Eleanor Finch
Political campaigns in the United States are financed through a combination of private and public funding. While most campaign spending is privately financed, with donations from individuals, corporations, and Political Action Committees (PACs), there are also public financing options available for qualifying candidates. The size of donations varies, with a small percentage of the population contributing more than $200 to federal candidates, PACs, parties, and outside groups. However, there is no limit to the amounts that individuals or corporations can donate to Super PACs, which can accept funds from non-foreign entities like corporations and labor organizations. The development of Super PACs has been a significant chapter in the debate over political spending, with critics arguing that it allows the very wealthy to spend unlimited amounts and drown out the voices of ordinary Americans.
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What You'll Learn
The role of small donors
Small donors play a significant role in grassroots campaigns, where candidates actively seek out and encourage small contributions from a large number of individuals. This strategy is often employed by candidates who wish to demonstrate broad-based support and avoid the appearance of being influenced by a few large donors. By relying on a diverse array of small donors, candidates can also avoid the potential negative perception of being beholden to special interests or wealthy individuals.
In recent years, the importance of small donors has been amplified by public financing systems, such as the one implemented in New York City. This system matches small donations from city residents at a rate of 6:1, meaning a $20 donation is worth $140 to the candidate. In 2009, small donations and matching funds accounted for 63% of individual contributions in the New York City elections. Similarly, at the federal level, there is a matching program for the first $250 of each individual contribution during the primary campaign.
Small donors also contribute to political action committees (PACs), which are groups that raise and spend money to support candidates and influence elections. While PACs have been criticised for accepting large donations from a small number of wealthy individuals or corporations, they can also be a way for small donors to pool their resources and have a greater impact. Overall, small donors play a crucial role in political campaigns by providing financial support, demonstrating popular appeal, and helping to reduce the influence of large donors and special interests.
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The influence of Super PACs
Political Action Committees, or PACs, are private interest groups that raise and spend money to support candidates and influence elections. Traditional PACs are subject to both donation and spending limits. However, the 2010 Citizens United v. FEC Supreme Court decision, along with other cases, lifted limits on independent fundraising and spending in elections, giving rise to a new type of committee known as Super PACs.
Super PACs, or independent expenditure-only committees, may raise and spend unlimited sums of money from corporations, unions, associations, and individuals to overtly advocate for or against political candidates. They are, however, prohibited from donating money directly to political candidates, and their spending must not be coordinated with that of the candidates they benefit. As of March 19, 2025, 2,502 groups organized as Super PACs reported total receipts of $5,096,825,517 and total independent expenditures of $2,688,997,939 in the 2023-2024 cycle.
The development of Super PACs has significantly impacted the political landscape, with concerns raised about the influence of wealthy special interests on the American political system. Critics argue that Super PACs allow the very wealthy to spend unlimited amounts on campaigns, drowning out the voices of ordinary Americans. For instance, in the 2020 federal election campaigns, nearly $14 billion was spent, with Super PACs contributing nearly $2.2 billion, or 56.5% of total expenditures.
While Super PACs cannot accept contributions from foreign nationals, federal contractors, national banks, or federally chartered corporations, they have been criticized for accepting "dark money," which masks the donor's identity. Additionally, Super PACs have been associated with backroom deals to influence elected officials, further highlighting the need for better regulation and transparency in campaign financing.
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Spending limits and rules
Federal law and the Federal Election Commission (FEC) enforce restrictions and rules on money spent on political campaigns. The FEC enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organisations can give to a candidate running for federal office. The FEC also sets campaign contribution limits for individuals and groups.
The FEC rules state that campaigns must adopt an accounting system to distinguish between contributions made for the primary election and those made for the general election. If a candidate loses the primary election, contributions accepted for the general election must be refunded, redesignated or reattributed within 60 days and cannot be used to repay primary election debt. However, candidates running in the general election may spend unused primary contributions on general election expenses.
The date a contribution is made determines whether the rule will apply, while the date of receipt governs whether the contribution is acceptable under the rule. All contributions must be deposited within 10 days, although the date of deposit is not used for reporting or contribution limit purposes. The date of receipt is the date the campaign or a person acting on its behalf receives the contribution. For electronic contributions, the date of receipt is when the committee obtains the contributor's authorisation of the transaction. For in-kind contributions, the date of receipt is when the goods or services are provided to the committee.
The FEC strongly recommends that campaigns encourage contributors to designate their contributions for specific elections. Written designations promote consistency in reporting and avoid the possible appearance of excessive contributions on reports. Designated contributions count against the donor's contribution limits for the election that is named, while undesignated contributions count against the donor's contribution limits for the candidate's next election.
PACs (political action committees) are private interest groups that raise and spend money to support candidates and influence elections. Traditional PACs are subject to donation and spending limits, while Super PACs can accept unlimited contributions from individuals, corporations, unions and other groups, provided they are operated correctly. However, Super PACs cannot accept contributions from foreign nationals, federal contractors, national banks, or federally chartered corporations.
Public financing is available for qualifying candidates for President of the United States during both the primaries and the general election, although eligibility requirements must be met. Those who accept government funding are usually subject to spending limits.
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Public funding
In the United States, the Federal Election Commission (FEC) administers the laws regarding the public funding of presidential campaigns. Eligible candidates can receive federal government funds to cover qualified expenses for both primary and general elections. The program was designed to match the first $250 of each contribution from individuals, and fund the major party nominees' general election campaigns. To be eligible, candidates must show broad-based public support, raising more than $5,000 in at least 20 states, with contributions from a minimum of 20 donors in each state.
Some US states have also implemented their own public funding systems. For example, North Carolina had the "Voter Owned Elections" program, which was repealed in 2013. In 2015, Seattle voters approved the democracy voucher program, which gives residents four $25 vouchers to donate to participating candidates. California, San Francisco, Los Angeles, and Portland, Oregon, have also had some form of public financing.
Canada also has a system of public funding for federal political parties, with the most significant portion coming at election time, based on electoral expense reimbursements. This reimburses 50-60% of a party's expenses, and the more a party spends, the more they are subsidised. This is in addition to per-vote subsidies, which are allocated according to the votes of Canadians.
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The impact of court rulings
Court rulings have had a significant impact on the size of donations in political campaigns, with some arguing that they have paved the way for "big money" to dominate politics. Here are some key examples:
Citizens United v. FEC (2010)
One of the most significant rulings was Citizens United v. FEC in 2010. This decision by the Supreme Court allowed super PACs to accept unlimited contributions from wealthy individuals and corporations, as long as they were not directly donating to candidates. This enabled these outside groups to spend vast sums of money on ads and communications promoting or attacking specific candidates. Critics argue that this ruling has led to an influx of dark money, where voters are unaware of the donors trying to influence their votes.
Buckley v. Valeo (1976)
The 1976 case of Buckley v. Valeo was a pivotal moment in campaign finance law. The Supreme Court's decision began a trend of striking down limits on campaign contributions and expenditures, with critics arguing that it was the "Court's First Big Mistake". This case set a precedent for future rulings that increased the influence of money in politics.
Speechnow.org v. FEC (2010)
In this case, a federal appeals court ruled that outside groups could accept unlimited contributions, in line with the Citizens United decision. This further solidified the rise of super PACs and the flow of unlimited funds into political campaigns.
Colorado Republican Federal Campaign Committee v. FEC (1996)
The Supreme Court's ruling in this case invalidated restrictions on the total amount of "independent expenditures" a political party could make without coordinating with a candidate. This decision contributed to the increasing amount of money flowing into politics from various sources.
Arizona Free Enterprise Club's Freedom Club PAC v. Bennett
This case dealt with public financing for political candidates in state elections. While the specifics of the ruling are unclear, it is mentioned in the context of court decisions that have influenced campaign financing.
First National Bank of Boston v. Bellotti (1978)
Dating back to the 1970s, this Supreme Court decision, along with others, has been cited as contributing to the influx of money from corporations, unions, and ultra-wealthy individuals into political campaigns.
These court rulings have had a significant impact on the landscape of political campaigns, often tilting the influence towards wealthy donors, corporations, and special interest groups. While some celebrate these rulings as victories for free speech, others caution that they threaten democracy by giving disproportionate power to those with financial wealth.
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Frequently asked questions
Nearly $14 billion was spent on federal election campaigns in the United States in 2020. This figure more than doubled what was spent in the 2016 election.
Political campaigns are mostly financed by private donors, largely through donors that work in subsidized industries. However, public financing is also available for qualifying presidential candidates.
Joe Biden had raised the most money as of May 9, 2024, with $170.6 million, followed by Donald Trump at $114.8 million, and Nikki Haley at $57.2 million.
Super PACs are independent expenditure-only political committees that may accept unlimited contributions from individuals, corporations, and labor organizations. They cannot accept contributions from foreign nationals, federal contractors, national banks, or federally chartered corporations. Super PACs received over $346 million in individual contributions during the 2012 cycle.
