4 min read

Brush Up on Campaign Contributions Rules

Featured Image

It's a presidential election year again! With campaign season gearing up, many individuals and businesses will be reaching into their wallets or otherwise contributing to candidates, political committees and parties. Before doing so, it's critical for you to understand the rules for making contributions for federal and state elections. Violations could lead to steep financial penalties, as well as reputational damage.

Individual Donations

According to the Federal Election Commission (FEC), individual contributions in 2024 are subject to the following limits:

Recipient Type

Maximum Contribution

Candidate committees

$3,300 per election

State/district/local party committees

$10,000 per year, combined

National party committees

$41,300 per year

Additional national party committee accounts (for example, for the presidential nominating convention or election recounts)

$123,900 per account, per year

Political action committees (PACs)

$5,000 per year

 

The term "PACs" refers to committees that make contributions to other federal political committees. Independent-expenditure-only political committees (sometimes called "Super PACs") may accept unlimited contributions, including from corporations and labor organizations.

Cash contributions to a campaign to nominate for election or elect to a federal office are limited to $100. Anonymous cash contributions are limited to $50. Recipients must promptly dispose of any excess over $50. However, excess amounts can't be used for any purpose related to a federal election, campaign or candidate.

Important: Limits on contributions to candidates apply separately to each federal election in which a candidate participates. Primary, general, runoff and special elections are each considered separate elections for these limits.

In-kind contributions are counted against your limit in the same way cash would be. The amount counted is the "usual and normal charge" for the good or service contributed.

Contributions made by one person in the name of another are prohibited. For example, if you've already met the limit for contributions to a candidate, you can't give money to a friend or family member to contribute to the same candidate. Minors can make contributions to candidates and political committees if the decision is made knowingly and voluntarily. The minor generally must own or control the funds, goods or services contributed. Contributions can't come from funds given to the minor for the purpose of making a contribution.

Business Donations

Corporations, including nonprofit corporations and professional corporations, can't contribute to campaigns. However, funds from a separate segregated fund (SSF) can be contributed. Corporations also are prohibited from using bonuses or other methods to reimburse employees for their contributions.

The rules for limited liability companies (LLCs) depend on how they're treated for federal income tax purposes:

As corporations. An LLC is treated as a corporation if it has opted to file taxes as a corporation or has publicly traded shares. These entities are prohibited from contributing to candidate committees, but they can establish SSFs. They can give money to independent-expenditure-only PACs.

As partnerships. An LLC is deemed a partnership if that's how it has chosen to file (or if it hasn't chosen to be a corporation or partnership). These entities are subject to limits imposed on partnerships, meaning they generally may contribute up to the individual limits. Contributions from a partnership count proportionately against each participating partner's own limit with respect to the same candidate.

LLCs or partnerships aren't allowed to attribute any portion of a contribution to corporations or foreign nationals that might be partners or members. LLCs and partnerships composed solely of corporate members or partners can't make any contributions.

Communications and Online Messaging

The FEC allows individuals or groups to pay for "public communications" to support or oppose a candidate. This includes the following types of communications:

  • Broadcast, cable or satellite,
  • Newspapers and magazines,
  • Outdoor advertising,
  • Mass mailings and telephone banking, and
  • Other forms of "general public political advertising."

As of March 1, 2024, paid advocacy messages disseminated online are considered public communications, including payments to platforms to boost viewership of express advocacy messages—even if the message was originally posted online for free. However, payments to social media influencers who disseminate a message for free on a platform aren't considered public communications.

Payment for a public communication is considered an independent expenditure if it isn't made in coordination with any campaign, candidate, political party committee or an agent of these entities. Independent expenditures aren't contributions, and they aren't subject to limits. However, they must display a disclaimer notice—and they may be subject to reporting requirements. Coordinated communications are in-kind contributions. As such, they're subject to limitations and prohibitions against who can and can't contribute. They also must display a disclaimer notice.

Can You Deduct Your Donation?

Political contributions are neither charitable donations nor business expenses for tax purposes. So they aren't tax deductible, regardless of whether you contribute as an individual or through your business. For more information on campaign contribution rules go to the FEC's website and check your state rules.

©  2024

5 min read

Smart Tax Planning Pays Off

If you're financially successful or expect to become so, taxes are or will become one of your biggest expenses—and most...

3 min read

Small Business Alert: Bankruptcy Debt Limits Soon Could Drop

Market uncertainties are causing some small businesses to struggle. If you're among them and are considering filing for...