When a candidate retires, an election ends with a loss or a PAC is ready to disband, someone has to figure out where those unspent funds go. There are a number of options PAC management professionals or campaign managers can take.
To start, let's look at general elections and the funds raised by official campaigns, before moving on to the more recent developments with Super PACs and presidential races.
As the dollar amount it takes to campaign for a seat in Congress rises, the chance that a strong candidate who has an impressive fundraising strategy and fails to win the election will end up with a unspent campaign contributions. Data from the Center for Responsive Politics shows that in the 2014 election, there was a total of nearly $200 million leftover. What happens to this money?
The easy solution is for these candidates to park the money until they run again. Whatever they raised the first time around will still be viable campaign money in the next election cycle. However, this scenario is contingent upon the candidate actually running for office. What about someone who has no plans to run for office in the future, or they are not sure whether they want to throw their hat in the ring again?
Another consideration – what if a sitting member of Congress decides to retire with funds from a previous election cycle left over? Elected officials (and those who never got the seat they were after) must carefully consider what to do because they are under the microscope.
According to Federal Election Commission laws, candidates cannot keep the money for personal use once the election is over. One option is to return it all to their donors, which requires ensuring the proper systems are in place to administer this. Otherwise, this could become a huge headache.
Campaigns, however, do have another option: giving the money to other candidates.
"The Commission has explicitly permitted a principal campaign committee to become a multicandidate committee as an alternative to the committee's termination," the FEC wrote in its 2014 election guidelines. "In meeting the requirements for multicandidate status, a former principal campaign committee may avail itself of the length of time of its prior registration, the number of contributions it has made in the past and the number of contributions it has received."
The stipulations go on to say that while a campaign remains a candidate committee, it can only spend $2,000 per candidate per election. If the group takes the steps to become a multicandidate PAC, this limit is raised to $5,000.
"It's also common to continue paying off costs incurred during the campaign."
It's also common for campaigns to continue paying off costs incurred during the campaign, which become debts when the campaign ends. This often emerges as a way to pay the salaries of campaign employees that went unpaid during the campaign, however, the amount paid will be limited to less than the amount owed. Services can also be converted into volunteer work, however, any unpaid salary or wages cannot be considered contributions from those employees and therefore cannot be refunded.
Super PACs and campaigns often give leftover funds to charities and that is a common course for campaign committees as well. For example, Tom Harkin, who retired as an Iowa Senator in 2014, had about $2.4 million in his account and a large portion of this was given to Drake University to create a policy institute.
And what about Super PACs?
By and large, Super PACs are under the same restrictions as campaigns, but it's common for the numbers to be much bigger. According to The New York Times, the Super PAC, just like a campaign committee, has a lot of say in what happens to excess funds.
Robert Kelner, chair of the Election and Political Law Practice Group at law firm Covington and Burling, told the media outlet that Super PACs can donate it all to charity, use it to pay off debts incurred during the campaign, pay wind-down costs like moving out of office spaces or filing final FEC reports. What Super PACs cannot do, however, is use the money to support an individual candidate for Federal office.
Improving PAC management throughout
Ideally, PACs won't actually have any money leftover to worry about, though. Excess funds may be a signal that there was not enough budget planning or the PAC administrator didn't put an effective disbursement plan together.
These are serious issues PACs face. However, with the right guidance and help, PACs can learn how to properly spend the money they have, so they will not have to worry about what to do with excess funds.