Chapter 6: Use of Campaign Funds (Spending Rules)

Official Source: Chapter 6 - Use of Campaign Funds

Introduction

The money in your campaign bank account does not belong to you. It belongs to the campaign. The Political Reform Act strictly regulates how you spend this money to ensure it is used for political purposes, not as a personal piggy bank.

The FPPC frequently fines candidates for using campaign funds on personal expenses like gym memberships, clothing, and mortgages. This chapter explains the "Golden Rule" of spending and breaks down exactly what you can and cannot buy.

The Golden Rule: "Political, Legislative, or Governmental Purpose"

Every single penny you spend must be reasonably related to a political, legislative, or governmental purpose.

The "Personal Benefit" Test (The $200 Rule)

If an expenditure provides a substantial personal benefit (meaning a benefit of more than $200) to the candidate, officeholder, or the person approving the expense, the standard gets stricter.

• Standard Expense: Must be reasonably related to a political purpose.
• Personal Benefit Expense (>$200): Must be directly related to a political purpose.

What is the difference?

• Reasonable: There is a loose connection. (e.g., A donor lunch).
• Direct: The expense would not exist without the campaign. (e.g., Renting a tuxedo for a political gala you must attend).

Permissible vs. Prohibited Uses

1. Food and Meals

• Under $200: You can pay for meals if they are reasonably related to your campaign (e.g., a strategy lunch with a consultant).
• Over $200: If the meal costs more than $200, it must be directly related to a specific political or governmental purpose (e.g., a ticket to a formal dinner honoring a local leader).

2. Vehicle Expenses

• Mileage Reimbursement: You can reimburse yourself or staff for using a personal car for campaign work.
  • Rate: You cannot exceed the standard IRS mileage rate.
  • Recordkeeping: You must keep a log of dates, destination, and purpose.
• Leasing/Buying: A committee can lease or buy a vehicle, but the committee must be the titleholder or lessee. The candidate cannot be on the title. (This is rare for small campaigns).

3. Clothing

• General Rule: You cannot use campaign funds for everyday clothing, even if you wear it to campaign events. Suits, dresses, and shoes are considered personal expenses.
• Exception: You can buy specialty clothing (like renting a tuxedo or buying a costume) if it is for a specific campaign event and cannot be worn generally.

4. Childcare (Important for Parents)

You can use campaign funds for childcare expenses (babysitting, day camp, nannying) IF:

• The cost is a direct result of campaign activity.
• You would not have incurred the cost otherwise.
• Prohibited: You cannot pay for private school tuition, medical expenses, or tutoring. You generally cannot pay a close relative unless they run a professional daycare business.

5. Staff Salaries

• Permissible: You can pay campaign staff (campaign manager, treasurer, field walkers) fair market value for their work.
• Prohibited:
  • The Candidate cannot receive a salary.
  • The Spouse/Domestic Partner of the candidate cannot receive a salary.

6. Fines and Legal Fees

• Allowed: You can pay parking tickets received while campaigning. You can pay fines for filing reports late.
• Prohibited: You cannot pay fines related to ethics violations (misuse of funds) or bribery.
• Sexual Harassment: You cannot pay settlements or fines related to sexual assault/harassment claims. You can pay for the legal defense, but if you are found liable, you must reimburse the campaign.

7. Security (Physical and Cyber)

• Cybersecurity: You can spend funds to secure devices (hardware/software) for the candidate and staff.
• Physical Security: You can install a home security system (up to $5,000) only if you have received threats verified by law enforcement.

8. Real Estate

• Leasing: You can lease an office for up to one year at a time.
• Buying: You cannot use campaign funds to purchase real estate.

Reimbursements

The cleanest way to spend money is using the campaign debit card. However, volunteers and staff often spend their own money and need to be paid back.

• The 45-Day Rule: Reimbursements to staff/volunteers must be paid within 45 days of the expense.
• The Candidate: Candidates should generally not spend personal money and ask for reimbursement later. Instead, the candidate should deposit their personal funds into the campaign account first, then spend from the campaign account.

Surplus Funds (When the Campaign Ends)

Campaign funds have a "shelf life." They become "Surplus Funds" at a specific moment after the election. Once they are "Surplus," your spending options become very limited.

When do funds become Surplus?

• Incumbents: 90 days after leaving office.
• Defeated Candidates: 90 days after the end of the post-election reporting period.
  • June Election: Period ends June 30 -> Surplus starts ~September 29.
  • November Election: Period ends December 31 -> Surplus starts ~March 31.

What can you do with Surplus Funds?

Once funds are surplus, you cannot use them for a future election. You can only:

1. Pay outstanding campaign debts.
2. Refund contributors (pro-rata).
3. Donating to a bona fide charity (as long as no personal benefit is derived).
4. Contribute to a political party (for overhead, not specific candidates).
5. Contribute to federal candidates or out-of-state candidates.

Trigger Warning: If you want to run again in the future, you must transfer your funds to a new committee before they become surplus (i.e., within that 90-day window).

Action Plan: Spending Checklist

FAQ: Common Questions

Q: Can I use campaign funds to install a second phone line in my house? A: Yes, if it is used exclusively for the campaign. If you keep it after the election for personal use, you must buy it out from the campaign.

Q: I lost the election. Can I use the leftover money to run again in 2 years? A: Yes, BUT you must open the new committee and transfer the funds before the 90-day "Surplus" deadline hits. If you wait too long, you lose the ability to use that money for your own future elections.

Q: Can I pay my campaign manager a bonus if we win? A: Yes, but it is usually considered a gift and limited to less than $250. It is cleaner to have a written contract that specifies performance payments.

Q: Can I buy tickets to a SF Giants game for my staff? A: Generally, no. Unless attendance is directly related to a specific political purpose (e.g., you are being honored on the field), sports tickets are personal entertainment.