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A very basic primer on Indiana campaign finance

To accompany The Indiana Citizen’s reporting on campaign finance, the following is a brief summary written by retired lawyer Bill Moreau, co-founder and president of the Indiana Citizen Education Foundation and publisher of The Indiana Citizen.

February 16, 2021

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When you read information about political contributions governed exclusively by Indiana law, you will see some very large amounts. Your reaction might be, “Can this possibly be legal?” The answer is almost certainly, “Yes.”

The Indiana General Assembly establishes by statute the limitations, if any, on political contributions. Notice the “if any.”

The General Assembly has placed annual limitations on what corporations and labor organizations can give. If a donor doesn’t fit into one of those two narrow categories, there is no limitation on how much can be contributed. So, individuals and a wide range of other entities—like PACs—can give unlimited amounts.

OK, you might be asking, just what is a “corporation” and what is a “labor organization?”

If you are thinking “corporation” must mean any business entity, think again. “Corporation” is narrowly defined to include C corporations, S corporations and Professional corporations. So a limited liability company, a limited liability partnership, a partnership, a sole proprietorship, an unincorporated association and similar entities can make unlimited contributions.

If you are thinking a “labor organization” is anything with a union’s name attached to it, think again. “Labor organization” is narrowly defined as the labor union itself, so you will often hear such donations referred to as “dues money” contributions. Union leaders often create political action committees to which members voluntarily contribute that can make unlimited contributions.

“Corporations” and “labor organizations” are subject to an annual aggregate limit known as “the $22,000 cap.” (Add these in your head as you go.)

$5,000 ~ apportioned in any manner among all statewide candidates;
$5,000 ~ apportioned in any manner among all state central committees of political parties;

$2,000 ~ apportioned in any manner among all candidates for State Senate;

$2,000 ~ apportioned in any manner among all candidates for State House of Representatives;

$2,000 ~ apportioned in any manner among all State Senate legislative caucuses;

$2,000 ~ apportioned in any manner among all State House of Representatives legislative caucuses;
$2,000 ~ apportioned in any manner among all candidates for county, local and school board offices; and
$2,000 ~ apportioned in any manner among all political party committees other than state central committees.

Some of the above categories are fairly self-explanatory. The Senate and House “legislative caucuses” might be unfamiliar. Each of the four legislative caucuses—the Senate Republicans, Senate Democrats, House Republican and House Democrats—have created a committee that raises money and spends it to support members of their caucus who are running for re-election, and in a few cases, first-time candidates.

These four legislative caucus committees are controlled by the respective caucus leadership and raise and spend large amounts. Many donors find it more efficient and impactful to give to a caucus committee rather than an individual legislative candidate’s committee. And, yes, you guessed correctly: these legislative caucus committees can make unlimited contributions.

So when you read about an Indiana House or Senate candidate’s committee receiving funds from the associated caucus committee, it’s an indication the candidate isn’t raising sufficient funds to win.

Quite often you will see a candidate’s campaign being supported financially by an incumbent’s committee. Incumbents who don’t need to spend the funds they raise—often because they have no or weak competition—often contribute to like-minded candidates’ committees.

And remember that lawful donations are made to a committee, not a candidate or party official. The former is transparent and a matter of public record; the latter is a bribe. This important distinction is frequently blurred by journalists and the political class.

If you really want to get into the weeds on Indiana campaign finance, go here:
https://www.in.gov/sos/elections/files/2020%20Campaign%20Finance%20Manual.FINAL.pdf

Don’t be misled by the number of pages in that document; Indiana’s campaign finance laws are fairly straightforward, beginning with the vast number of donors who can contribute unlimited funds. Makes record-keeping simpler.