
Spending that isn’t personal use
In addition to the 'irrespective test,' Commission regulations include other uses of funds that do not constitute personal use and thus are permissible uses of campaign funds.
Charitable donations
Gifts to charity are not considered personal use expenses as long as the candidate does not receive compensation from the charitable organization before it has expended the entire amount donated. Note that the amount donated must have been used for purposes that do not personally benefit the candidate.
Transfer of campaign assets
The sale or transfer of a campaign asset to either the candidate or a third party does not constitute personal use as long as the transaction is made at the fair market value.
Gifts
On special occasions, campaign funds may be used to purchase gifts or make donations of nominal value to persons other than the members of the candidate’s family.
Candidate salary
The candidate may receive a salary from his or her campaign committee only under the following conditions:
- The salary must be paid by the principal campaign committee;
- The salary must not exceed the lesser of the minimum annual salary for the federal office sought or what the candidate received as earned income in the previous year;
- Individuals who elect to receive a salary from their campaign committees must provide income tax records and additional proof of earnings from relevant years upon request from the Commission;
- Payments of salary from the committee must be made on a pro-rata basis (a candidate may not receive a whole year’s salary if he or she is not a candidate for an entire twelve-month period);
- Incumbent federal officeholders may not receive a salary payment from campaign funds; and
- The first payment of salary shall be made no sooner than the filing deadline for access to the primary election ballot in the state in which the candidate is running for office.
Salary payments may continue until the date when the candidate is no longer considered a candidate for office or until the date of the general election or general election runoff. For special elections, payments may continue from the date that the special election is set until the date of the special election.
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Automatic personal use
The regulations list some expenses that are automatically considered to be personal use. Based on these rules, the following paragraphs discuss what kinds of expenses the campaign can and cannot pay for.
Household food items and supplies
The candidate cannot use campaign funds to pay for food purchased for daily consumption inside the home or supplies needed to maintain the household. The campaign may, however, pay for food and supplies for fundraising activities and campaign meetings (even when they take place in the candidate's home).
Funeral, cremation and burial expenses
Campaign funds cannot be used to cover expenses related to deaths within the candidate’s family. They may, however, be used to cover funeral, cremation and burial expenses for a candidate or campaign worker whose death arises out of, or in the course of, campaign activity.
Clothing
The campaign cannot pay for attire for political functions (for example, a new tuxedo or dress), but it can pay for clothing of de minimis value that is used in the campaign, such as T-shirts or caps imprinted with a campaign slogan.
Tuition payments
Campaign funds may not be used for tuition payments unless the payments are associated with training campaign staff. In AO 1997-11, the Commission allowed a federal officeholder to use campaign funds to cover her costs for a Spanish immersion class that she took to better communicate with her constituents.
Mortgage, rent and utility payments
The campaign may not pay for mortgage, rent or utilities for the personal residence of the candidate or the candidate’s family even if part of the residence is being used by the campaign. However, the Commission has allowed the use of campaign funds to pay for home security enhancements made in response to threats to an officeholder's safety. In these cases, the security upgrades were not considered personal use because the threats would not exist irrespective of the officeholders’ candidacy or duties as an officeholder.
In addition, the campaign may pay for long distance calls made for campaign purposes from the candidate’s residence or the residence of his or her family.
Investment expenses
The campaign may not pay for investment expenses such as acquiring securities on margin unless all of the investment and its proceeds are used for the purpose of influencing the candidate’s election for federal office or for one of the permissible non-campaign uses of funds discussed on this page.
Entertainment
The campaign may not pay for admission to sporting events, concerts, theater and other forms of entertainment. Campaign funds may be used, however, if the entertainment is part of a specific officeholder or campaign activity. They may not be used for a leisure outing at which the discussion occasionally focuses on the campaign or official functions.
Dues, fees and gratuities
Campaign funds may not be used to pay for dues to country clubs, health clubs, recreational facilities or other nonpolitical organizations unless the payments are made in connection with a specific fundraising event that takes place on the organization’s premises. Campaign funds may be used for membership dues in an organization that may have political interests.
Salary payments to candidate’s family
Campaign funds may be used to make salary payments to members of the candidate’s family only if:
- The family member is providing a bona fide service to the campaign; and
- The payments reflect the fair market value of those services.
Any salary payments to family members in excess of the fair market value constitute personal use.
Case-by-case determination of personal use
For other expenses not mentioned on this page, the Commission will determine, on a case-by-case basis, whether the expense is one that would exist irrespective of the candidate's campaign or duties as a federal officeholder and would be considered a personal use expense. For example, the Commission addresses payments for meals, travel, vehicles, mixed-use and legal expenses on a case-by-case basis.
Meal expenses
Campaign funds may be used to pay for meals during face-to-face fundraising events. By contrast, a candidate may not use campaign funds to take his or her family out to dinner.
Travel expenses
Campaign funds may be used to pay the costs of travel to an activity that is related to the campaign or to the candidate’s duties as a federal officeholder. Thus, the costs of travel for a candidate (and the candidate’s spouse and minor children) may be used to pay for travel to functions directly related to the campaign or those directly connected to the individual’s official responsibilities as a federal officeholder. The regulations, however, prohibit the use of campaign funds for personal expenses collateral to travel—either campaign or officeholder—unless personal funds are used to reimburse the committee.
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Vehicle expenses
Campaign funds may be used to pay for a vehicle that is used for campaign-related purposes, assuming that the costs related to the personal use of the vehicle are de minimis. Campaign funds cannot be used to pay for expenses relating to the personal use of a campaign vehicle unless those expenses are de minimis, that is, unless they are insignificant in relation to the overall vehicle use.
Mixed use
In the event of travel or vehicle expenses that commingle personal and campaign or officeholder activity, the beneficiary of the personal use expenses must reimburse the committee within thirty days for the entire amount associated with the personal activities (the amount over and above what the cost would have been had the trip/vehicle use been solely for campaign/officeholder-related purposes). The reimbursement does not constitute a contribution.
The committee must maintain logs of the expenses to help the Commission determine on a case-by-case basis what portion was for personal use rather than for campaign-related activity or officeholder duties.
Legal expenses
Using the irrespective test summarized on this page, the Commission decides on a case-by-case basis whether legal expenses are considered 'personal use' and thus are expenses that a candidate may not pay for using campaign funds.
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Relating to campaign or officeholder activity
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In several advisory opinions the Commission has said that campaign funds may be used to pay for up to 100 percent of legal expenses related to campaign or officeholder activity, where such expenses would not have occurred had the individual not been a candidate or officeholder.
Relating to other activity
In specific situations the Commission has concluded that campaign funds may be used to pay for up to 50 percent of legal expenses that do not relate directly to allegations arising from campaign or officeholder activity (for example, activity prior to becoming a candidate or officeholder or activity of a business owned by the candidate/officeholder) if the candidate or officeholder is required to provide substantive responses to the press regarding the allegations of wrongdoing.
Salary, compensation and other payments paid on behalf of candidates
General rule
Generally, when a third party (not the candidate or the candidate's committee) pays for personal use expenses, the third party makes a contribution, subject to the restrictions and limitations of the Federal Election Campaign Act.
Exceptions
No contribution will result, however, if the payment would have been made irrespective of the candidacy. A third party may make the following payments on behalf of a candidate without making a contribution:
- Payments to a legal expense trust fund established under House and Senate rules;
- Payments for personal living expenses made from funds that are the candidate’s personal funds, including an account the candidate holds jointly with a family member; and
- Payments that began prior to candidacy.
For example, if the candidate's parents had been making college tuition payments for the candidate's children, the parents could continue to do so during the campaign without making a contribution.
Salary or compensation paid to candidate
Compensation paid to a candidate by a third party as a continuation of payments made prior to candidacy (for example, payments of salary) are not considered contributions as long as such payments:
- Result from bona fide employment independent of the candidacy;
- Are exclusively in consideration of the services provided as part of this employment; and
- Represent pay not in excess of that normally received for such services.
Promotion of candidate’s books
Generally, the expense of marketing a book would exist irrespective of a candidate’s campaign, and thus a campaign cannot ordinarily use its funds to pay such an expense. In limited situations, however, the Commission has permitted the use of campaign funds to promote a candidate’s book, as follows:
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- A campaign could incur de minimis costs to post on its website material promoting the book’s release and linking to an online bookseller.
- A campaign could incur costs for planning book-related events and handling press and public inquiries where the candidate donates royalties to charitable organizations and thus does not personally gain from the use of campaign assets to promote the book.