Campaign Finance: The Impact of the New Law on North Carolina’s Political Landscape

Editor’s note: HB 237 became law on June 27, 2024 (S.L. 2024-16), after the General Assembly overrode the governor’s veto. The individual contribution limit has since risen to $6,800 per election. The analysis below is as originally published on June 14, 2024.

On Tuesday, the North Carolina General Assembly passed House Bill 237, affecting how outside political groups can engage in North Carolina’s political process. This new bill would permit federal PACs and 527 organizations to contribute to North Carolina political candidates and committees.

Impact

The impact of the new law centers on a few national party-affiliated organizations: the Republican and Democratic Governors Associations, and the Republican and Democratic Attorneys General Associations. All are 527 organizations and can now send funds to the North Carolina Republican Party (NCGOP) or NC Democratic Party as long as these funds are from sources not prohibited by state law.

Party organizations like the NC Republican and Democratic Parties receive significant discounts on mail advertising through the postal service. However, a party cannot run TV ads independently and receive a discount, but there is a notable exception. The parties can run joint television advertisements with a candidate and jointly receive discounted TV advertising rates.

Why the Change Was Made

Senate President Pro Tempore Phil Berger said this change was made to “level the playing field in terms of money,” referencing Democrats’ ability to transfer large amounts of money through existing special vehicles. Now, both parties will have greater flexibility to move funds between organizations.

Jim Stirling, a researcher for the John Locke Foundation, explained how the two governors associations have moved money into North Carolina:

“While the DGA does have a traditional Super PAC that accepts corporate contributions, they also maintain a regular PAC (Democratic Action) as the vehicle to move money into the state Democratic party. Regular PACs are subject to individual contribution limits and are ineligible to receive corporate or labor union funding. The Republican Governors Association (RGA) lacks a regular PAC, with funding for the 2016 governor’s race coming directly through its super PAC (RGA Right Direction PAC) to the Republican party.”

Similar to how the RNC and DNC can transfer unlimited funds to the NCGOP and NC Democratic Party, respectively, the RGA and DGA can now do the same, helping elect their preferred gubernatorial candidate slightly more directly.

One important thing to note is that earmarking funds is still illegal under North Carolina law. Therefore, as an example, in 2024, anyone who is ineligible to give directly to a state party cannot donate to the DGA or RGA with the purpose of funneling money to the Josh Stein or Mark Robinson campaign effort. The new law does not provide a new workaround for ineligible donors.

Other campaign finance laws remain the same. Individual contribution limits stay unchanged at $6400 per person, per election cycle.