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9.1 Generally

An expenditure is defined as a gift, transfer, disbursement, or promise of money or valuable thing by or on behalf of a political committee to promote or assist in promoting the success or defeat of a candidate, political party, or question at an election.

- §1-101(aa) of the Election Law Article

• Expenditures must be election related; that is, they must enhance the candidate's election chances, such that they would not have been incurred if there had been no candidacy.
• Expenditures, including loans, may not be for the personal use of the candidate or any other individual.
• Except as expressly authorized by law, expenditures must be made by the treasurer*.
• Except as expressly authorized by law, expenditures must be by check signed by the treasurer from the campaign bank account.
• Expenditures must be supported by receipts or vouchers, which must be kept with the treasurer's books and records.

*The exception to the rule is referenced in section 7.3 of the Summary Guide.

Note: If you are unsure whether a planned expenditure is lawful, contact the State Board of Elections.

9.2 How to Make Expenditures

1. Direct Expenditures

Expenditures made by the campaign finance entity must be by check except in limited circumstances. The only authorized signatory for checks on the account is the treasurer and when the treasurer is unable to perform its duties, the chairman. The political committee cannot use a credit card, money order or debit card to make an expenditure. Wire transfers or electronic withdrawals are also prohibited.

- § 13-218 & 220 of the Election Law Article

Automatic bank fees and charges do not require payment by check. However, such fees and charges are still expenditures by the political committee and therefore must be accounted for in the campaign finance report.

2. Reimbursement

If the payee does not accept checks, then a person, not the political committee, would have to use his or her personal debit or credit card to make the purchase and then seek a reimbursement from the political committee by check.

The candidate, treasurer, or an authorized campaign worker may pay an expense of the campaign from personal funds and seek a reimbursement, provided:

• The expense is supported by a receipt that is retained by the treasurer of the political committee;
• The treasurer reimburses the person who paid the expense by check from the campaign bank account;
• The reimbursement is made within the same reporting period as the initial transaction; and
• The reimbursement is reported as specified in Section 11 of this Summary Guide.

-  § 13-220(b) of the Election Law Article

9.3 Petty Cash

A petty cash fund of up to $250 may be maintained by the treasurer in a separate account book. The fund must be established and replenished only by check. All expenditures from this fund must be supported by receipts which must be kept as part of the treasurer’s account books and records. The expenditures must be reported by category on the appropriate campaign finance report. No more than $25 in the aggregate may be disbursed from the petty cash fund to any single recipient in connection with any primary or general election.

– § 13-220(c) of the Election Law Article

9.4 Expenditures to Federal Candidates and Committees

A political committee may make an expenditure to a federal candidate or federal PAC only if the expenditure directly serves a campaign purpose for the political committee making the expenditure.The political committee should contact the Federal Election Commission regarding permissible limits and registration requirement.

9.5 Expenditures to a Municipal Candidate and Committee

Generally, funds collected for a State election campaign may be used only in State and county elections. If the expenditure made to a municipal candidate serves a campaign purpose for the State political committee, the expenditure may be permissible. Consult local law for any applicable municipal campaign finance limits.

Remember, Baltimore City is not considered a municipality for this purpose. Baltimore City elections are subject to State campaign finance regulations.

9.6 Legislative Newsletters

It is permissible for a candidate committee of an incumbent member of the General Assembly to use campaign funds to pay for the publication expense of a legislative newsletter. A legislative newsletter is a document used by an incumbent to disseminate information to a constituent, voter, or potential voter about an issue of public interest or the incumbent’s performance in legislative office.

Instead of using campaign funds, an incumbent may pay for the publication of a legislative newsletter from the personal funds of the incumbent or the incumbent’s spouse if:

• The incumbent has not filed a certificate of candidacy;
• The legislative newsletter contains a notice that it is disseminated at the personal expense of the incumbent; and
• Within 10 days after the first mailing or distribution of the issue, the incumbent files a campaign finance report with the State Board that includes a detailed list of publication expenses and an affidavit that no funds for the newsletter have been solicited or received from any source to supplement personal funds.

– § 13-406 through 13-409 of the Election Law Article

9.7 Prohibited Expenditures

In general, campaign expenditures must promote a candidacy, not simply the individual running for office.

Prohibited expenditures of campaign funds include:

• For personal use or expenses related to holding office.
• Paying for a personal endorsement.
  
  - §13-245(c)(1) of the Election Law Article
• Paying late filing fees.
  
  - §13-331(d) of the Election Law Article

For example, a candidate may not use campaign funds to pay a mortgage payment or an oil change on a personal vehicle. These types of expenditures would have occurred regardless of the individual being a candidate. Additionally the nexus between the expenditure and the promotion of the candidacy is too tenuous.

This is not a comprehensive list. If you have any questions regarding permissible expenditures, please contact The State Board.

9.8 Charities

Generally, campaign funds may not be used solely for charitable purposes. Maryland law requires campaign funds to be used for the purpose of supporting or opposing a candidate, question, or political committee. Furthermore, it is important to keep in mind that contributors give to campaign committees for one important reason – they want to support the committee’s candidate, question, or political party. When campaign funds are spent for a non-campaign related purpose, it frustrates the intent of the contributor.

However, there are instances when a charitable donation is permissible because it is for a campaign purpose. For example, a candidate may permissibly use campaign funds to attend a charitable event since attending the event increases the candidate’s visibility and allows the candidate to network with potential voters and donors.

9.9 Legal Defense

1. Permissible Expenditures

Contesting or Maintaining Election Results

A candidate or political committee may use campaign funds to pay reasonable legal expenses incurred to contest or maintain the results of the candidate’s election. A person may donate money or legal services for this purpose and the value of the donation will not be considered a campaign contribution.

Campaign-Related Legal Defense

Campaign funds may be used to pay for legal costs associated with an investigation or criminal proceeding that has a direct  connection with the individual’s candidacy. See 78 Opinions of the Attorney General 155 (1993).

2. Impermissible Use

Non-Campaign-Related Legal Expenses

It is prohibited for any candidate or political committee to use campaign funds for legal or other expenses related to investigations or court proceedings that do not have a direct connection with the candidacy. For example, investigations or charges involving misconduct in an individual’s employment or public office are not campaign-related, even if the charges first come to light as a result of the individual’s decision to run for elected office. Non-campaign-related legal costs are considered “personal” expenses for purposes of the campaign finance laws.

3. Separate Legal Defense Funds

A candidate may establish a legal defense fund separate from the campaign committee and accept donations from others. A separate legal defense fund may be used to defend against any type of charge, whether campaign-related or not. Donations to a segregated legal defense fund are not considered campaign contributions.

Candidates defending against a prosecution for campaign-related improprieties who wish to use campaign funds or donations from others to defray legal defense costs are urged to contact the State Board for further guidance. Funds collected and used for legal expenses must be kept in a segregated account and may not be converted to campaign use after the legal expenses have been paid.

Please note, while a candidate may raise funds for legal defense that will not be subject to campaign finance contribution limits, if the candidate is an officeholder, ethics rules on gifts and disclosures may apply.

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