What Can PACs Spend Money On? A Comprehensive Guide

The political action committee (PAC) has become an iconic component of the United States political system. PACs play a huge role in shaping American policies by providing financial support to candidates, parties, and causes. 

Whether you are thinking about forming your own PAC or have already done so, it’s vital that you familiarize yourself with the rules governing financial expenditures. Here’s everything you need to know. 

First Off, What Counts as an Expenditure?

According to the Federal Election Commission, a PAC expenditure is a “purchase, payment, distribution, loan, advance, deposit, or gift of money.” The FEC’s definition also includes the distribution of anything of value that is intended or has the propensity to influence a federal election.

The FEC also regulates disbursements, which are expenses and payments that don’t influence a federal election but must still be reported by a political action committee. Some examples include using PAC funds to buy supplies for volunteers, purchasing reporting software, and hiring an attorney to deal with legal issues.  

What Can Your PAC Allocate Funds To?

There are several types of PACs, including nonconnected committees, separate segregated funds, and Super PACs. While there are important differences between these options, most variations focus on: 

  • Who the organizations can receive donations from
  • How much a single donor can contribute
  • How much the committee can spend on a single campaign or candidate 

However, most PACs, including yours, can allocate funds to the same types of expenditures, such as: 

Contributions to Candidates and Political Parties

Allocating contributions to a campaign, candidate, or political party is a PAC’s main purpose. Generally, your PAC can donate directly to candidates’ campaign committees, as well as party entities at the federal, state, and local levels. These contributions can take the form of direct donations, in-kind disbursements, or coordinated expenditures. 

Independent Expenditures

Your PAC is also permitted to spend money independently of candidates and parties to advocate for or against specific individuals or issues. These independent expenditures can be used to purchase advertising slots on channels such as TV, radio, print, or digital platforms. 

Super PACs are unique in that they aren’t subject to normal donation limits. Nonetheless, they can still only contribute to campaigns or parties via independent expenditures. 

Administrative and Operating Costs

Naturally, your organization will incur a wide range of administrative and operating expenses in the course of its operations, including the following: 

  • Salaries and wages for staff 
  • Facility rent 
  • Utilities 
  • Office supplies 
  • Professional services 
  • Travel expenses
  • Other miscellaneous overhead costs

These expenses are necessary for the day-to-day functioning of your committee and are allowed under federal election law. 

However, you must carefully detail every disbursement and maintain receipts that correspond with each expense. This means retaining your utility bill, invoices from service providers, and other documentation to demonstrate the legitimacy of the transactions. 

Fundraising Costs

While fundraisers are meant to generate money for your PAC, they also represent an expenditure. Some common costs associated with fundraising activities include purchasing food, renting a venue, and hiring an event planner. Marketing and promotional expenses should also be tracked and documented. 

During the planning process, make sure to run calculations of the net proceeds from your fundraising event. While hosting a huge, sophisticated gathering can be fun and exciting, it’s important that all activities bring your PAC closer to its big-picture fundraising goals. Thus, it’s important to be judicious with your spending choices. 

Reporting Obligations

Your political action committee will be subject to state and federal reporting obligations, which include filing regular reports with the FEC. These documents must disclose your financial activities and expenditures in detail. 

Document any expense you incur related to reporting activities, such as accounting services and software subscriptions. Maintain accurate records and meet filing deadlines to avoid penalties. 

Failing to adhere to FEC reporting rules could threaten the PAC, lead to severe fines, and hinder your ability to achieve political goals. Fortunately, the Federal Election Commission has published clear guidance regarding recordkeeping and reporting requirements. 

Moreover, organizations like Aristotle offer consulting services designed to strengthen your compliance posture. Take advantage of them. 

Legal and Compliance Expenses 

One of the overlooked political action committee expenses is legal fees. Your PAC will likely have to keep an attorney on retainer to address issues like campaign finance laws and other regulations. A skilled lawyer can also respond to inquiries or investigations by regulatory agencies and defend the committee in the event of a dispute. 

While you may not want to proactively take on attorney fees, doing so can keep your PAC out of hot water with the FEC. In the event of an issue, a legal professional who has a strong working knowledge of your organization and its activities will be better equipped to defend it. 

Public Education and Advocacy

Some PACs engage in public education and advocacy efforts to raise awareness of specific causes or issues and mobilize voter support. These efforts can involve:

  • Conducting research 
  • Producing educational materials 
  • Organizing events or forums 
  • Participating in outreach or community activities to engage with the public

Whether your committee focuses on supporting a specific cause or multiple candidates, it will likely incur some of these advocacy-related expenses. 

Simplify PAC Management With Aristotle

In addition to being a leader in political data, Aristotle is also a premier provider of political action committee management solutions. Our PAC technology can simplify day-to-day management processes, compliance, and reporting, thereby enabling you and your team to spend more time focusing on achieving your political mission. 

Schedule a demo to learn more.

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