Who can contribute
An individual may make contributions to candidates and political committees, subject to the limit of $2,700 per election.
An individual who is under 18 years old may make contributions to candidates and political committees, subject to the limit of $2,700 per election, if:
- The decision to contribute is made knowingly and voluntarily by the minor;
- The funds, goods or services contributed are owned or controlled by the minor, proceeds from a trust for which he or she is a beneficiary or funds withdrawn by the minor from a financial account opened and maintained in his or her name; and
- The contribution is not made using funds given to the minor as a gift for the purpose of making the contribution, and is not in any way controlled by another individual.
Certain limited liability companies (LLCs)
An LLC must, at the time it makes a contribution, notify the recipient committee:
- That it is eligible to make the contribution; and
- How the contribution is to be attributed among members.
This requirement will prevent the recipient committee from inadvertently accepting an illegal contribution.
Corporations and partnerships
For purposes of contribution limitations and prohibitions, a limited liability company (LLC) is treated as either a corporation or a partnership.
An LLC is treated as a corporation if:
- It has chosen to file, under Internal Revenue Service (IRS) rules, as a corporation; or
- It has publicly traded shares.
An LLC is treated as a partnership if:
- It has chosen to file, under IRS rules, as a partnership; or
- It has made no choice, under IRS rules, as to whether it is a corporation or a partnership.
If an LLC is treated as a corporation, it is prohibited from making contributions to candidate committees, but it can establish an SSF. It may also give money to IEOPCs. If it is considered a partnership, it is subject to the contribution limits for partnerships.
Single member LLC
If a single member LLC has not chosen corporate tax treatment, it may make contributions; the contributions will be attributed to the single member, not the LLC.
Partnerships are permitted to make contributions according to special rules.
Contributions received by a candidate’s authorized committees from a partnership may not exceed $2,700 per election. In addition, a contribution from a partnership also counts proportionately against each participating partner’s own limit with respect to the same candidate.
Because a contribution from a partnership is a joint contribution, the partnership must provide to the recipient committee, along with the contribution, a written notice listing the names of the contributing partners and the amount to be attributed to each. However, unlike other joint contributions, the signature of each contributing partner is not required.
Contributions made by individual partners
Each individual partner may make contributions of $2,700 per election, per candidate. Although contributions made by the partnership as a whole count proportionately against each participating partner’s $2,700 limit, contributions made by individual partners from their own funds do not count against the partnership’s limit. Note, however, that certain partnerships and partners may be prohibited from contributing.
A portion of the partnership contribution must be attributed to each contributing partner. If all partners within the organization are contributing, the partnership may attribute the contribution according to each partner’s share of the firm’s profits.
However, if the partnership attributes a contribution on another basis agreed to by the partners, all the following rules must be observed:
- The profits of only the partners to whom the contribution is attributed are reduced (or their losses increased).
- The profits (or losses) of those partners are reduced (or losses increased) in the amount of the contribution attributed to them.
The portion attributed to each partner must not, when aggregated with other contributions from that person, exceed his or her individual contribution limit.
Who can’t contribute
Campaigns are prohibited from accepting contributions from certain types of organizations and individuals. These prohibited sources are:
- Corporations, including nonprofit corporations (although funds from a corporate separate segregated fund are permissible)
- Labor organizations (although funds from a separate segregated fund are permissible)
- Federal government contractors
- Foreign nationals
- Contributions in the name of another
Corporations, labor organizations, national banks
Campaigns may not accept contributions from the treasury funds of corporations, labor organizations or national banks. This prohibition applies to any incorporated organization, including a nonstock corporation, a trade association, an incorporated membership organization and an incorporated cooperative.
A campaign may, however, accept contributions from PACs established by corporations, labor organizations, incorporated membership organizations, trade associations and national banks. Moreover, the Federal Election Campaign Act (the Act) permits corporations, labor organizations, incorporated membership organizations, trade associations and national banks to use their treasury funds for certain election-related activities that benefit candidates.
Although law firms, doctors’ practices and similar businesses are often organized as partnerships, some of these businesses may instead be professional corporations. Unlike a partnership, a professional corporation is prohibited from making any contributions because contributions from corporations are unlawful.
Partnerships or LLCs with corporate partners or members
Because contributions from corporations are prohibited, a partnership or LLC with corporate partners or members may not attribute any portion of a contribution to the corporate partners or members.
A partnership or LLC composed solely of corporate partners or members may not make any contributions.
Partnerships or LLCs with foreign national members
Similarly, because contributions from foreign nationals are prohibited, a partnership or LLC may not attribute any portion of a contribution to a partner who is a foreign national.
Personal funds from a candidate employed by prohibited source
A candidate’s salary or wages earned from bona fide employment are considered his or her personal funds. However, compensation paid to a candidate in excess of actual hours worked, or in consideration of work not performed, is generally considered a contribution from the employer. If the employer is a corporation, federal government contractor, or another prohibited source, the excess payment would result in a prohibited contribution under the regulations applicable to that employer.
Churches and other charitable organizations
Incorporated charitable organizations — like other corporations — are prohibited from making contributions in connection with federal elections. Unlike most other corporations, charities face additional restrictions on political activity under provisions of the Internal Revenue Code.
Federal government contractors
Campaigns may not accept or solicit contributions from federal government contractors. Since corporate contributions are already prohibited, the government contractor ban applies primarily to contributions from a partnership (or a limited liability company) with a government contract. It also applies to the personal and business funds of:
- Individuals under contract to the federal government; and
- Sole proprietors of businesses with federal contracts.
The spouses of individuals and sole proprietors who are federal government contractors and employees of federal government contractors, however, may make contributions from personal funds.
Partnerships or LLCs with federal government contracts
A partnership or LLC that is negotiating a contract with the federal government or that has not completed performance of such a contract is prohibited from making contributions. However, an individual partner in such a firm may make contributions from personal funds (rather than from funds drawn on the partnership’s account).
Also, an individual, who is, in his or her own right or as a sole proprietor, a federal government contractor or negotiating a contract with the federal government may not make contributions using any funds (business or personal) under his or her control. Note that the spouse of such an individual is not prohibited from making a personal contribution in his or her own name (as long as he or she is not otherwise prohibited from making contributions in connection with a federal election).
Campaigns may not solicit or accept contributions from foreign nationals. Federal law prohibits contributions, donations, expenditures and disbursements solicited, directed, received or made directly or indirectly by or from foreign nationals in connection with any election — federal, state or local. This prohibition includes contributions or donations made to political committees and building funds and to make electioneering communications. Furthermore, it is a violation of federal law to knowingly provide substantial assistance in the making, acceptance or receipt of contributions or donations in connection with federal and nonfederal elections to a political committee, or for the purchase or construction of an office building. This prohibition includes, but is not limited to, acting as a conduit or intermediary for foreign national contributions and donations.
A person acts knowingly for the purposes of this section when he or she has:
- Actual knowledge that the funds have come from a foreign national;
- Awareness of certain facts that would lead a reasonable person to believe that there is a substantial probability that the money is from a foreign national; or
- Awareness of facts that should have prompted a reasonable inquiry into whether the source of funds is a foreign national.
Pertinent facts that satisfy the “knowing” requirement include knowledge of:
- Use of a foreign passport or passport number;
- Use of a foreign address;
- A check or other written instrument drawn on an account or wire transfer from a foreign bank; or
- Contributor or donor living abroad.
Definition of foreign national
A foreign national is:
- An individual who is not a citizen of the United States, and not lawfully admitted for permanent residence (as defined in 8 U.S.C. § 1101(a)(20)); or
- A foreign principal, as defined in 22 U.S.C. § 611(b). Section 611 defines a foreign principal as a group organized under the laws of a foreign country or having its principal place of business in a foreign country. The statute specifically mentions foreign governments, political parties, partnerships, associations and corporations.
“Green card” exception
An individual who is not a citizen of the United States is eligible to make a contribution if he or she has a “green card” indicating that he or she is lawfully admitted for permanent residence in the United States.
Domestic subsidiaries of foreign corporations
In advisory opinions, the Commission has said that a United States corporation that is a subsidiary of a foreign corporation may sponsor a separate segregated fund which can in turn make contributions to federal candidates as long as:
- The foreign parent does not finance election related contributions or expenditures either directly or through the subsidiary.
- No foreign national (including the foreign parent) participates in the operations of the separate segregated fund or in its administration (such as by appointing officers) or in any decision to make donations, contributions, disbursements or expenditures in connection with any federal or nonfederal election.
Determining nationality of contributor
The Commission stated, in AO 1998-14, that the use of any surname on a contribution check (or similar instrument) would not, by itself, give any reason to inquire as to the person’s nationality. Nonetheless, the Commission advised the committee to take the following minimally intrusive steps to ensure that the contributions it received did not come from foreign nationals:
- Ensure that public political ads and solicitations directed to audiences outside the U.S. contain a summary of the foreign national prohibition of 52 U.S.C. § 30121.
- Make further inquiry into the nationality of the contributor if the committee receives a contribution postmarked from any non U.S. territory.
- Make further inquiry into the nationality of the contributor if the committee receives a contribution indicating that either the bank or the account owner has a foreign address.
In all of the these instances, if the contribution is submitted along with credible evidence (for example, a copy of a valid U.S. passport) that the contributor is a U.S. citizen, a U.S. national or a permanent resident alien, no further inquiry need be made. However, if the committee has actual knowledge that the contributor is in fact a foreign national, it may not rely on these documents as a defense.
Contributions in the name of another
A contribution made by one person in the name of another is prohibited. For example, an individual who has already contributed up to the limit to the campaign may not give money to another person to make a contribution to the same candidate. Similarly, a corporation is prohibited from using bonuses or other methods of reimbursing employees for their contributions.