State primaries are currently taking place across the country. Unfortunately, after every election, many committees must end their efforts. However, before terminating, campaign committees must “wind down.” The campaign infrastructure, which took months or years to build, cannot be dismantled overnight. Campaigns must pay off debt, sell assets and compensate the staff responsible for the wind down process, which includes compliance activities in accordance with FEC regulations. Usually, campaigns are left with few remaining resources. Occasionally, however, former candidates face an unusual dilemma. After losing an election, how does a campaign committee allocate surplus funds?
According to the FEC, former candidates must follow certain guidelines. The FEC explicitly states that surplus campaign funds CANNOT be used to cover candidates’ personal expenses. However, a federal campaign committee may:
Contribute to other federal campaign committees or PACs in accordance with normal contribution limits
Donate to state and local candidates pursuant to state guidelines
Make unlimited contributions to national, state or local party committees
Contribute funds to qualifying charitable organizations
Convert the campaign committee into a multi-candidate committee
During the primary election, some candidates may also receive contributions designated for the general election. If the candidate loses the primary, these funds are not considered “permissible campaign funds” by the FEC and, thus, are subject to different guidelines. Campaign committees should consider the following options:
If the candidate plans to seek office again, the campaign may contact donors and ask for permission to re-designate the funds to another campaign committee that belongs to the same candidate.
If donors do not agree to re-designate the funds, the committee must refund the contributions.
If the campaign is unable to refund the contributions, it must turn over the remaining funds to the U.S. Treasury
Every election cycle, whether they win or lose, candidates must eventually terminate their committees. Candidates should be prepared to dispose of surplus funds in a manner that is consistent with FEC regulations and that continues to further the causes shared by candidates and their supporters.
This article was posted for informational purposes only and should not be construed as legal advice.