Personal Finances for Politicians

polling station poster on clear glass door
by Advice Chaser
by Advice Chaser

If you’ve ever considered running for office, it might seem a lofty goal. Doesn’t it cost a lot of money to get elected? Will it take time away from your current job? How can you fundraise without running afoul of campaign finance laws? But running for a minor office doesn’t have to be complicated. It will take a little financial forethought, but it isn’t out of reach for the average person.

polling station poster on clear glass door

Running for Office

It’s unavoidable: getting elected often costs a great deal of money. How much will depend on how high the office is and how large the voter base. You’ll need to spend money on getting your name out there, whether by sending out mailers, purchasing a radio spot, or renting a billboard. However, that doesn’t have to be your money. You can and should raise money from supporters to help fund this cost. After all, you won’t be serving in office for yourself, but to give a voice to everyone who thinks the way you do.

Your network of supporters will be your key allies, so cultivate them well. Often, people first volunteer with a political party or campaign before running themselves. That way, you’ve proved to potential allies that you’re willing to put in the work for the issues, even when you’re not the one running. Political organizations are full of networking opportunities which can help you increase your supporter base.

As you raise money, it’s critical to keep your personal money and campaign money completely separate. You should open a separate bank account for the campaign and track donations and expenditures scrupulously. Your locality will have its own rules about what you will need to disclose. To be sure, you should keep records of the name and address of everyone who donates to your campaign.

Who Can Donate?

You can’t collect donations from just anyone. Campaign finance laws set limits on which persons and groups may donate. If you’re running for a federal position, such as the US senator or representative of your state, you must follow federal regulations. For local or state positions, you’ll need to find out the exact rules in your state.

In general, individuals can donate to campaigns without a problem, though they might be subject to certain limits in how much they can give to any one candidate. The federal donation limit for an individual is currently $3,300. Individuals who donate to your campaign must be citizens or lawful residents. While you don’t need to verify someone’s citizenship to accept a donation, if you have reason to know they’re a foreign national, you must not take donations from them. 

For groups, it becomes more complex. Many types of organizations cannot donate to political campaigns at all. This includes corporations, nonprofit organizations, and labor organizations. In some cases, they can establish a separate segregated fund from which they can make political donations. However, political action committees (PACs), 501(c)4 organizations, and other candidates’ and parties’ funds can donate directly to your campaign.

Even you can donate to your own campaign! In this case, there is no limit—but you should still make careful note of how much you donated.

Managing Your Finances After You Take Office

So, if you win, then what? Are your financial worries over? In most cases, local offices aren’t full-time jobs. Even if you receive a stipend, it won’t be more than a pittance. However, these offices usually don’t take up very much of your time, either. Think of it like a volunteer position or hobby—but one where your decisions affect your whole community.

It’s vital not only to be scrupulously honest but to also have the appearance of honesty. This requires following regulations to the letter and being transparent when required. Specific reporting requirements vary from place to place, but be ready to report all your sources of income, investments, and gifts. Keeping good records will help with this. Have a place where you record every transaction in and out. Budgeting software can make this pretty easy.

At tax time, be as accurate as you can. It will hurt your political reputation if you end up making a mistake and getting audited. Hiring a professional to help with your taxes is definitely a good call. Keep all receipts and necessary records to make sure you can prove you’re reporting and deducting exactly what you should.

Getting Expert Help

When you’re running for office, success hinges on having mentors who can guide you well. You’ll need political mentors, but for your finances, it’s also a good idea to have a financial advisor. This person can help you decide if your finances are ready for a political campaign, brainstorm how to manage your campaign funds, and ensure your finances are as transparent as possible. To meet the right advisor for you, contact us today.

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