What happens with Biden's war chest now that he's dropped out?

• President Joe Biden on Sunday declared he's dropping out of his reelection campaign.
• Donors and voters alike will now have questions about where funds from his campaign war chest will go.
• The Biden campaign can refund its donors or pass along its funds to the DNC.

President Joe Biden on Sunday announced he's dropping out of his reelection campaign, leaving donors and voters alike wondering what happens now to the hundreds of millions of dollars he'd raised to support his bid.

While campaign finance experts are split on how the intricacies of the law will need to play out, one thing is clear: Democrats have options.

Biden's war chest surrendered

Biden's announcement came after nearly a month of sustained criticism about his ability to continue to be the nominee following his debate performance against former President Donald Trump on June 27. In the wake of the debate, in which Biden rambled and repeatedly appeared to lose his train of thought, many Democratic leaders urged Biden to step aside to give the party its best chance at defeating Trump.

But the Biden campaign said donor funds had surged after the debate, with the Associated Press reporting his reelection campaign raised $264 million in the second quarter of the year alone, in addition to $240 million cash on hand. Still, other Democratic megadonors, including Netflix cofounder Reed Hastings and Abigail Disney, pledged to withhold funds from the party until Biden dropped out.

Now that he has, there's a massive pot of money for Democrats to deal with.

Where Biden's money goes now

Campaign finance experts disagree on the specifics of what the Biden campaign will be able to do with its money.

Charles Spies, a Republican campaign finance law expert, argued in an opinion article in The Wall Street Journal that Biden would have needed to formally accept the Democratic nomination for president before passing the campaign's existing funds to Vice President Kamala Harris, as long as she remained on the ticket. Biden endorsed her shortly after announcing he was withdrawing from the race.

But without having accepted the nomination, Spies wrote that Biden becomes beholden to the Federal Election Campaign Act's rules regulating "excess campaign funds" and can no longer donate more than $2,000 to any other candidate, including Harris.

Saurav Ghosh, the director of federal campaign finance reform at the Campaign Legal Center, told Reuters that, as long as Harris remains in the race, she automatically has access to the campaign's shared funds — regardless of whether the pair had formally accepted the nomination or not, since both names appeared on the same campaign registration documents.

But Spies and Ghosh noted that either way, there are workarounds. The Biden campaign can either refund its donors, Ghosh told Reuters, or, they agreed, the campaign can pass the money back to the Democratic National Committee.

Dan McMillan, founder and executive director of Save Democracy in America, a nonpartisan campaign to end the influence of corporate and special interest money in politics, told Business Insider it ultimately doesn't matter which expert was right about the formal nomination — Biden didn't stay in the race long enough to accept it, and it wouldn't have made a difference if he had.

Legal challenges may arise over how, exactly, these types of scenarios should play out, but final determinations in those cases will ultimately be made long after the election is decided.

"It's really a nonargument because that money is not going to go to waste," McMillan told BI. "If someone other than Harris becomes the nominee, then the campaign will just give this money to the Democratic National Committee or to other party committees — and those committees can then spend that money in ways that benefit the presidential campaign of other Democratic candidates. So the money's not going to go away."

If the funds are ultimately transferred to the Democratic National Committee, the party can then spend unlimited amounts on ads promoting a new candidate and up to $32 million directly on a new campaign. The rest of the funds can be divvied up to other other action committees.

Whoever ends up as the Democratic nominee, McMillan noted, they'll have no shortage of financial support.

"It's gonna make a huge difference in how the campaign is conducted in a meaningful way," McMillan said.