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Campaign Finance An Overview

Campaign Finance Reform: An Overview

Updated October 3, 2011

Why states regulate money in elections

A successful election campaign depends on communication, and communication costs money. However, it is believed by some that money has the potential to corrupt a candidate, to drive him or her to serve their own interests or the interests of their campaign donors rather than the public good. For instance, there is a belief that an unusually large financial contribution could influence the voting behavior of an elected official. Campaign finance laws are intended to reduce the potential for corruption, or even the appearance of corruption.

How states regulate money in elections

There are three main avenues for regulating campaign finance. Few states rely on just one; most utilize a combination of two or three. These three primary methods are disclosure, contribution limits, and public financing.

Disclosure

Disclosure is the most basic form of campaign finance regulation. All states require some level of disclosure from candidates, committees, and political parties of the amount and source of contributions and expenditures. The states vary in the detail required in disclosures, and in the frequency of reporting.

 

 

Example - Colorado's Disclosure Requirements

Candidates must file quarterly reports on January 15, April 15, July 15, and October 15. Additional reports are required in election years - monthly reports beginning six months prior to the election

- biweekly reports beginning two months before the election

- a report two weeks after the election.

Reports must include information on all contributions and expenditures. Contributions or expenditures greater than $20 must be itemized, and include the name and address of the contributor or recipient of an expenditure, the amount, and the date of the transaction.

A recent trend in many states is electronic disclosure. A number of states require candidates to file their reports electronically, via a diskette or the Internet, and then post the disclosure information on a public Web site. Electronic filing is effective because it is quick and accurate. It is also inexpensive--once the software has been developed. States do not have a time-consuming, error-prone and expensive data entry process. Learn more about electronic from the Campaign Disclosure Project.

Contribution Limits

Limiting the amount and source of campaign contributions is one of the most common tactics for regulating money in politics. Just four states place no limits on contributions. Limits vary widely from state to state and from office to office within a state. Nationwide, the limit on the average amount an individual can give to a gubernatorial candidate is about $7,500 in an election cycle. For legislative candidates, the limit is much lower, averaging about $3,300 (for House candidates) to $3,700 (for Senate candidates) per election cycle. All but four states also regulate corporate contributions--25 states have limits on the amounts corporations may contribute to candidates, and 21 states have an outright ban on corporate contributions.

 

 

Example - Delaware's Contribution Limits

Contributions to candidates from individuals, PACs, corporations and unions

$1,200/statewide candidate
$600/other candidate
Both amounts are per election cycle

Contributions to candidates from political parties

$75,000/gubernatorial candidate
$5,000/senate candidate
$3,000/house candidate
All amounts per election cycle

Contributions to political parties from individuals

$20,000 per election cycle

Visit NCSL's Contribution Limits page for more detailed information

Spending Limits and Public Financing of Campaigns

Spending Limits

In addition to limiting contributions, many people favor limiting the amount candidates may spend in their campaigns. However, the United States Supreme Court ruled in Buckley v. Valeo that requiring candidates to abide by spending limits violates the 1st Amendment of the U.S. Constitution. The First Amendment protects free speech, and the court has ruled that political communications are protected speech. Therefore, the court said, limiting political communication by candidates is equal to limiting speech, and impermissible.

The court has ruled that spending limits are constitutional only if they are optional. Several states have optional spending limits. They entice candidates into abiding by these limits by offering state funds for their campaign in return.

A more recent case upholding this view on spending limits and public financing is Randall v. Sorrell, decided by the U.S. Supreme Court in 2006.

Public Financing of Campaigns

Twenty-four states currently operate programs that give grants of state funds to candidates and/or political parties for their campaigns.  In many states, the programs are limited in scope and the grants are small, while in others a public grant may cover nearly the entire cost of a candidate's campaign.  In all cases, participating in public financing programs is optional. Candidates who agree to participate are required to (1) agree to abide by spending limits, and (2) limit or cease raising private contributions. In most states, the grants cover only a portion of the candidate's campaign costs, and the candidate must raise private funds to cover the remainder of the costs. Such programs may be referred to as partial public financing.

Partial public financing programs typically rely on income taxpayer check-offs and legislative appropriations for their funding. Because taxpayer participation in public financing programs is declining while the cost of campaigns is rising, many states' public financing programs are unable to fully fund participating candidates, and therefore are declining in popularity.

 

 

An Example of a Partial Public Financing Program: New Jersey

New Jersey offers public financing for gubernatorial candidates. In order to be eligible for public financing in the 2009 elections, a candidate was first required to raise private contributions totaling $340,000. This is to demonstrate that the candidate has sufficient popular support to merit a state grant.

Once a candidate agreed to participate in the program, the state matched the private contributions the candidate raises. For each $3,400 raised from a private source, the state gives the candidate $6,800. Matching funds were not given for the first $109,000 in contributions. The state continued to match private contributions up to an amount of $3.1 million for the primary election and $7.3 million for the general election.

In return, participating candidates agreed to abide by spending limits. In 2009 in New Jersey, participating candidates were limited to spending no more than $5 million in the primary election and $10.9 million in the general election.

(Note:  All of the amounts in this example applied to New Jersey's most recent gubernatorial election in 2009.  Different amounts will apply in future elections.)

Another type of public financing is commonly called "Clean Elections" public financing, and is the newest idea in state campaign finance reform. This type of program allows candidates to finance their campaigns almost entirely with public funds. Once a candidate qualifies by collecting a specified number of small contributions (often as low as $5), he or she agrees to abide by strict spending limits and is prohibited from receiving any additional contributions from private sources. Instead, the candidate receives a grant from the state to finance his or her campaign. Arizona, Maine and Vermont have operated clean elections programs since 2000 for gubernatorial candidates, and in Arizona and Maine, legislative candidates too. Massachusetts voters passed a clean elections law in 1998, but it was repealed in 2003, before it was fully in effect.  Connecticut has a new clean elections program that began operating in 2008. New Mexico and North Carolina offer full public financing for judicial candidates and candidates for selected statewide office.

 

 

An Example of a Clean Elections Public Financing Program:  Arizona

In order to qualify for public financing, a candidate must demonstrate his or her popular support by gathering $5 contributions from a number of registered voters in the district. Gubernatorial candidates must gather 4,000 contributions of $5, and legislative candidates 220 such contributions.

In addition to the qualifying contributions raised by candidates, a participating candidate receives a state grant to pay all costs of the primary and general election. In the 2010 election, gubernatorila candidates received $707,447 for the primary election and $1,061,171 for the general election. Legislative candidates received $14,319 for the primary election and $21,479 for the general election.

Participating candidates are not permitted to collect any additional contributions; their campaigns are funded solely through the qualifying contributions and state grants.

 Visit NCSL's Public Campaign Financing page for more detailed information.

For More Information

For more information on campaign finance reform, contact Morgan Cullen.

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