Big money: How candidates are financed in US presidential election

Contents

• Ways to raise funds in US election
• Super PACs as a way to circumvent funding restrictions
• Who oversees how money is spent in election
• Funds raised by Trump
• Funds raised by Biden

Ways to raise money in US election

The only person who can make unlimited contributions to his or her campaign fund is the presidential candidate himself or herself.

There are restrictions on other direct donors. According to the law, each US citizen can contribute no more than $2.8 thousand to an election campaign. Funds can also be contributed by political organizations - political action committees (PACs). These organizations unite individuals on a business, labor, or ideological basis. Members of the committees collect contributions and donate these funds to campaigns for or against candidates, electoral initiatives, or laws. They are not taxed but limited in their contributions to candidates. A candidate can receive $5,000 from one such organization.

Political action committees may or may not be 501c or 527 organizations (i.e., organizations whose financial activities are regulated by 501 and 527 sections of the Internal Revenue Code, respectively).

A 501(c) organization can hide donors, but cannot engage in political activities as their main activity.

On the contrary, a 527 organization can engage in political activities exclusively, but they are obliged to name their donors.

Both Republican and Democratic parties can also raise funds for their candidates, although they are used mainly for organizational activities, such as commissioning polls, Democrats and Republicans have three structures for this purpose: 1) a national committee, 2) a committee dedicated to the US Senate election, and 3) a committee dedicated to the US House of Representatives election.

Super PACs as a way to circumvent funding restrictions

To avoid corruption and undue influence on politicians, corporations, trade unions, and even non-profit organizations are prohibited from funding candidates. However, they can spend money on supporting candidates indirectly through Super PACs. Unlike PACs, these committees are not limited in terms of time, amount, or source of money and can receive funds from individuals, companies and corporations, unions, and associations.

Super committees may then spend the funds raised, for example, on candidate advertising, mailings, or other communication activities. However, super committees cannot direct funds directly to parties or candidates. Moreover, they are not allowed to coordinate their activities with election headquarters or even meet with representatives of candidates.

Who oversees how funds are spent in election

The only government agency in the United States that oversees the implementation of campaign finance laws is the Federal Election Commission (FEC).

There are six FEC commissioners and, according to the law, no more than three can be from the same political party. Ideally, this makes the commission's decisions independent of any party, as four votes are required to pass a resolution.

The commissioners monitor who spends money and how, and ensure that political committees and candidates file accurate and complete reports, which are later published by the FEC. Commissioners also investigate allegations of illegal activity.

Funds raised by Trump

From April to June of this year, fundraisers supporting Donald Trump raised more than $400 million for his presidential election campaign. This is a record amount. For comparison, Trump raised almost the same amount during his 2016 election campaign.

Large sums were received during the active consideration of court cases against Trump in May and June of this year. More than $450,000 was received by pro-Trump funds in just one day on May 31. This happened after a jury found Trump guilty in a case of falsifying business records.

For example, the Trump National Committee Super PAC raised $139 million, including $69 million from donors who gave less than $200. And the Trump Save America Super PAC raised $28 million, including $11.7 million from small donors.

The recent assassination attempt on Trump's life has prompted billionaires from Silicon Valley to Wall Street to contribute to the Republican's campaign. In particular, billionaire Elon Musk has said he plans to give about $45 million a month to a new America PAC that supports Trump.

Funds raised by Biden

On July 15, groups associated with Biden reported that they raised $270 million in the second quarter. This roughly corresponds to the total amount of contributions from his supporters at the same stage of the 2020 race.

At the same time, many of Biden's financial donors were reconsidering their position due to uncertainty about his candidacy. On July 12, according to the New York Times, major donors informed the Future Forward super PAC, which supports Biden, of their intention to suspend contributions of about $90 million if Biden remains in the race.

Future Forward is considered to be the leading support committee for Biden in the early stages of the presidential campaign. This super PAC has already announced that it has reserved $250 million for television and digital advertising. The ads are scheduled to launch in August when the Democratic Party convention will take place and the presidential candidate will be finally approved.

Now, all the funds raised will be available to Vice President Kamala Harris, who will become the new Democratic presidential candidate. But if Biden had nominated someone else instead, that person would have had to raise money for the campaign from scratch.

Read also whether Kamala Harris has a chance to defeat Donald Trump.

Sources: Politico, NPR, and the Wall Street Journal.