Campaign Finance Law Quick Reference for Reporters
Major provisions of the Bipartisan Campaign Reform Act of 2002:
The Bipartisan Campaign Reform Act of 2002 (BCRA) includes several provisions designed to end the use of nonfederal, or "soft money" (money raised outside the limits and prohibitions of federal campaign finance law) for activity affecting federal elections. These include:
- Prohibiting national parties from raising or spending nonfederal funds
- Requiring state, district and local party committees to fund certain "federal election activities" with federal funds (i.e. hard money) and, in some cases, with money raised according to new limitations, prohibitions, and reporting requirements (i.e. Levin funds), or with a combination of such funds.
- Limiting fundraising by federal and nonfederal candidates and officeholders on behalf of party committees, other candidates, and nonprofit organizations.
Beginning November 6, 2002, national party committees may not solicit, receive, direct to another person or spend nonfederal funds. Moreover, such committees must use only federal funds (hard money) to raise funds that are used, in whole or in part, for expenditures and disbursements for federal election activity. These restrictions also apply to organizations which are established, financed, maintained, or controlled by the national parties.
National party committees may not solicit funds for, or make or direct donations to, tax-exempt 501(c) organizations if the organization makes expenditures or disbursements in connection with a federal election, including for federal election activity.
National party committees may solicit funds or make or direct donations to so-called "527 organizations" only if they are political committees registered with the FEC or state, district or local party committees or authorized campaign committees of state or local candidates.
National party committees may no longer accept funds into building accounts and any funds remaining in building fund accounts after November 6, 2002 must be paid to the U.S. Treasury or returned to donors.
State, District and Local Parties
In general, state and local parties must use federal funds (hard money) to pay for federal election activity, but in some cases they can use "Levin" funds for a portion of voter registration activity or for voter identification, get-out-the-vote activities (GOTV) or generic campaign activity as long as they don't refer to a clearly identified federal candidate and are not used for radio or television communications (unless they are exclusively state and local candidates).
There are three categories of funding available to state, district, and local parties;
- Federal funds (hard money) are raised under federal limitations and prohibitions and may be used in connection with a federal election. (See contribution limit chart)
- Nonfederal funds are those outside the limits and, in many cases, the prohibitions of federal law but which are permitted by state law. These may not be used for federal election activity (unless they qualify as "Levin" funds).
- Levin funds are donations allowable under state law, raised directly by the specific state or local party that intends to use them, and limited to no more than $10,000 in a calendar year from any "person." (A "person" can include a corporation or union, but not a foreign national, if state law allows.)
State, district, and local party committees may not solicit funds for, or make or direct donations to, tax-exempt 501(c) organizations if the organization makes expenditures or disbursements in connection with federal elections. They can only solicit or donate to "527 organizations" if they are registered with the FEC, are state, district or local party committees, authorized campaign committees for state or local candidates, or committees registered under state law that support only state or local candidates and don't make disbursements that are federal election activity.
Federal Candidates and Officeholders
The BCRA places limits on the amounts and types of funds that can be raised by federal candidates and officeholders for both federal and state candidates. These restrictions apply to the candidates and/or officeholders, their agents, and entities directly or indirectly established, maintained, or controlled by, or acting on behalf of, any such candidate or officeholder.
- These persons may not solicit, receive, direct, transfer, spend or disburse funds in connection with an election for federal office unless they are federal funds which are subject to the limitations, prohibitions and reporting requirements of the FECA.
- These persons may only solicit, receive, direct, transfer, spend, or disburse funds in connection with any non-federal election if those funds are consistent with state law and also do not exceed the contribution limits in the FECA and are not from sources prohibited under FECA.
These restrictions do not apply if the person is a candidate for state or local office and the fundraising or spending refers only to that state or local candidate or any other candidate for that same state or local office, or both.
Federal candidates or officeholders may, however, attend, speak, or be a featured guest at a fundraising event for a state, district, or local party organization at which non-federal or Levin funds are raised.
These persons may make general solicitations for tax-exempt organizations if the organization does not engage in activities in connection with an election, or its primary purpose is not activity in connection with elections and the solicitation is not to obtain funds to be used in connection with a federal election, including federal election activity.
The BCRA, and FEC rules, contain provisions related to television and radio ads that refer to a clearly identified federal candidate and are distributed (targeted) to the relevant electorate within a particular time period before an election. These are often referred to as "issue ads" because they have typically discussed candidates in the context of certain issues without specifically advocating a candidate's election or defeat. Under the new rules, such ads would now be considered "electioneering communications" and as such, may no longer be funded by corporations or labor organizations. Other individuals or groups who pay for these ads must report the activity and the sources of funds if the payments exceed a specific threshold.
The defining characteristics of an "Electioneering Communication" are:
- The communication refers to a clearly identified candidate for federal office.
- The communication is publicly distributed on radio or television (including broadcast, cable, or satellite) for a fee.
- The communication is distributed during a specific time period before an election - within 30 days prior to a primary election or 60 days prior to a general election.
- The communication is targeted to the relevant electorate - i.e. it can be received by 50,000 or more people in the district or state where the candidate is running for federal office. For presidential campaigns this means 50,000 or more people in a state holding a primary within 30 days or within 30 days of the start of the nominating convention.
NOTE: The Supreme Court ruling in Wisconsin Right to Life v. FEC provides for additional exceptions covering issue ads.
- No other forms of communication (e.g. mail, telephone, Internet, etc.) are covered by these restrictions. News stories, editorials or commentary, and candidate debates are also not covered.
- The restrictions do not apply to broadcast ads by state or local candidates that refer to a federal candidate so long as the ads do not promote, support, attack or oppose the federal candidate.
- The restrictions do not apply to charitable organizations that are exempt from federal taxes under section 501(c)(3) of the tax code. However, the tax code does not permit these groups to participate or intervene in any political campaign on behalf of any candidate for public office.
- Electioneering communications must be disclosed if the direct costs of producing and airing the communications aggregates to $10,000 or more.
- Reports must be filed on the day after the public distribution of the communication that causes the total costs to exceed the threshold. Subsequent reports must be filed within 24 hours of a communication's distribution each time that the total costs for electioneering communications again exceed $10,000 in the aggregate.
- Reports must identify the person making the disbursement, as well as any person exercising direction or control over the activities of that person (e.g. officers, directors, executive directors or their equivalent, partners or owners of the organization), the custodian of records for the spender, the amount of each disbursement of $200 or more along with the date of the disbursement and the person to whom the payment was made, all clearly identified candidates referred to, the disclosure date, any individual who donated a total of $1,000 or more since January of the preceding year to the person or account who paid for the ad.
New rules define when a communication is considered coordinated between a candidate or political committee and a person making a communication. The new regulations provide for a three-part test to determine coordination. Satisfaction of all three justifies the conclusion that a communication is coordinated and is for the purpose of influencing an election. As a result, the person with whom coordination takes place has made an in-kind contribution or made a coordinated expenditure (in the case of party committees) on behalf of the candidate.
Three part test:
- Source of Payment - A coordinated communication is paid for by someone other than a candidate.
- Content Standard - The communication is reasonably related to an election. In order to determine whether it is, the new rules specify four content standards, the meeting of any one would make the communication election-related. The four standards are;
- Conduct Standard - There are five forms of conduct by the person paying for the ad and the candidate, any one of which would satisfy this test. Examples include creating or paying for a communication at the request or suggestion of a candidate, or a candidate or agent being materially involved in decisions about the communication, or having substantial discussions about the communication, or using common vendors or former employees who provide information about the candidate's plans or activities to the person paying for the communication.
New rules also address the making of coordinated and independent expenditures by a party committee. Political parties may no longer make both independent and coordinated expenditures but now must choose between the two. A party's national, state and local committees are considered one political party for the purpose of choosing the kind of expenditure they will make.
Anyone making independent expenditures that aggregate $10,000 or more with respect to a given election anytime up to 20 days before an election must now report those expenditures to the FEC within 48 hours after the communication was disseminated. Within the last 20 days, these expenditures must be reported within 24 hours of their distribution.
The BCRA increases limits on contributions made by individuals and some political committees; indexes certain contribution limits for inflation; prohibits contributions by minors to federal candidates and parties; and prohibits contributions, donations, expenditures, independent expenditures and disbursements by foreign nationals.
New contribution limits for individuals -- beginning January 1, 2003:
- Contributions to candidates - $2,000* per election (was $1,000).
- Contributions to state, district and local party committees - $10,000 (combined) per year (was $5,000).
- Contributions to national party committees - $25,000* per year (was $20,000).
- Overall limit on contributions from one person now $95,000* every two years (was $25,000 per year). Within this limit, however, only $37,500 may be contributed to candidates and no more than $37,500 to other committees that are not national parties
National party committees may now contribute up to a total of $35,000* to Senate candidates per six-year campaign (was $17,500).
Amounts with an asterisk are indexed for inflation. Increases will be implemented during odd-numbered years starting in 2005 and will be in effect for a two-year period.
Individuals who are 17-years-old and younger are prohibited from making contributions to candidates and from making contributions or donations to any accounts of state or local party committees (including "Levin" accounts). They may make contributions to other types of political committees.
The existing prohibition on contributions in federal, state, or local elections by foreign nationals was clarified and expanded in BCRA. The ban now clearly applies to:
- contributions and donations of money, or anything of value, in connection with US elections,
- contributions and donations to committees of political parties,
- donations to Presidential inaugural committees,
- donations to party committee building funds,
- disbursements for electioneering communications,
- expenditures, including independent expenditures.
The new law specifies additional requirements accompanying radio, television, print and other campaign communications. Some of the changes are:
- Any communication made by a political committee - including communications that do not expressly advocate the election or defeat of a federal candidate - must now have a disclaimer.
- Candidate authorized radio and television ads must include an audio statement by the candidate approving the ad and, in addition for television communication, a view or image of the candidate and a written statement at the end of the communication.
- For radio or television communication that is not authorized by a candidate, the name of the political committee or other person who is responsible for the communication, and, if applicable, the name of the sponsoring committee's connected organization and for television a view of the representative making an audio statement and accompanied by a written statement at the end of the communication.
- Communications not authorized by the candidate must also provide their contact information.
The personal use regulations retain the existing prohibitions regarding personal use of campaign funds but amended them in a few areas. Some of the amendments include:
- House and Senate candidates are permitted, under certain conditions, to receive a salary from their campaign committee (up to either the candidate's earnings in the previous year or the salary of the office, whichever is lower).
- Additional recordkeeping is required for expenses that may be partly personal, such as vehicles, travel and legal expenses.
- Campaign funds may be used for certain non-campaign purposes -- official officeholder expenses, contributions and donations to other campaigns and charitable organizations, and transfers to national, state, or local party committees.