It's a daunting word. It can be difficult and awkward to ask people for money, maybe more difficult than actually running for office. FundHero is here to help.
Getting your political campaign finances in order is a critical step into not only running a successful campaign, but running an organized and legal campaign.
DISCLAIMER: This post is intended as general, guiding information and should NOT be used as official legal advice. Every candidate’s situation is different, and so are the laws governing each campaign. Consult an attorney, CPA, and/or your local elections official with specific questions regarding your campaign.
Whew! With that out of the way, let's get on with it!
Running for office is complicated. For most candidates, this may be your first time establishing a legal entity, filing financial reports, or even setting up a business style bank account. We know how intimidating this can be, but never fear, FundHero is here!
To help you get started, here is a quick check list of the things you should do and know when setting up your campaign.
Establish a Budget
Before you can start getting your name out there you need money, and you need to figure out how much money you are going to need to be successful. Spending money to increase your name recognition is critical to victory. You should think about how much you can spend on direct mailings, advertising, campaign literature and staff. Create a budget to help you establish a plan for fundraising.
We’ve put together a sample budget for you (find below) so you can see what you need to be prepared for and what you might spend money on. You can also use financial disclosures from past elections to see what candidates have spent.
Set a Goal
Use your budget to set goals and make plans on achieving those goals. This will help you stay on track and have something to look back on and evaluate. Create a calendar that details your month by month tactics and goals for fundraising so you check off those specific achievements. Sometimes thinking backwards is the best way to approach goal setting. Start from your victory party and then work backwards from there. Space out the frequency in which you ask for money. For example, if your campaign is 10 months long you should decide how many rounds of fundraising you’d like to do within that timespan.
Organize a Finance Committee
Nearly all candidates and political groups must create and file official paperwork to establish a campaign committee BEFORE they start raising money. Committees usually require two or three people to officially declare leadership roles such as treasurer, secretary, and/or candidate. Don’t fret over specifically who needs to fill these roles. You just need someone you trust and who will sign the paperwork with you. Often times, these roles are filled by the candidate, spouse, good friend, and/or colleague.
Create an EIN
Regardless if you plan to have official “employees,” it is always a good idea for your campaign to have its own tax entity and not be tied directly to your personal social security number. Most candidate and political committees are classified as 527 Exempt organizations by the IRS. While this classification does not mean contributions are tax-deductible (because they are not), it does mean most candidates and local political committees do not need to file annual tax returns. More details can be found on the IRS website.
Most political campaigns can get an EIN entirely online from the IRS in just a few minutes. To get your EIN, visit the IRS website.
Create a Campaign Bank Account
More important than an EIN, your campaign should have a bank account separate from your personal finances. In fact, this is a legal requirement for many campaign committees. When setting up a campaign bank account, you’ll need your EIN and likely campaign committee paperwork mentioned above. Most candidates set up a simple, no-interest free checking account at whatever bank is convenient for the candidate, treasurer, or whomever is likely to do the deposits for your campaign. Visit the FEC website for more information about creating a Bank Account
Research your Local Finance Laws
Election laws can vary greatly through different offices and regions. You should know the rules that apply to you before you get too far in the process.
- What are your reporting requirements? Most campaigns must file financial reports with the governing elections official. Missing these reports can come with heavy penalties, including fines or being removed from the ballot. To avoid any issues, make sure you know all reporting deadlines, the process by which you file, and what information you need to collect. For example, do you need to report the employer and occupation of your donors? What about addresses for your expenditures? What is the schedule by which you need to file reports? Understanding and collecting the required information up front will save you huge headaches come reporting time.
- What are the legal contribution limits and restriction? Many, but not all, campaigns are limited to the amount they can receive from a single individual or entity. For Federal candidates, this is $2,700 per cycle, but many state and local jurisdictions have their own contribution limits. Learning these upfront will save you the embarrassment of having to refund a contribution from a major donor.
- Are there restrictions on who you can receive contributions? For example, many jurisdictions do not permit candidates to receive contributions from corporations. Some restrict those with government contracts from giving to political candidates. In most cases, it is the responsibility of the candidate to know the laws, so make sure you understand who you can and cannot solicit.