CAMPAIGN CONTRIBUTIONS:
THE RULES OF THE GAME 

FAQ’s and answers from SIGMA’s legal counsel

What are the legal limits for contributions to Federal election campaigns?

An individual is permitted to give a maximum of $2,000 per election to a candidate for the House or the Senate. You may give a maximum of $2,000 to a candidate for his or her primary election (or party caucus) and $2,000 for his or her general election. The total number of contributions from an individual does not matter, as long as the total amount does not exceed $2,000 per election.

An individual is permitted to give a maximum of $2,000 for the "primary" election of a presidential candidate. The primary election includes the entire nominating process for each major political party. Again, the number of contributions is not important, as long as the total does not exceed $2,000. The presidential general election campaign is financed using public funds (if a candidate agrees to spending restrictions) and direct individual contributions are not permitted.

Are there limits on the total amount of contributions I can give to all of the federal candidates I want to support?

Yes. An individual may contribute a maximum of $95,000 biennially ($37,500 to all candidates and $57,500 to all PACs and local, state, and national party committees).

Can I give to candidates in jurisdictions where I don’t live or vote?

Yes

Can other members of my family contribute? Within what limits?

Yes. Any individual may contribute to a federal candidate, including spouses and children who are 18 years of age and older. The same $2,000 per election and $95,000 overall limits apply.

Can I have my company make a political contribution to a federal candidate instead of doing it with my own personal funds? What if my company is not incorporated, or is a Subchapter S Corporation?

Federal candidates are not permitted to accept contributions from corporations. A sole proprietorship is not a corporation. A Subchapter S corporation is a corporation. Contributions from a partnership are permitted and are treated as individual contributions from the members of the partnership based upon their individual ownership interest in the partnership (which must be disclosed for Federal Election Commission reporting requirements).

Can I ask employees to make campaign contributions and have the company reimburse them? What if I reimburse them with my personal funds rather than with corporate funds?

No. Such reimbursement practices are unlawful. It does not matter whether personal or corporate funds are used for reimbursement.

If there is no reimbursement or coercion involved, can the executives of my company all make contributions to a federal candidate and mail all the checks together?

Yes. This practice is called "bundling" and is permitted. However, it is important that no coercion be involved. In addition, the individual gathering the checks to send to the federal candidate would be classified as a "conduit" and is required to report this activity to the FEC. To avoid classification as a conduit, each contributor may mail his or her check separately.

From a political perspective, when is the best time to contribute? From a legal standpoint, is there any time when it is illegal or improper to contribute?

From a legal standpoint, individuals may contribute to federal candidates only after the candidate has formed an election committee. As to when the "best" time is to contribute, there is no one answer to this question. The "best" time to contribute varies depending on the federal candidate and the campaign. Early contributions may be greatly appreciated by a candidate as he or she seeks to establish his or her credibility as a viable candidate or dissuade other candidates from entering the race. Contributions late in the election cycle, particularly in a close race, sometimes can have a significant impact.

I hear all the time about candidates having $10,000-a-plate fundraisers, and I also hear about corporations making contributions. What’s going on?

In general, the contributions made at such events, whether involving corporate or personal money, are not governed by the federal election laws or contribution limits. These events do not benefit an individual candidate directly. Instead, the proceeds from these event go to local, state, or national political committees for party- building activities, voter registration drives, or "get-out-the-vote" activities. Such contributions are called "soft money" because the federal limits do not apply to them. Soft money cannot be earmarked for the benefit of a particular candidate. Under the BiPartisan Campaign Reform Act of 2003, most "soft money" contributions to federal party committees and candidates have been prohibited.

How do Political Action Committees (PACs) fit into this whole picture?

When Congress outlawed corporate campaign contributions in the early 70’s, it recognized that there was still a need to allow people who worked for the same company, operated in the same industry or shared a common political view to have an united political voice. So Congress allowed companies, labor unions, trade associations and others to set up PACs for the express purpose of making contributions to candidates for federal office.

Why should I consider contributing to a PAC?

Three reasons. First, PACs allow individuals to combine their contributions to a candidate for maximum impact. Second, PACs contribute to candidates that support the views of the members of the PAC, assuring that your contributions to a PAC are directed to those candidates that you would support if you had the time to research their positions on issues of importance to you. Third, PACs have become much more important in Washington since Congress passed gift reform rules. In general, PACs can sponsor lunches, dinners and other events for candidates which lobbyists and trade associations are prohibited from doing.

What contribution limits apply to individuals giving to PACs and to PACs giving to federal candidates?

Individuals may contribute up to $5,000 per year to a PAC -- a contribution which is subject to the individual's overall $95,000 annual limit. PACs in general may contribute up to $5,000 per election to a federal candidate with no overall limit on contributions in an election cycle.

How can I contribute to a PAC?

The same way you would to an individual candidate: through a voluntary contribution to the PAC. There are no limits to the number or types of PACs to which an individual can make a contribution, so long as the contributions are voluntary, unsolicited, and within the contribution limits.

Can a trade association PAC solicit a contribution from me?

The FEC places strict limits on contribution solicitations by trade associations. First, a company must "authorize" a trade association PAC to solicit employees of the company. A company can only authorize one trade association PAC in any given year. Second, a company may restrict the executives and administrative personnel that may be solicited by a trade association PAC when it authorizes the PAC. Third, a trade association PAC may not solicit contributions from all of the employees of a company or from the general public.

It is worth noting that these restrictions apply only to the activities of the trade association PAC. They do not apply to the independent actions of the executives of the individual members of a trade association. For example, the president of a company, on his own initiative and using his own time and resources, may solicit contributions for a trade association PAC from employees at his company or from executives at other companies. Of course, in such a situation, the company president must not coerce employees to make such a contribution.

Does this mean that executives in my company can only contribute to one trade association PAC in a given year?

No. Executives in your company may contribute to any PAC on a voluntary basis, whether the company has authorized that PAC or not. The restrictions on solicitations apply only to the trade association PAC and the contacts it may have with executives in your company.

Some SIGMA members have declined to authorize SIGMAPAC because they fear it would mean that they couldn’t give to other PACs. You are saying this is not a problem?

That is correct. Any individual can make a voluntary contribution to any PAC, whether his or her company has authorized that PAC or not.

Can I request solicitation materials form another trade association’s PAC if my company has authorized SIGMAPAC?

Yes. It is only the PAC and connected organization's staff that is prohibited from soliciting the employees of a company that has not authorized it. An individual may request solicitation materials from any PAC, authorized or not.

If my company has its own corporate PAC, does this mean we can’t authorize a trade association PAC?

No. A company that maintains its own federal PAC may authorize one trade association PAC each year.

I belong to several state associations which also have PACs that contribute to candidates in races for governor and state legislatures. If I authorize SIGMAPAC, would these state groups be prohibited from soliciting contributions from me?

No. Only PACs making contributions to federal candidates are covered by federal election laws. Contributions to candidates for state and local offices are regulated by the laws of the state in which they are a candidate for office.

Are the rules otherwise the same for state elections as they are for federal elections?

No. Each state's election laws are independent of the federal laws. For example, while most states also prohibit corporate contributions for state candidates, some states do permit them. You have to check your state for its rules.