Chapter 3
Convention Funding

How Convention Funding Works

Each major party is entitled to a public grant of $4 million (plus cost-of-living adjustment) to finance its Presidential nominating convention.1 In 1992, each major party received $11.048 million. A qualified minor party (a party whose Presidential candidate received between 5 and 25 percent of the vote in the preceding election) may become eligible for partial convention funding based on its Presidential candidate's share of the popular vote in the preceding election.2

An eligible major or minor party committee may receive its entitlement from the U.S. Treasury any time after July 1 of the year preceding the convention. The Commission then certifies additional funds, once the applicable cost-of-living figures become available, usually by March of the election year. The Treasury Department then makes corresponding payments to each committee.3

A convention committee may not spend more than the amount to which the major party is entitled. Certain supplemental services, however, may be provided by the host state and city governments and by local groups such as retail businesses and labor unions. The host city may, for example, provide additional public transportation to and from the convention site. Or a retail business may sell or rent chairs, podiums, tables or other equipment to the convention committee at discount rates.4

After the convention, the Commission audits each committee to ensure that public funds were spent in compliance with the law.5

A repayment may be required if the Commission determines that a committee:

A committee may dispute the Commission's initial repayment determination by submitting legal and factual materials to support its view.7

The Commission will take into account the committee's arguments when making its final repayment determination. The committee, however, must repay the amount specified in the final determination within the payment deadline unless it obtains a stay from the Commission pending an appeal of the agency's decision.8

Statistical Wrap-up

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Expenditure Limits

As noted in the "How Convention Funding Works" section, publicly funded convention committees must limit their spending to the amount of the major party entitlement.

Through a series of advisory opinions (AOs) and regulatory amendments, however, the Commission has gradually expanded the amount of supplemental spending that is permissible in connection with publicly funded conventions.9 Under current regulations:

In addition, local officials and business figures may establish "host committees" to promote the city and its commerce during the convention. These host committees may receive monetary or in-kind donations from local businesses, municipal corporations, government agencies, labor organizations and individuals to further their promotional efforts.11 The committees must register and file reports with the FEC, disclosing all of their receipts and disbursements. They are also audited by the Commission.12

Local retail businesses, municipal corporations and government agencies may also donate funds to the host committees to help defray convention expenses. The amount of these donations must be proportionate to the commercial return reasonably expected by the business, corporation or agency as a result of the convention.13

Critics contend that this supplemental spending undermines the concept of public funding of conventions: "Besides questioning the rationale for the use of public funds, the infusion of large amounts of private dollars makes the accompanying expenditure limits meaningless."14 Many critics argue that the public grant should be the sole source of convention funding. These critics have been particularly concerned about donations from sources that cannot legally contribute to influence federal elections. They point out, for example, that corporations and labor organizations may make tax-deductible donations to municipal corporations. As noted above, these corporations may provide facilities and services for the convention, including not only traditional city services such as police and fire protection, medical facilities and special bus service for delegates, but also such benefits as rental of the convention halls and upgrades of their facilities. Municipal corporations are not, however, required to file reports with the FEC.15

The Commission and other observers believe that the expenditure limits would be "unrealistically low" without these kinds of supplemental spending.16 For instance, published estimates put the total cost of the 1992 Democratic convention in New York at $30 million and of the Republican convention in Houston at $22 million. Federal funding for the 1992 conventions was $11 million each. According to the Commission, the statute's spending limits relate only to expenses paid by the parties themselves, not to "the value of facilities and services provided by the convention city and the host committee in that city."17 To account for this, the Commission promulgated the regulations described above. While these regulations do permit some corporate and labor donations, safeguards exist "to insure that such donations are commercially, rather than politically motivated."18

In Advisory Opinion (AO) 1988-25, the Commission expanded its regulatory exemptions somewhat more by permitting General Motors (GM) to loan vehicles at no cost to both major party conventions. The Commission concluded that:

This GM vehicle loan program represents activity in the ordinary course of business for GM in view of its established two year program of loaning, without charge, fleets of GM vehicles to various conventions, conferences, sporting events and other special events for GM's promotional purposes.

The Commission based its conclusion on additional factors as well, such as:

The assumption that the value provided is proportionate to the value provided in similar situations; the obvious commercial benefit that underlies the program; the assumption that such commercial benefit is not outweighed by the value provided; and most important, the unique promotional versus political opportunities that a national nominating convention presents.19

The Commission also noted "the apparent non-partisan nature of GM's proposal."

Critics have argued that the GM opinion further undermines the integrity of the public funding program.20

1. Congress established the convention grant at $2 million, but increased it to $3 million in 1979, and to $4 million in 1984.

2. A new party (a party that is neither a major nor a minor party) is not eligible for convention funding. 26 U.S.C. Sec.9008.

3. 26 U.S.C. Sec.9008.

4. 11 CFR 9008.7.

5. The audit and repayment procedures used for convention committees are much the same as those described in Chapter 1. Issues related to FEC audits are discussed in the "Audits and Enforcement" section on page 15.

6. 26 U.S.C. Sec.9008(h).

7. 11 CFR 9008.11.

8. 11 CFR 9008.11.

9. See, for example, AOs 1975-1, 1975-47, 1982-27, 1983-23 and 1983-29. The Commission revised its convention regulations in 1977 and 1979, and made technical amendments in 1983. Further revisions were considered in 1990, but were suspended in 1991.

10. 11 CFR 9008.7(b) and (c).

11. 11 CFR 9008.7(d)(1) and (2).

12. 11 CFR 9008.9 and 9008.12.

13. 11 CFR 9008.7(d)(3).

14. Herbert E. Alexander and Monica Bauer, Financing the 1988 Election, p. 31.

15. Herbert E. Alexander and Brian A. Haggerty, Financing the 1984 Election (Lexington: Lexington Books, D.C. Heath and Company, 1987), p. 294.

16. Explanation and Justification for Regulations on the Presidential Election Campaign Fund and Federal Financing of Presidential Nominating Conventions. 44 FR 63036 (November 1, 1979).

17. Ibid.

18. Ibid.

19. These principles have been applied in subsequent audits of the convention committees.

20. See, for example, Herbert E. Alexander and Monica Bauer, Financing the 1988 Election, p. 31.