Simone Lawson
Political campaigns are costly affairs, with candidates for the 2020 US presidential cycle drawing in $4.1 billion in donations. In the same year, federal election campaigns in the US saw nearly $14 billion spent, making it the most expensive campaign in the country's history. So where does all this money come from? Political campaigns receive funding through two routes: the candidate's campaign committee, and outside committees such as super PACs. The latter can raise unlimited funds but cannot collaborate directly with the candidates they favour. Most of the money spent so far in the 2024 election cycle has come from PACs – nearly $2.2 billion, or 56.5% of total expenditures as of April 2024.
Where does most political money campaign contributions come from?
| Characteristics | Values |
|---|---|
| Political action committees (PACs) | $2.2 billion as of April 2024 |
| Large individual contributions | More than $200 |
| Small individual contributions | $200 or less |
| Money from the candidates' own pockets | N/A |
| Super PACs | Unlimited funds |
| Corporations | Unlimited amounts |
| Labor organizations | Unlimited amounts |
| Taxpayers | Federal funds for campaign expenses |
| Political appointments | N/A |
| Lobbyists | N/A |
| Unions | N/A |
| Nonprofits | N/A |
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What You'll Learn
Political action committees (PACs)
At the federal level in the US, an organisation becomes a PAC when it receives or spends more than $1,000 to influence a federal election and registers with the Federal Election Commission (FEC). PACs can give $5,000 to a candidate committee per election (primary, general or special) and up to $15,000 annually to any national party committee. They can also give $5,000 annually to any other PAC and receive up to $5,000 from any one individual, PAC or party committee per calendar year.
There are several types of PACs. Connected PACs, or corporate PACs, are established by businesses, non-profits, labour unions, trade groups, or health organisations. As of January 2009, there were 1,598 registered corporate PACs, 272 related to labour unions and 995 to trade organisations. Non-connected PACs are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders.
Super PACs, or independent expenditure-only political committees, can raise unlimited amounts from individuals, corporations, unions, and other groups to spend on ads overtly advocating for or against political candidates. However, they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties. Hybrid PACs are similar to super PACs but can give limited amounts of money directly to campaigns and committees while still making independent expenditures in unlimited amounts.
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Large individual contributions
Political campaigns can raise millions or even billions of dollars through personal and business donations. In 2020, nearly $14 billion was spent on federal election campaigns in the United States, making it the most expensive campaign in US history. Candidates in the 2020 presidential cycle drew $4.1 billion in donations.
Additionally, individuals can also form political action committees (PACs) to pool their resources and make larger contributions. These PACs can accept unlimited contributions from individuals and organizations, and they can use this money to support their chosen candidates. This allows wealthy donors to have a significant influence on the political process.
It is worth noting that there has been extensive criticism of the system, with some arguing that it allows the "'very wealthy' to have too much influence over political campaigns. This has led to concerns about the potential for corruption and the influence of "special interests" in politics. However, others argue that independent spending does not result in corruption, as candidates are not directly indebted to individual contributors.
Furthermore, large individual contributions can also come from bundlers, who are individuals that gather together multiple donations from different sources and present the aggregated amount to the campaign. This method allows campaigns to receive a large sum of money from a single source, making it more efficient and easier to track. Bundlers often have close relationships with the campaigns they support and may be rewarded with political appointments or other favours in return for their efforts.
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Small individual contributions
Political campaigns can raise millions of dollars through personal and business donations. In 2020, nearly $14 billion was spent on federal election campaigns in the United States, making it the most expensive campaign in US history. Candidates in the 2020 presidential cycle drew $4.1 billion in donations.
While large sums of money are often donated by corporations and wealthy individuals, small individual contributions also play a significant role in campaign financing. These are donations made by private citizens who support a particular candidate or cause. Small individual contributions are typically $200 or less and can come from a wide range of people, including voters, activists, and other supporters.
In the United States, the Federal Election Commission (FEC) regulates campaign financing and imposes limits on the amount of money that can be contributed by individuals and organizations. For example, as of 2024, an individual can contribute a maximum of $6,600 to a federal candidate during a primary and an additional $6,600 during the presidential campaign. These limits help ensure that small individual contributions remain an important part of the political process and prevent any one individual or organization from having undue influence over a candidate.
To encourage small individual contributions, campaigns often employ various strategies. They may use grassroots organizing techniques, such as door-knocking and phone banking, to reach potential supporters directly. Social media and email campaigns can also be effective tools for soliciting small donations from a large number of people. Additionally, campaigns may offer incentives such as exclusive merchandise or access to events for people who contribute, further engaging their supporters.
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Donations from candidates' own pockets
Running for office is an expensive affair, with candidates collecting millions of dollars in contributions. While most campaign spending is privately financed, candidates can also spend their own money on their campaigns without any limits. However, they must report the amount they spend to the Federal Election Commission (FEC). This self-funding is an option for candidates who have the financial means to do so and can be a significant source of campaign funds.
The FEC enforces the Federal Election Campaign Act of 1971 (FECA), which sets limits on the amount of money individuals and political organizations can contribute to a candidate running for federal office. However, candidates are allowed to spend their personal funds on their campaigns without restrictions. This means that candidates with significant personal wealth can potentially self-fund a large portion of their campaign expenses.
Self-funding by candidates can be a significant advantage, as it gives them greater control over their campaign messaging and strategy. They are not solely reliant on donations from others, which may come with certain expectations or conditions. By using their own funds, candidates can maintain their independence and focus on their agenda and priorities. This can be particularly beneficial for candidates who wish to portray themselves as outsiders or reformers, unbound by special interests or lobbyists.
On the other hand, self-funding can also be seen as a potential disadvantage. It may raise questions about a candidate's ability to relate to the average voter and their understanding of financial constraints. Critics may argue that a candidate who relies primarily on their own wealth may be out of touch with the financial realities of their constituents. Additionally, self-funding can limit the resources available to the candidate after the campaign, as they would have depleted their personal finances significantly.
Overall, the decision to self-fund a political campaign is a complex one. It can provide candidates with greater autonomy and flexibility but may also invite scrutiny and criticism. Candidates need to carefully consider their financial resources, the potential advantages, and the potential backlash from both the public and their opponents when deciding how much of their own money to contribute to their campaigns.
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Dark money from undisclosed donors
Political campaigns can raise millions or even billions of dollars through personal and business donations. In 2020, nearly $14 billion was spent on federal election campaigns in the US, with presidential candidates in the 2020 cycle drawing $4.1 billion in donations. This money is used to pay for travel, administration, salaries, and other campaign-related expenses. While most campaign spending is privately financed, public financing is available for qualifying candidates for the US presidency during the primaries and general elections.
There has been extensive criticism of the fact that, following a number of Supreme Court decisions, very wealthy individuals are now allowed to spend unlimited amounts on campaigns, and to prevent voters from knowing who is trying to influence them. This is known as "dark money", which masks the donor's identity. For example, independent expenditure-only political committees, or Super PACs, may accept unlimited contributions, including from corporations and labor organizations. This has been described as "a major loophole" in federal campaign financing and spending law.
Contributions made directly to a specific candidate are called "hard money", while those made to parties and committees for party-building in general, rather than for specific candidates, are called "soft money" or "independent spending". Soft money political spending is exempt from federal limits, and critics argue that it can be closely coordinated with political campaigns. Most of the donations received by state party committees are then sent to the national party headquarters to be spent.
In addition to Super PACs, nonprofit, non-governmental grassroots organizations, such as the Center for Responsive Politics, Consumer Watchdog, and Common Cause, also play a role in tracking how money is raised and spent in political campaigns. Candidates and committees are required to keep diligent records of where the money comes from and how it is spent. The Federal Election Commission has rules in place to control how money is spent by candidate campaign committees, and there are rules dictating how money can be spent after a campaign concludes. For example, leftover money from a campaign can be donated to charities or to other candidates, but personal use is prohibited.
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Frequently asked questions
Most political campaign contribution money comes from private financing, largely through donors that work in subsidized industries. However, public financing is available for qualifying candidates running for President of the United States.
Private financing includes donations from individuals, businesses, and Political Action Committees (PACs).
Public financing includes government subsidies and funding from national political parties.
