Barack Obama's campaign recently announced record fundraising totals of $150 million for September and more than $600 million for the primaries and general election combined. What happens to all the leftover cash he can't spend? In 2004, Brendan I. Koerner explained what happens to a candidate's war chest after the campaign folds. The article is reprinted below.
After his dismal fourth-place showing in Iowa, Richard Gephardt has decided to call off his quest for the White House. What's going to happen to the millions of dollars still in Gephardt's campaign war chest?
Although he can't hand the entire kitty to another candidate or blow it on a deluxe Waikiki vacation, the longtime congressman has plenty of disbursement options. According to Gephardt's last filing with the Federal Election Commission, he had nearly $6 million in cash on hand. And that was before he received an additional $3.1 million in federal matching funds earlier this month. Because he accepted public financing, Gephardt must now submit his books to an FEC audit and refund any unspent public funds to the United States Treasury. He'll also have to pay off some pretty sizable debts—those placards and TV ads in South Carolina don't come cheap.
But after all creditors have been paid off, it's likely that Gephardt will still have a few million dollars to spare. He could save the money for his next campaign for public office, but that route seems unlikely; Gephardt has announced that he will not seek another term in Congress, and it's likely that his political career is now over. He could also disburse the money to the Democratic National Committee or a Democratic state party, as Al Gore did last July. Gore, who still has about $6.6 million left over from his failed presidential bid, donated $450,000 to the Tennessee Democratic Party, citing a "special relationship" with the state he once represented in the Senate.
Gephardt could also give the money to any charities he sees fit, provided he doesn't receive compensation from the recipient organizations until the donations have been expended. And, of course, he could refund the donations, although this is a rarity; the bureaucratic headache of sending out $50 checks to thousands of individual donors is usually considered more trouble than it's worth.
The campaign funds cannot be employed for personal use, such as buying a hot tub or paying for a kid's braces. But there's a small loophole for ex-candidates who still retain public office, as Gephardt does. According to FEC regulations, leftover campaign funds "may be used to defray any ordinary and necessary expenses incurred in connection with the recipient's duties as a holder of Federal office, if applicable." Those expenses include travel costs associated with "bona fide official responsibilities"—the FEC guidelines specifically mention fact-finding missions as copacetic, for example. Gephardt can also use the excess cash to defray "the costs of winding down" his congressional office after his term is up at year's end, though he's only permitted 6 months to use the money to close up shop.
Gephardt is also barred from simply transferring his war chest to another candidate. His campaign can make donations to other candidates, but only according to the rules that govern individual contributions—a maximum of $2,000. If Gephardt wants the eventual Democratic nominee to have access to his campaign funds, his best bet is to sign over the pot to the DNC.
Bonus Explainer: The FEC occasionally lets candidates accused of financial improprieties use campaign funds in their defense. Last year, for example, the FEC voted to allow James Treffinger, a one-time candidate for the Senate from New Jersey, to use leftover campaign dough to combat corruption charges. The commission, however, was careful to state that the funds could only be used to defend against charges related to Treffinger's campaign—specifically, allegations that he extorted campaign donations from a sewage-repair company that had been awarded no-bid contracts in Treffinger's home county. He could not, however, use the campaign funds to fight accompanying ethics charges related to his dicey reign as a county executive. In October, Treffinger was sentenced to 13 months in federal prison.
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