Is There Money in Politics?

by | Jul 20, 2021 | Business

Money is everywhere in politics. That’s a commonly held belief, but it’s also not exactly correct. There is money in politics, but it is a highly regulated condition. When I say money in politics, I am referring to traditional political giving. That is, making a campaign contribution to a candidate. We are allowed by law to contribute to campaigns but must do so within certain limitations and guidelines. Campaign finance laws are quite explicit about what is allowed and what is not. This post contains some highly simplified concepts relevant to campaign contributions.

How Much Can I Contribute to a Campaign?

There are levels established for each type of campaign. Federal and state-level elections are not the same. In this post, I am speaking to federal-level campaigns: Representatives, Senators, and Presidential campaigns. The Federal Election Commission (FEC) identifies limits on each specific type of election race, such as a primary or general election. A typical candidate has two races in a given election cycle: the primary and the general election races—the FEC tracks in a public database who contributes how much to each candidate and campaign. You can look up contributions by multiple variables at www.FEC.gov. Such variables for search include company name, individual, election cycle, and calendar year.

Money is everywhere in politics. That’s a commonly held belief, but it’s also not exactly correct. There is money in politics, but it is a highly regulated condition. Click To Tweet

What Is a PAC?

PAC stands for political action committee. A PAC is a structure that allows a group of like-minded contributors to pool their financial resources and amplify their contributions. Many companies form PACs to which management employees contribute individual funds. If Joe contributes $1000 over a year, and 25 other management employees also contribute $1000, it allows for pooled contributions to a campaign in a more focused way. Specifically, $25,000 now represents the interests of 25 like-minded people. The construct of a PAC allows the PAC to contribute a more significant dollar value than the individual may otherwise contribute. It’s the depth and breadth of the interest or the issue the contribution represents that resonates with the candidate.

There is a PAC for every facet of your life. Think AARP, insurance, realtors, pharmaceuticals, trade, or financial services. You name it. Some PACs have millions of dollars in cash on hand. However, cash on hand does not mean they can pour money into a campaign. The limits apply to each campaign, as mentioned above.

Why Give to Political Campaigns?

We can argue the merits of whether people should contribute to PACs that support candidates; however, that train left the station years ago. The Supreme Court has ruled that campaign contributions represent a form of free speech. If we accept that this is the law of the land, it’s reasonable to conclude that it is a channel of communication that gets well-utilized. Many companies and interest groups use PACs to amplify their message to elected officials and candidates for office.

Believe it or not, one PAC can even contribute to another PAC. This condition is quite common. Some elected officials have an easier time generating contributions or have safer seats. Those holders can contribute specific PAC dollars to another candidate who may not have such an easy time but also represents their ideology: Republican, Democrat, Conservative, Liberal, etc. As with PAC contributions to elections, PAC contributions to another PAC also have dollar limits.

Should I Contribute to My Representative or Senator?

What difference does your contribution make? One size does not fit all in answering this one. Does it feel right to you? Do you like how the candidate does business, and would you like to see them remain in the role? It’s a way to demonstrate support in a manner that matters to the candidate. If you contribute with an expectation of something in return, you will be disappointed. It’s also against the law for such a quid pro quo.

Elections do cost money. The cycle of raising money to run a race to serve the term and run again is perpetual. Term limits and legislative efforts have yet to curb the need for candidates to solicit your contributions. The choice to contribute remains yours.

Gene Moran will guide you to achieve the federal funding you need. Want to learn more? Schedule a call with Gene.

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