Chapter 1: Money Rules (Contributions & Expenditures)

Official Source: Chapter 1 - State Contribution and Expenditure Rules

Introduction

This chapter explains the rules for the money flowing into and out of your campaign. In California state elections, you cannot just raise unlimited amounts of cash from anyone you want. There are strict caps on how much a single person or entity can give you.

There is also a voluntary limit on how much you can spend. While limiting your own spending sounds counterintuitive, agreeing to it gives you a massive advantage: a statement in the official ballot pamphlet.

Part A: Contribution Limits (How Much You Can Take)

The Basics

State candidates have a "contribution limit." This is the maximum amount a single source (person, business, or PAC) can give you per election.

Important Definition: The "Primary" and "General" elections are treated as separate elections.

• You can raise the full limit for the Primary.
• You can raise the full limit again for the General.
• Trigger Warning: If you lose the Primary, you cannot keep money raised specifically for the General election. You must return it to donors (minus administrative costs).

The Limits (2023-2024 Cycle)

These numbers change every two years to account for inflation.

Note: A "Small Contributor Committee" is a specific type of PAC that has been in existence for 6+ months, receives small donations from 100+ people, and contributes to 5+ candidates. If you don't know if a PAC qualifies, assume the lower limit applies.

Who CANNOT Donate?

Lobbyists: If a lobbyist is registered to lobby the specific agency you are running for (e.g., a legislative lobbyist donating to a State Senate candidate), they cannot donate to you.

• They cannot donate to your campaign.
• They cannot donate to your officeholder account.
• They can donate to your federal campaign (if you run for Congress).
• No Home Fundraisers: A lobbyist cannot host a fundraiser for you in their home or office if they are registered to lobby your agency.

Loans and Personal Funds

• Your Own Money: There is no limit on how much of your own personal cash you can give to your campaign.
• Personal Loans: You can loan your campaign money, but you generally cannot have an outstanding balance of more than $100,000 in personal loans at any one time.
• Commercial Loans: If you get a loan from a bank, it counts toward that $100,000 limit.
• Interest: You are prohibited from charging your campaign interest on a loan you make to it.

Recurring Contributions (The "Subscription" Rule)

If you set up a donation page where donors can give monthly (recurring contributions), you must follow strict consent rules.

• Affirmative Consent: The donor must actively agree to the recurring charge. You cannot have a pre-checked box that says "make this monthly." They must check the box themselves.
• Cancellation: You must provide a receipt and an easy way to cancel. If they ask to cancel, you must stop the charges immediately.
• The Penalty: If you take recurring money without this active consent, you must return it within 14 days.

What if Someone Gives Too Much?

If a donor accidentally writes a check over the limit, you have a grace period to fix it without getting fined.

• The 14-Day Rule: You have 14 days from receiving the check to return the excess amount.
• Attribution: Instead of returning it, you can "attribute" the excess to the next election (e.g., move the extra money from Primary to General) if you do it within the 14 days. You must inform the contributor you did this.

Part B: Voluntary Expenditure Ceilings (VEC)

This is a strategic choice you make when you file your Form 501 (Candidate Intention Statement).

The Deal

The state sets a "ceiling" (a maximum total amount) you can spend on your campaign.

• If you ACCEPT the ceiling: You get to purchase space for a 250-word statement in the state ballot pamphlet (or voter guide). This is often the cheapest and most effective way to reach voters.
• If you REJECT the ceiling: You can spend unlimited money, but you do not get the ballot statement.

Most grassroots candidates accept the ceiling because the ballot statement is critical for visibility.

The Spending Limits (2023-2024)

When is the Ceiling Lifted?

If a wealthy opponent runs against you and spends their own personal money in excess of the ceiling, the ceiling is "lifted" for everyone.

1. The Trigger: Your opponent contributes personal funds to their own campaign that exceed the limit.
2. The Result: You are no longer bound by the spending limit, but you keep your right to the ballot statement.

Part C: Transfers Between Committees

If you have multiple committees (e.g., you are a City Councilmember running for State Assembly), you can transfer funds from your old committee to your new one. However, you cannot hide the original source of the money.

LIFO and FIFO

When you move money, you must attribute it to specific donors to ensure no one exceeds the contribution limits for the new office.

• LIFO (Last In, First Out): You assume the money you are transferring came from your most recent donors.
• FIFO (First In, First Out): You assume the money came from your earliest donors.

Why this matters: If "Donor A" gave you $5,000 for City Council, and you transfer that money to your Assembly campaign, it counts as a $5,000 donation to your Assembly campaign. "Donor A" can now only give you $500 more for the Assembly race (because the limit is $5,500).

Part D: After the Election

Net Debts Outstanding

Once the election is over, you cannot keep fundraising just to build a war chest. You can only raise funds to pay off "net debts outstanding."

• Calculation: (Total Debts + Cost to fundraise) minus (Cash on Hand) = Amount you can raise.
• Surplus: If you have no debt, you cannot raise more money into that committee.

Officeholder Accounts

If you win, you can open a separate "Officeholder Committee."

• Purpose: To pay for expenses related to holding office (e.g., travel, constituents dinners) that are not campaign expenses.
• Limits: There are strict calendar year limits on how much you can raise for this account (e.g., $4,500 per donor per year for Assembly/Senate).
• Restriction: You generally cannot use this money to run for reelection.

Part E: Special Committees

Legal Defense Fund

If you are sued or facing administrative proceedings related to your campaign or office, you can open a Legal Defense Committee.

• Contribution Limits: None. You can raise unlimited amounts.
• Use of Funds: Strictly for legal fees and administrative costs. Cannot be used for ads or campaign staff.

Recall Committees

If you are the target of a recall:

• You can open a committee to oppose the recall.
• Contribution Limits: None. You can raise unlimited amounts to fight a recall.
• Replacement Candidates: If you are running to replace someone in a recall, you are subject to standard contribution limits.

Summary of Deadlines & Triggers

Common Pitfalls

1. The "General Election" Trap: Raising money for the General Election before the Primary is over is allowed, but risky. If you lose the Primary, you have to refund all General Election money.
2. Lobbyist Cash: Accepting a check from a lobbyist registered to your agency is an automatic violation. Always check who the donor is.
3. Personal Loan Cap: Lending your campaign $150,000 is a violation. The cap is $100,000.
4. Mixing Accounts: Never pay for campaign ads out of your Officeholder Account, and never pay for officeholder travel out of your Legal Defense Fund. Keep the money in separate lanes.