Public funding of presidential elections
Under the presidential public funding program, eligible presidential candidates receive federal government funds to pay for the qualified expenses of their political campaigns in both the primary and general elections. The public funding program was designed to use tax dollars to:
- Match the first $250 of each contribution from individuals that an eligible presidential candidate receives during the primary campaign; and
- Fund the major party nominees' general election campaigns (and assist eligible minor party nominees).
Between 1976 and 2012, the program also funded the major parties’ presidential nominating conventions and provided partial convention funding to qualified minor parties. In 2014, legislation was enacted to end public funding of conventions.
Primary matching funds
Only candidates seeking nomination by a political party to the office of President are eligible to receive primary matching funds. A presidential candidate must establish eligibility by showing broad-based public support. He or she must raise more than $5,000 in each of at least 20 states (i.e., over $100,000). Although an individual may contribute up to a specific limit to a primary candidate, only a maximum of $250 of each individual’s contribution is counted in determining whether a candidate has met the $5,000 threshold in each state. This means that a candidate must receive contributions from a minimum of 20 contributors in each of at least 20 states in order to establish eligibility for primary matching funds.
Presidential candidates also must agree to:
- Limit campaign spending for all primary elections combined to $10 million plus a cost-of-living adjustment (COLA). This national spending limit was $48.07 million in 2016.
- Limit campaign spending in each state to $200,000 plus COLA, or to a specified amount based on the number of voting age individuals in the state (plus COLA), whichever is greater. In 2016, state limits ranged from $961,400 in Wyoming to $23,092,100 in California.
- Limit spending from personal funds to $50,000.
The campaign finance law exempts the payment of some expenses from the spending limits. Certain fundraising expenses (up to 20 percent of the expenditure limit) and legal and accounting expenses incurred solely to ensure the campaign's compliance with the law do not count against the expenditure limits.
Even if they no longer campaign actively in primary elections, candidates may continue to request public funds to pay off campaign debts until the first Monday of March of the year following an election. However, to qualify for matching funds, contributions must be deposited in the campaign account by December 31 of the election year. Eligible candidates may receive public funds equaling up to half of the national spending limit for the primary campaign.
General election funds
Public funding for major party presidential nominees in the general election takes the form of a grant of $20 million plus the COLA. To be eligible to receive public funds, the presidential nominee of a major party must agree to limit spending to the amount of the grant and may not accept private contributions for the campaign. Candidates may spend an additional $50,000 from their own personal funds, which does not count against the expenditure limit. In 1976, each major party nominee received $21.8 million. By 2008 (the last year a major party candidate chose to accept a general election grant), that amount had grown to $84.1 million. (In 2016, the general election grant would have been $96.14 million.)
Minor party candidates and new party candidates may become eligible for partial public funding of their general election campaigns. A minor party candidate is the nominee of a party whose candidate received between five and 25 percent of the total popular vote in the preceding presidential election. The amount of public funding to which a minor party candidate is entitled is based on the ratio of the party's popular vote in the preceding presidential election to the average popular vote of the two major party candidates in that election. A new party candidate receives partial public funding after the election if he or she receives five percent or more of the vote. The entitlement is based on the ratio of the new party candidate's popular vote in the current election to the average popular vote of the two major party candidates in the election.
The $3 tax checkoff
Once the FEC determines that a candidate has met the eligibility requirements, it certifies the amount of public funds to which the candidate is entitled. The U.S. Treasury then makes the payments using funds from the $3 tax checkoff.
The 1040 federal income tax form asks taxpayers whether they'd like to designate $3 of their taxes paid to the Presidential Election Campaign Fund. When taxpayers check "yes," three of their tax dollars are placed in the Fund. Checking the "yes" box does not increase the amount of tax that taxpayers owe, nor does it decrease any refund to which they are entitled. The tax checkoff is the sole source of funds for the public funding program.
The FEC audits all campaigns that receive public funds for either the primary or general election. Candidates may owe a repayment to the Treasury if they used public funds to defray non-campaign related expenses, exceeded the expenditure limits, maintained a surplus of public funds, or received more public funds than they were entitled to receive.