Isabella Carter
The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organizations can donate to a candidate running for federal office. However, independent-expenditure-only political committees, or Super PACs, are not subject to these restrictions and may accept unlimited contributions, including from corporations and labor organizations. Following two court decisions in 2010, Citizens United v. FEC and SpeechNOW.org v. FEC, soft money political spending was also exempted from federal limits, creating what some have described as a major loophole in campaign finance law. These rulings effectively abolished limits on political campaign donations from certain sources, allowing for unlimited contributions to be funneled into political campaigns through various channels.
| Characteristics | Values |
|---|---|
| Date of receipt | The date of receipt is the date on which the committee obtains the contributor's authorization of the transaction. |
| Date of contribution | The date the contribution is made determines whether the rule will apply. |
| Soft money | Money used for "state and local elections and generic 'party-building' activities, including voter registration campaigns and get-out-the-vote drives". There are no federal contribution limits on soft money. |
| Hard money | Regulated contributions from an individual or PAC to a federal candidate, party committee, or other PAC, where the money is used for a federal election. |
| Super PACs | Independent-expenditure-only political committees (Super PACs) may accept unlimited contributions, including from corporations and labor organizations. |
| FEC contribution limits | The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organizations can give to a candidate running for federal office. |
| State contribution limits | As of January 1, 2021, a state campaign contribution limit applies by default to city and county candidates when the city or county has not already enacted laws addressing contribution limits. |
| Small Contributor Committee | A committee that has been in existence for at least six months, receives contributions from 100 or more persons, with no person contributing more than $200 per calendar year, and makes contributions to five or more candidates. |
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What You'll Learn
Soft money vs. hard money
In economics, hard money and soft money are terms used to describe different kinds of currency. Hard money refers to coins or specie, while soft money refers to paper currency. These terms are also used to refer to how clients pay their brokers or financial services providers. In this context, hard money refers to direct payments for services, while soft money refers to payments for indirect items.
However, in the context of political campaign donations, hard money and soft money refer to different types of political contributions in the United States. Hard money refers to contributions made directly to a specific candidate's campaign. These contributions are seen as explicit endorsements of the candidate and their platform. Hard money donations are subject to strict limits set by the Federal Election Commission (FEC) and must be reported to the FEC to ensure transparency.
On the other hand, soft money refers to indirect political contributions made to political parties or political action committees (PACs). Soft money contributions are not tied to a specific candidate and are used for party-building activities such as advocating for the passage of a law or promoting voter registration. The advantage of soft money is that it can be raised in larger amounts without the restrictions of strict regulatory limits. However, soft money contributions offer less transparency as they are not subject to the same reporting requirements as hard money.
The distinction between hard money and soft money is important in understanding the regulations and limits surrounding political campaign donations. The Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold Act, placed significant restrictions on the use of soft money in federal elections. The Federal Election Campaign Act of 1971 (FECA) enforced by the FEC, also plays a crucial role in regulating the amount of money individuals and organizations can contribute to candidates running for federal office.
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Super PACs and unlimited donations
In the United States, a political action committee (PAC) is a tax-exempt 527 organization that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. The Federal Election Campaign Act of 1971 (FECA) enforces limits on the amount of money individuals and political organizations can donate to a candidate running for federal office.
However, in 2010, a federal appeals court ruled in Speechnow.org v. FEC that outside groups could accept unlimited contributions from individual donors and corporations as long as they did not give directly to candidates. These groups, labelled "super PACs," could still spend money on independently produced ads and communications promoting or attacking specific candidates. This ruling further tilted political influence towards wealthy donors and corporations.
Super PACs, or independent expenditure-only committees, are not bound by spending limits on what they can collect or spend. They are required to disclose their donors, but those donors can include dark money groups, obscuring the original source of the donations. While super PACs are prohibited from working directly with candidates, the rules enforcing this separation have often been ineffective.
From 2010 to 2022, super PACs spent approximately $6.4 billion on federal elections, with at least $2.7 billion spent in the 2024 election alone. This has largely eclipsed donations by small donors, despite funds from small donors growing. To address this, lawmakers and regulators have been encouraged to pass stricter rules to prevent super PACs from coordinating directly with candidates and parties.
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FEC and FECA regulations
The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organisations can contribute to a candidate running for federal office. The FEC also oversees the enforcement of laws specified under FECA, including setting campaign contribution limits for individuals and groups and overseeing public funding used in presidential elections.
FECA requires candidates for president, the Senate, and the House of Representatives to report the names of individuals and political organisations contributing to their campaigns, as well as the amounts contributed. Candidates must also report how they spend the money they receive.
FEC regulations also cover the procedures for handling excessive contributions. Campaigns are prohibited from retaining contributions that exceed the limits, and they must follow special procedures for handling such funds. Additionally, the FEC provides guidelines for contributions from political committees, recommending written designations to promote consistency in reporting and avoid the appearance of excessive contributions.
To address technological advancements, the FEC has updated its regulations to encompass electronic documents and transactions. These updates include new definitions for terms such as "record", "writing", and "signature" to include electronic formats. The regulations also facilitate electronic accounting, record-keeping, and reporting by political committees. The final rules, effective from March 1, 2024, address electronic communications and transactions, such as contributions made using credit cards, text messages, or internet-based payment processors.
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State and local contribution limits
State and local campaign contribution limits are enforced by the Federal Election Commission (FEC) under the Federal Election Campaign Act (FECA) of 1971. The FEC enforces limits on the amount of money individuals and political organisations can contribute to candidates running for federal office.
As of January 1, 2021, a state campaign contribution limit applies by default to city and county candidates when the city or county has not already implemented its own laws regarding contribution limits. These limits vary depending on the office, the committee, and the contributor. For instance, a state candidate or state officeholder may not contribute more than $5,900 to a committee controlled by another state candidate or state officeholder.
State committees, including political parties and Political Action Committees (PACs), can receive contributions that exceed the specified limits, provided that the funds are not used for state candidate contributions. The FEC defines PACs as committees that make contributions to other federal political committees. Independent-expenditure-only political committees, or "Super PACs", can accept unlimited contributions, including from corporations and labour organisations.
The FEC also recommends that campaigns encourage contributors to designate their contributions for specific elections. Designated contributions ensure that the contributor's intent is clear to the candidate's campaign and promote consistency in reporting. Undesignated contributions are counted against the donor's contribution limits for the candidate's next election.
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Lobbyists and campaign finance
The relationship between lobbying and campaign finance is complex and ever-changing. Lobbying and campaign finance are two significant forms of political activity that combine money and communication, which have a substantial impact on democratic self-government. While they are generally governed by distinct statutory regimes, they often intersect and reinforce each other, with individuals, organisations, and interest groups deploying both lobbyists and campaign funds to achieve their objectives.
In 2007, Congress explicitly acknowledged the connection between campaign finance and lobbying by enacting legislation specifically regulating the campaign finance activities of lobbyists. At the same time, leading Democratic presidential candidates debated the ethics of accepting campaign contributions from lobbyists. This highlights the potential for undue influence when lobbying and campaign contributions converge.
The regulation of lobbying and campaign finance aims to address the dangers of undue influence. The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which imposes limits on the amount of money individuals and political organisations can contribute to candidates seeking federal office. However, candidates can spend unlimited personal funds on their campaigns, provided they disclose the amounts to the FEC.
Additionally, the FEC distinguishes between designated and undesignated contributions. Designated contributions are earmarked for specific elections, ensuring the contributor's intent is clear and promoting consistency in reporting to avoid the appearance of excessive contributions. Undesignated contributions are counted against the donor's limit for the candidate's next election. The date of receipt and the method of contribution, such as electronic or in-kind, are also factors in determining the applicability of contribution limits.
Furthermore, states like California have their own regulations. The Political Reform Act of 1974 requires detailed financial disclosures from candidates, political committees, and lobbyists. The Act aims to ensure transparency in campaign and lobbying activities, with the CAL-ACCESS system providing public access to this financial information.
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Frequently asked questions
The Federal Election Commission (FEC) enforces the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money individuals and political organizations can donate to a candidate running for federal office.
Yes, candidates can spend their own personal funds on their campaigns without limits. However, they must report the amount spent to the FEC.
Yes, federal law prohibits corporations and labor unions from donating directly to candidates or national party committees. However, there are no federal contribution limits on "soft money," which is money used for state and local elections and "party-building" activities.
A contribution is typically considered to be money given to a candidate or campaign. However, in-kind contributions, such as goods or services provided to a campaign, are also considered contributions and are subject to the same limits.
Yes, as of January 1, 2021, a state campaign contribution limit applies by default to city and county candidates unless the local jurisdiction has already enacted specific laws addressing contribution limits. These limits vary depending on the office, committee, and contributor.
