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Where does the DNC/RNC (or any political party) get its money? Is it mostly from individuals donating who want to see change? If so, are those donations capped at $3300 per individual per election?

Or are companies/sponsors allowed to donate limitlessly to political parties? In which case, isn't that just blatant bribery? (Goodness knows a company wouldn't donate many millions to a political party against their own interests)

Or are political parties like Talent Agencies that take a cut of every politician's "profit", and that's how they survive? Similar to Hololive. In which case, it seems also like "bribery" (the agency will pay for the politician, in return the politician is their employee that has to make them money and obey their direction)?

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    Are you only interested in political parties in the USA (as per the tag) or world-wide? The rules and histories are sometimes very different.
    – origimbo
    Feb 12 at 15:29
  • @origimbo I'm focused on just the USA, though I'd love to hear about other countries! I'm pretty sure that many European countries have public and more "fair" funding systems, if I'm not mistaken. It's nice to hear about these alternatives.
    – chausies
    Feb 12 at 15:38
  • Not sure of all the details but I am sure there are multiple different types of funding based on where the funds go and how they are used. I don't think there is a simple answer for this question.
    – Joe W
    Feb 12 at 15:40
  • @JoeW it would be nice if we could get a simple breakdown like this i.imgur.com/yHeUrUb.jpeg (e.g. that says that most of Microsoft's revenue comes from Azure and Office)
    – chausies
    Feb 12 at 15:49
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    Sure, but I don't think it is that simple as there is a massive amount of political funding that is held by different groups but still spent for the purpose of supporting the parties themselves. It is very likely that most of the money you would consider spent by the parities has nothing to do with them at all.
    – Joe W
    Feb 12 at 16:00

2 Answers 2

2

Political parties in the US are similar to "Political Action Committees" (PACs), and are organized as non-profit organizations under the IRC Sec. 527.

As such their contributions or donations income is not taxable, and anyone can give them money as a non-taxable (and non-deductible) gift.

The donation limits are specifically for the candidates themselves. An individual cannot give more than $X to the candidate (or their campaign), but they can give whatever they want to any PACs. The PACs (including the DNC/RNC/State or county level committees/etc) will then provide support to their candidates. The "Citizens United" precedent cited in the other answer removed any limitations on what PACs can do, as long as they don't directly coordinate their actions with the candidate themselves.

Political party committees are recognized explicitly in FECA and have somewhat fewer restrictions than (other) PACs, one major is that they can coordinate with candidates, and move money more easily within the party organization (PACs are limited how much they can transfer to other PACs).

In which case, it seems also like "bribery" (the agency will pay for the politician, in return the politician is their employee that has to make them money and obey their direction)?

This is generally how it works in the US, and is not considered "bribery". Although in some cases people did run afoul of the very few laws remaining that tried to shield politicians from such influence (one notable recent example is a certain criminal defendant's "charitable" arm donating to the prosecutor tasked with charging that said defendant).

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    This isn't correct as political parties are not PAC(political action committees) as they do so much more then what a PAC does and they have existed long before the idea of a PAC cam around.
    – Joe W
    Feb 12 at 19:20
  • @JoeW Feel free to correct this, but at least from the perspective of IRC references I believe this is very much correct.
    – littleadv
    Feb 12 at 19:26
  • Political organization != Political action committee there are various different types of political organizations out there and they are not all classified as the same thing. A quick example would be ones whose goal is to get people registered and voting and they don't care which party or candidate you vote for, just that you did the act of voting.
    – Joe W
    Feb 12 at 19:52
  • I corrected to "similar". You're describing a 501(c)(4) organization, not 527.
    – littleadv
    Feb 12 at 20:02
  • "As such their income is not taxable, and anyone can give them money as a non-taxable (and non-deductible) gift." Not quite true. 527s pay income tax on their investment income. Donations to them don't count as income, but they can owe some taxes.
    – ohwilleke
    Feb 13 at 0:30
1

Q: How is a political party funded?

Donations up to certain limits.

Contribution limits for 2023-2024 federal elections

                Recipient


Donor
Party
committee:
state/district/
local
Party
committee:
national
Additional
national party
committee
accounts ‡
Individual $3,300*
per election
$10,000
per year
(combined)
$41,300*
per year
Candidate committee Unlimited transfers Unlimited transfers
PAC: multicandidate $5,000 per year
(combined)
$15,000 per year $45,000 per account,
per year
PAC:
nonmulticandidate
$10,000 per year
(combined)
$41,300* per year $123,900* per account,
per year
Party committee:
state/district/local
Unlimited transfers Unlimited transfers
Party committee:
national
Unlimited transfers Unlimited transfers

* Indexed for inflation in odd-numbered years

‡ The limits in this column apply to a national party committee’s accounts for: (i) the presidential nominating convention; (ii) election recounts and contests and other legal proceedings; and (iii) national party headquarters buildings. A party’s national committee, Senate campaign committee and House campaign committee are each considered separate national party committees with separate limits. Only a national party committee, not the parties’ national congressional campaign committees, may have an account for the presidential nominating convention.

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