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Feds OK with leftover campaign money being invested

By   /   February 6, 2012  /   No Comments

By Ryan Ekvall | Wisconsin Reporter

MADISON — Candidate committees can rack up cash in a hurry, especially during a high stakes race.

And provisions in election law allow campaigns to invest campaign funds, bolstering — or diminishing — contributions.

In the 2011-12 election cycle, U.S. Rep. Paul Ryan, R-District 1, raised nearly $2.5 million, according to filings with the Federal Election Commission. At the end of 2011, his candidate committee held $4.6 million.

In early 1999, Citizens for Arlen Specter, the campaign for the former U.S. senator from Pennsylvania, sought the opinion of the FEC to determine what could be done with his excess cash, which was earning overnight money market rates.

An FEC advisory option replied to Specter, “… the Commission has also permitted the investment of political committee funds in a variety of investment vehicles.”

Permissible investments have included:

  • Government securities and money market funds;
  • Cash management accounts maintained by an investment and brokerage firm, which could contain money market funds, U.S. Government obligations, or other securities;
  • Open-end, diversified investment trusts, which are a professionally managed money market fund.

According to FEC rules, money in candidate committees is allowed to be invested in securities, so long as disclosure procedures are met.

Committees have to report dividends, interest, capital gains and losses on campaign finance reports, according to the commission.

There is no limit to how much candidate committees can invest. That is, as long as all of the investment and its proceeds are used for federal election campaigning.

As far as reporting the figures goes, candidate committees file quarterly or bi-annual reports that disclose contributions, expenditures, loan payments and “other receipts,” along with individual receipts showing where all those funds came from or went to. Dividends and interest earned are reported under “other receipts.”

John Samples, an analyst with the Cato Institute, a conservative think tank, said, “It’s basically the same problem that anyone with a lot of money has about what to do with it.

“They can also probably lose money. It’s basically straightforward stuff; the committees have to deal with managing substantial sums of money,” Samples said.