At WiseGEEK, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.
How is Political Fundraising Regulated in the United States?
Dana Hinders
Dana Hinders
Political fundraising and campaign finance laws in the United States work to help ensure a level playing field for all candidates who wish to run for office. Although political fundraising laws do apply to elections at the state and local level, the public tends to become most interested in this issue during a presidential election year.
At the federal level, individual donors are the primary source of political fundraising. However, there are strict limits placed on the amount of money an individual may donate. For example, in 2008 the cap was set at $2,300 US Dollars (USD) for each candidate and $28,500 USD for each national party committee with a cap of $108,200 USD for the overall biennial limit.
Political action committees are a distant second when it comes to political fundraising at the federal level. Like individual contributions, money from political action committees is classified as hard money. In 2008, a multi-candidate political action committee could give $5,000 USD to each candidate and $15,000 USD to a national party committee, but there is no overall limit set to contributions from this source.
Current campaign finance laws prohibit corporations and trade unions from contributing to a candidate’s fundraising efforts. Contributions from 527 groups, a special type of tax-exempt organization, are allowed only when they are not directly linked to candidate campaigns and do not advocate support or opposition for a particular candidate. Because of this, these types of campaign contributions are known as soft money. Unlike campaign contributions classified as hard money, soft money donations are not heavily regulated by the Federal Election Commission.
Disclosure is an important part of political fundraising regulations. Political action committees, candidate committees, and party committees are legally required to file periodic reports detailing the money they raise and spend. In the interest of accountability, names, address, occupations, and employers must also be provided for any individual who donates more than $200 USD in a single election cycle.
For a presidential election, candidates who have privately raised $5,000 USD each in at least 20 states are eligible for a special subsidy that is a dollar for dollar match up to a limit of $250 USD per contribution. In exchange for accepting this subsidy, however, candidates must agree to follow a special statutory formula that places limits on their spending. Although traditionally most candidates have chosen to accept these matching funds, it is becoming increasingly common for candidates to opt out of the program in order to leave them free to spend as much money as they can raise through private campaign donations and political fundraising efforts.
Dana Hinders
Dana holds a B.A. in journalism and mass communication from the University of Iowa. She has loved being part of the WiseGEEK team ever since discovering the joys of freelance writing after her son was born. Dana also hones her writing skills by contributing articles to various blogs, as well as creating sales copy and content for e-courses.
Learn more...
Dana Hinders
Dana holds a B.A. in journalism and mass communication from the University of Iowa. She has loved being part of the WiseGEEK team ever since discovering the joys of freelance writing after her son was born. Dana also hones her writing skills by contributing articles to various blogs, as well as creating sales copy and content for e-courses.
Learn more...AS FEATURED ON:
AS FEATURED ON:
-
![Political candidates in many countries are required to submit campaign finance reports during election campaigns.]()
By: Photo_MaPolitical candidates in many countries are required to submit campaign finance reports during election campaigns.
Discussion Comments
@KoiwiGal - They do spend many millions of dollars in their campaigns. I believe in the election that pitted Obama against McCain the two candidates spent over a billion dollars between them, all of it supposedly gained through fundraising.
No doubt that amount will only increase with every election, as more and more sophisticated campaigns are made in line with modern technology.
One way in which they manage to get more contributions from individuals is to do what's called "bundling" which is when they get a lump sum of money from a group of individuals rather than from one at a time. I'm not sure if they fudge the numbers there, so maybe if one person gives more than the limit, their contribution is attributed to another in the group.
The individual amount each person can give is quite a lot though, when you consider how many people there are in the United States and how passionate about their political parties they can be.
I actually had no idea that the threshold for an individual to donate to a politician was so low.
I assumed that because politicians always seemed to be able to spend so much money on their campaigns that they must be able to solicit more money than that from people.
I mean, $2400 is a lot of money to me and I would probably never be able to contribute that much to a political campaign, but it's almost nothing to a rich man. They might make that amount in a day, and be more than willing to put it towards whoever is running for office. There must be some other way for political donations to be given to a candidate.
Post your comments