GOVERNMENT 101: Campaign Finance

GOVERNMENT 101: Campaign Finance

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.

Source: The Federal Election Commission

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
Time Period	per election*	per calendar year	per calendar year	per calendar year
Individual can give**	$2,000***	$25,000 per party commitee***	$10,000 to each state or local party commitee $5,000 to each PAC or other political commitee***	$95,000 per two year election cycle as follows: $37,500 per cycle to candidates; and $57,500 per cycle to all national party commitees 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****	$5,000	$15,000	$5,000	No limit
Other Political Committee can give	$1,000	$20,000	$5,000	No limit

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).

To Find out more about Campaign Finances: