Money in Chrysler's dormant political action committee fund totaling $525,000 will be donated to the United Way, The Detroit News has learned.

And any voluntary contributions made by the more than 1,300 employee participants since June 10 when a new company, Chrysler Group LLC, was formed in alliance with Fiat SpA, will be refunded, employees learned this week in a letter from John Bozzella, senior vice president responsible for external affairs and public policy. These additional contributions beyond the $525,000 that accumulated before June 10 are minimal because payroll deductions for employee contributions stopped in July, Chrysler said.

Both Chrysler and General Motors Co. ceased political contributions to candidates after receiving government loans.

GM transferred its PAC from the bankrupt Motors Liquidation Co. -- the GM entity that remains in bankruptcy -- to the new GM. The fund had $418,000 in cash through May 31. GM has said political contributions will not resume until next year at the earliest.

Ford Motor Co., which did not accept federal bailout funds, has donated about $128,000 to political candidates and groups this year through its political action committee.

The committees were established to voluntarily pool resources and contribute to candidates for state and federal offices who support the automakers' views on business and public policy issues.

The decision to discontinue the committee at Chrysler became final this week after months of mulling it over.

Bozzella sent letters to participants explaining the decision and thanking them for past contributions.

There are two main reasons behind the decision, said Chrysler spokeswoman Eileen Wunderlich.

One is legal: the law says a PAC must operate as part of a corporation within a corporation. Chrysler's PAC was housed inside Chrysler Services Contracts Inc. within the old Chrysler LLC that filed for bankruptcy April 30 and remains under Chapter 11 protection as Old Carco LLC.

The new Chrysler Group "doesn't have a corporation that can house the PAC and there are no plans to establish a new one," Wunderlich said.

The second reason is appearance. GM and Chrysler were criticized for continuing to lobby Congress after receiving government loans. The federal government holds an 8 percent stake in Chrysler and a 60.8 percent stake in GM.

Chrysler wants to avoid a misperception that taxpayer funds are going to fund political campaigns, Wunderlich said, and that is the reason a new PAC will not be established.

"The External Affairs and Public Policy office will continue to advocate for Chrysler on key issues and involve our employees and stake holders in grassroots efforts," Bozzella told employees.

The policy office will continue Chrysler's lobby efforts and employees are encouraged to remain involved in local politics, Wunderlich said.

As for the money in the fund, the automaker decided to give it to branches of the United Way in the communities where Chrysler has facilities.

"We commend Chrysler's generosity and deep commitment to United Way, and recognize their long-time support of southeastern Michigan," said Michael J. Brennan, president and CEO of United Way for Southeastern Michigan. "This significant contribution comes at a critical time in our region when the needs of the community are growing exponentially. ... Chrysler is in step with our goals, and we deeply appreciate their investment and continued confidence in our work."

The chapters that will benefit include:

• United Way of Howard County (Kokomo, Ind., Transmission and casting plants)

• United Way of Boone County & United Way of Rock River County (Belvidere, Ill., assembly and stamping plants)

• United Way of Delaware (Newark, Del., assembly plant)

• United Way of Greater St. Louis (St. Louis North and South assembly plants)

• United Way of Greater Toledo (Toledo assembly and machining plants)

• United Way of Summit County (Twinsburg, Ohio, stamping plant)

• United Way of Kenosha County (Kenosha, Wis., engine plant)

• Washtenaw United Way and Chelsea United Way (Chelsea Proving Grounds)

• Monroe County United Way (GEMA engine plant in Dundee)

• United Way of Southeast Michigan (multiple facilities)

The agencies are in the process of being notified, Wunderlich said, with most letters and checks expected to be delivered in the next week.