What do Jennifer Carnahan, Jeff Ettinger, Jeremy Munson and Nels Pierson have in common?
They’re among the 18 candidates vying for the First Congressional District seat left open with the death of Rep. Jim Hagedorn in February, for one. They’re also among the candidates with the most cash in pursuit of that goal, thanks — at least in part — to significant donations or loans they gave their own campaigns.
On the Republican side, three candidates have loaned their campaigns at least $100,000: State Rep. Jeremy Munson loaned his campaign $200,000, a Federal Election Commission report shows. Former Minnesota GOP chair Jennifer Carnahan, Hagedorn’s widow, has loaned her campaign $227,500. And state Rep. Nels Pierson loaned his campaign $100,000. On the DFL side, Jeff Ettinger, the former CEO of Hormel, has donated $200,000 to his campaign. Some other candidates loaned or donated smaller amounts to their campaigns.
Self-funding isn’t exactly unheard of in Congressional campaigns, but the prevalence of big self-donations and loans in the short run-up to this special primary next week and election in August got us wondering: what gives?
Campaign finance rules
Anyone donating to federal political campaigns are bound by individual donor limits, meaning you can’t donate more than $2,900 per election (so $5,800 total for the primary and the general) to a given candidate.
Unless you’re the candidate. Then you can donate or loan an unlimited amount of money to your campaign, said Michael Toner, an election law expert and a former chairman of the FEC.
Preventing corruption or the appearance of corruption is the rationale for campaign contribution limits, Toner said, and, in 1976’s Buckley v. Vallejo, “the court found that there’s no potential corruption when you’re giving yourself money.”
Any self-funding dollars a candidate loans or donates to their campaign has to be the candidate’s own. If it’s a loan, the collateral has to be assets that belong to the candidate. Either way, the funds or assets can’t belong to a candidate’s spouse or parent or sibling, and the FEC follows state rules to determine what constitutes the candidate’s assets, Toner said.
Candidates who do not necessarily want to get their money back can self-fund their campaign in the form of a campaign contribution — just like any other campaign contribution, except that it doesn’t have a limit. That’s how Ettinger’s $200,00 contribution is structured. In Carnahan, Munson and Pierson’s cases, the self-funding portion of their campaign cash comes from loans, which is how candidates can give their campaigns money if they do hope to recoup some or all of their cash.
Loans candidates make to their campaigns can be repaid before or after an election, whether the candidate wins or loses. A Supreme Court ruling this week removed a $250,000 limit on the amount of candidate loans that can be paid back after the election. But loans can also be “forgiven” and converted to contributions at any time — such as if a campaign spends all the money a candidate loans and doesn’t raise enough money to pay it back.
So, Toner said, if he loaned a million dollars of his own money to his own hypothetical campaign for office, he could see how fundraising goes and pay himself back, or not.
“Let’s say I don’t raise much money or I lose the primary or lose a general election, and I’m not going to be able to raise any more money. I can convert whatever remains of that million dollar loan into a contribution,” he said.
Why give your campaign money?
So why would a candidate opt to self fund when they also have the option to ask supporters for money?
First, if the option is there, because they can. This perhaps is more and more often the case as members of Congress grow increasingly wealthy, Toner said. “It’s not a coincidence that the net worth of U.S. senators and U.S. House members has been growing in the last 15 or 20 years because more and more of them are financing their own campaigns in part or in whole and winning.”
Donating money to your campaign can just be easier than traditional fundraising. To win a typical competitive House election these days, a candidate generally needs to raise a couple million dollars, said Douglas Weber, a senior researcher at OpenSecrets. Getting a head start by loaning or donating money to your campaign can be easier than passing the proverbial hat among donors.
“That’s basically viewed as an initial investment, and then once you’ve established yourself, you start fundraising in a more conventional fashion,” Weber said.
Self-funding can lend almost instant credibility to a campaign. One extreme example of that is in former New York City Mayor Michael Bloomberg’s 2020 bid for the Democratic presidential nomination. Before Bloomberg even ran, he said he would self-fund his campaign.
“He was able to walk in and basically just say, ‘OK, I’m going to put a billion dollars into my presidential campaign’ and boom, he’s a major candidate instantly,’” Weber said. “If you need to get the money in a hurry, if you’re on a short deadline, building up that that fundraising base, trying to build momentum is very difficult,” and it might make sense to self-fund if a candidate can.
It can also be a way for candidates to pad fundraising numbers before a reporting deadline.
“If you’re going to try to get a lot of money, you want to do it just before, rather than just after, a filing deadline,” Weber said.
In the First District, it’s worth nothing that the amounts of money CD1 candidates are contributing to their campaigns is relatively modest to the hundreds and hundreds of thousands — and sometimes millions — some candidates throw into their races, Weber said. None of the candidates are wholly self-funding their campaigns.
But some factors specific to the race might explain the prevalence of self-funders in it.
One, its short duration, with just three months between Hagedorn’s death and the primary, and then three months from primary to general.
“This is a short race,” Weber said — it might just be easier to loan yourself money to get up and running and think about paying it back later.
And two, it’s an open seat with lots of candidates — nine Republicans and seven Democrats — and having the seed money to jumpstart the campaign can be a quick way to show the candidate is viable, Toner said.