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Where Donations Go When Presidential Candidates Drop Out

With a primary or caucus nearly every week, the presidential field is thinning – but the candidates’ penny banks are nowhere near empty. According to the Center for Responsive Politics, a nonpartisan campaign finance watchdog group, by the end of September, the 2008 presidential candidates set aside over $33.6 million for the general election. But that’s a race only two of them will see; the rest will be left to pack up their offices, kiss their volunteers goodbye, and redistribute the wealth of their campaign.

“The money the candidates have raised for the general [election] is equivalent to the cost of putting 28,000 new Apple computers in schools that need them, buying a MacDonald’s Big Mac for every resident of Michigan, or donating the entire Harry Potter book series to nearly every household in New Hampshire and Maine,” Lindsay Renick Mayer said. Mayer is the editor of Capital Eye, a money-in-poli¬tics newsletter. But New Hampshire households will have to make do; money from former candidates won’t be funding a book drive anytime soon.

“If I give money to a candidate and he then drops out of the race, where does my money go?,” my friend Andres asked me last week as Super Tuesday wrapped up. “If I supported Edwards before he dropped out, can he just go do what he wants, buy a house or something, with my donation?”

He can’t buy a house, but he does have options. “It’s a little complicated depending on the candidate,” explained George Smragdis, a public information officer for the Federal Elections Committee. “But there are always choices, particularly with general election funds.” FEC regulations divide presidential campaign contributions into two categories: money to be spent on the primaries and money to be spent in the general election. It’s like having two separate bank accounts, and money saved for the general can’t be touched for a primary.

The first candidates to exit the race are usually the lowest on funds, and this year, Sam Brownback (R-KS) and Tom Tancredo (R-CO) had yet to raise any funds for a general election campaign. But with Obama-mania taking the nation by storm, Hillary Clinton’s record $16.7 million tucked away for the November race might be up for grabs.

Because she did not accept FEC matching dollars - only Edwards and Tancredo chose to do so – Clinton would escape the audit that a candidate usually undergoes.

It’s no surprise that the minute the supporters leave the IRS comes knocking.

“After the audit, it’s very rare that there’s money leftover in excess of the candidacy,” Smragdis said. “Usually it just evens out. But for someone who hasn’t taken public funding, it’s altogether more simple.”

If a candidate runs for an office in one election cycle, drops out of the race, and then runs for another office, the funding from the first campaign can roll over into the second.

Political reality aside, hat would make Rudy Giuliani a wise vice presidential pick for the GOP, as the former presidential candidate still has $12.8 million in campaign funds to spend. “Say you gave him $2300 to run for president, but then drops out,” Smragdis explained. “He can use that money for any other election in the 2008 public election cycle, including VP.”

Since no clear VP choice has emerged on either side, candidates will probably be more apt to redistribute their funds in other ways. “He can give it to a charity that supports his interests,” Massie Ristch explained from the Center for Responsive Government’s Washington, D.C. offices. “Or he could give it to a party committee or federal office.” A once-candidate does not need to contact his contributors to pass along their donations after dropping out of the race. “If it was transferred to a committee, there financials would show its receipt, but he wouldn’t be required to inform his donors what he had done.”

Not every voter is comfortable knowing that a candidate can redistribute their donations without public transparency. And for this, some every day Americans have a remedy. “When we give money and sign an implicit contract of trust – I support you, I’ll give you my money – we should know where it’s going, so that, with some luck, it will serve our interests,” Andres suggested. “Every candidate should have a non-profit foundation associated with the campaign that the donors are aware of. Then, if the campaign fails, this foundation would reflect the same interests as the candidate.”