Government 101: Campaign Finances
Campaign Finance Information in this guide is based on The FEC and Federal Campaign Finance Law, published in November 2002 by the Federal Election Commission. On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act of 2002 (BCRA), Public Law No. 107-155.
Bipartisan Campaign Finance Reform Act of 2002
The Bipartisan Campaign Reform Act of 2002 is a bill that bans "soft money" contributions to national political parties; but permits up to $10,000 in soft money contributions to state and local parties. "Soft money" is the unlimited contributions to the national political parties for "party-building" activities. The bill will also stop issue ads from targeting specific candidates. Restrictions will be placed on outside groups running so called "issue ads" that tout or critizes a candidate's position on an issue, but refrain from explicitly telling viewers to vote for or against that candidate. Additionally, the bill would raise the individual contribution limit from $1,000 to $2,000 per election for House and Senate candidates, both of which would be indexed for inflation. The "Millionaire's Amendment" to this bill, will increase the contribution limits for candidates facing a wealthy opponent who intends to make large expenditures from personal funds.
A voting record for the Bipartisan Campaign Reform Act which is also know as the Shays-Meehan Campaign Finance Overhaul-Passage can be found on the Project Vote Smart, Key Votes section.
I. Major Rules
Who Can Contribute?
- Any American citizen can contribute funds to a candidate or a political party except for individuals and sole owners of proprietorships that have contracts with the federal government.
- Foreigners with no permanent US residency are prohibited from contributing to any political candidates at any level.
- Cash contributions over $100 are prohibited, no matter what their origin.
- No candidate can accept an anonymous contribution that is more than $50.
- Corporations, labor unions, national banks and federally chartered corporations are also prohibited from contributing to federal campaigns or parties. (since 1907)
- Political action committees operated by foreign-owned corporations may contribute to campaigns as long as American citizens are the only contributors to the PAC.
- Minors are prohibited from making contributions to federal candidates and contributions or donations to committees of political parties.
Federal Campaign Spending Limits
According to the Bipartisan Campaign Finance Act of 2002:
|To any candidate or candidate committee||To any national party committee||To any PAC or other political committee||Total|
|Individual can give**||$2,000***||$25,000 per party committee***||$10,000 to each state or local party committee
$5,000 to each PAC or other political committee***
|$95,000 per two year election cycle as follows:
$37,500 per cycle to candidates; and
$57,500 per cycle to all national party committees and PACs($20,000 to $57,500 per cycle to all national party committees, and a maximum $37,500 per cycle to PACs)
|Multicandidate Committee can give****|
|Other Political Committee can give|
SOURCE: The Federal Election Commission; The Center For Responsive Politics.
* Primary and general elections count as two separate elections; so this contribution can be effectively doubled during a normal election year in states with primaries.
**Individual contribution limits under the new law will be indexed for inflation.
***Individual contribution limits under the new law are higher to candidates facing wealthy opponents financing their own election.
**** Multicandidate committees are those with more than 50 contributors, that have been registered for at least six months, and (with the exception of state party committees) have made contributions to five or more federal candidates.
II. What is a PAC?
A Political Action Committee (PAC) is a common term for a political committee set up for the purpose of raising and spending money to elect and defeat candidates. Most PACs represent ideological, business or labor interest. The following are federal campaign spending limits for PACs, which are in accordance with the Bipartisan Campaign Reform Act of 2002. A PAC can give $5, 000 to any candidate committee per election, primary, general or special. They can also give up to $15,000 annually to any national party committee, and $5,000 annually to any other PAC. PACs may be given up to $5,000 from any one individual, PAC or party committee per calendar year. A PAC must register with the Federal Election Committee, in 10 days of its formation, providing name and address for the PAC, its treasurer and any connected organizations. For the purpose of contribution limits, associated PACs are treated as one donor.
III. Additional PAC information?
PACs have been around since 1944. The Congress of Industrial Organizations (CIO) was the first PAC to be formed in order to raise money for the re-election of President Franklin D. Roosevelt. The CIO was formed in response to the Smith Connally Act of 1943, which banned direct contributions from labor unions to federal candidates. The PAC's money came from voluntary contributions from union members rather than union treasuries. Although commonly called PACs, federal election law refers to these accounts as "separate segregated funds" because money contributed to a PAC is kept in a bank account separate from the general corporate or union treasury.
Many politicians also form Leadership PACs, which are not technically affiliated with the candidate, as a way of raising money to help fund other candidates' campaigns.
In 1974 the Federal Election Campaign Act was amended and specifically sanctioned the formation of "political committees" to enable the employees of corporations, members of labor unions, or members of professional groups, trade associations or any other political group to pool their dollars and give to the candidates of their choice. At the same time, it gave PACs higher contributions limits than individual contributors, and set up the Federal Election Commission (FEC) to oversee elections and to collect and monitor campaign finance reports filed by PACs and candidates. The FEC officially recognized over 600 PACs by the end of 1974 giving about $12.5 million to campaigns. In January 2003, according to a semi-annual survey by the Federal Election Commission there were 4, 027 federally registered political actions committees (PACs).
IV. Super PACs
Prior to the ruling of Citizens United v. Federal Elections Commission, the Bipartisan Campaign Reform Act of 2002 (BCRA) was the supreme campaign finance law for elections. As amended by statute 203 of BCRA, federal law prohibits corporations and unions from using their general treasury funds to make independent expenditures for speech that is an 'electioneering communication' or for speech that expressly advocates the election or defeat of a candidate. Electioneering communication is defined in this statute as being any media broadcast or publication released in a state within 30 days of a primary election with a message that can be received by at least 50,000 people in that state.
Citizens United v. Federal Elections Commission
The court case that gave us the 'Super PAC' was argued from 2008-2009 and decided in 2010 by the USSC. In this case, a non-profit organization (Citizens United) released an ad critical of former New York Senator Hillary Clinton that had potential to be in violation of the stipulations laid out in in the Bipartisan Campaign Reform Act of 2002. The case was brought before the United States Supreme Court in order to define how campaign finance laws can be applied.Decision:
In its ruling, the Supreme Court of the United States struck down the federal ban on independent expenditures by corporations & unions and the potential influence these organizations could have on federal election, overruling the provisions laid out in BCRA. The Court reasoned that it is an infringement on First Amendment rights to discriminate between corporations and individuals when it comes to electoral spending that is independent of candidates and political parties. Because the political message of Citizens United was not coordinated with any campaign and was released by an unaffiliated organization, the Supreme Court allowed it under a category of free speech. The outcome of this decision is that individuals are able to financially contribute as much as they would like to a Political Action Committee as long as that committee is not coordinating it's message with the candidate or campaign they are supporting.
Super PAC facts
- Individuals can make unlimited financial contributions to Super PACs
- Candidates are not allowed to coordinate messages or campaign strategies with members of Super PACs who support them
- Candidates can participate at Super PAC rallies and fund raisers as long as they don't personally solicit donations from themselves or the PAC
- There are no restrictions on who can join a Super PAC regardless of their relation to the candidate supported by the group
- The FEC primarily investigates illegal coordination claims based on complaints from other organizations and PACs
- An FEC complaint is confidential until the case is closed, so it is unknown if any coordination complaints have been filed unless the filer makes it public
To Find out more about Campaign Finances:
- The Federal Election Commission (FEC)
- The FEC and the Federal Campaign Finance Law
- Federal and State Campaign Finance Laws
- Public Funding of Presidential Elections
- Supporting Federal Candidates: A Guide For Citizens
- Bipartisan Campaign Finance Act of 2002
- The Center for Responsive Politics
- National Institute on Money and State Politics