Several types of entities are commonly used to raise and spend money to influence elections. Keeping track of the main distinctions and the rules governing election financing can be difficult, but it’s also necessary to remain informed and protect voters’ right to know who is attempting to influence their vote and our government.
This has become especially true since two key court decisions in 2010, the U.S. Supreme Court’s decision in Citizens United v. FEC and the U.S. Court of Appeals for the D.C. Circuit’s decision in SpeechNow v. FEC. These decisions essentially enabled corporations and wealthy special interests to flood elections with unlimited amounts of campaign spending.
This blog provides an explanation of how the main vehicles for political spending work to enable the public to better understand our campaign finance system and demand accountability about how elections and candidates’ campaigns are funded.
For starters, the basic vehicle for political spending is the “political committee.” A political committee includes any organization or group that raises or spends over $1,000 in a calendar year to influence a federal election and has the “major purpose” of nominating or electing federal candidates.
Within 10 days of its creation, a political committee is required to register with the Federal Election Commission (FEC), the federal agency responsible for enforcing and implementing the federal campaign finance laws that govern our elections for Congress and the presidency.
1. PACs
Although not an official legal term, a political action committee (PAC) is commonly understood to be a type of political committee that is not authorized by a candidate. PACs may accept contributions of up to $5,000 per year from any individual but are generally prohibited from accepting union or corporate treasury funds.
Some PACs are dedicated to supporting the interests of a single candidate, but it’s also possible to form a multicandidate PAC if that PAC has been registered with the FEC for at least six months, received contributions from at least 51 people and given to at least five candidates.
A multicandidate PAC may contribute up to $5,000 per election to a candidate and $15,000 to a party committee, with no limit on how much it can contribute in total. (PACs that do not meet the requirements for being a multicandidate PAC are subject to the same limits as individuals on contributions to candidates and party committees).
Corporations, labor unions and elected officials can also establish PACs. In the case of corporations or labor unions, these are referred to as “connected” PACs or separate segregated funds (SSF), and they operate under slightly different rules.
For example, a corporation or labor union can pay an SSF’s administrative expenses out of their general treasury funds, but funds given to candidates must be raised from individuals associated with the organizations and fundraising for SSFs is subject to special restrictions.
Elected officials (and former officials) can also establish PACs to support other candidates, known as leadership PACs. These PACs are intended to be used to support other candidates and were traditionally used to gain influence in a political party or caucus, but a leadership PAC cannot be used by its controlling or sponsoring official for their own campaign activities.
A major concern regarding leadership PACs is the frequency with which elected officials have abused them as personal slush funds for expenses like personal vacations and luxury items by their associated candidates.
Campaign Legal Center (CLC), together with Issue One, has produced multiple reports documenting lawmakers’ repeated abuses of their leadership PACs, and along with a number of former lawmakers, CLC and Issue One also petitioned the FEC to revise and amend its regulations to clarify that leadership PACs may not be used to subsidize lawmakers’ personal expenses.
2. Super PACs
“Super PAC” is a common shorthand for what the FEC refers to as an independent expenditure-only political committee. A super PAC has similar obligations to a traditional PAC; like any political committee, it must register, maintain records and file disclosure reports with the FEC, which are publicly available on the FEC’s website.
Super PACs and traditional PACs also are both prohibited from accepting contributions from federal contractors and foreign nationals. But the similarities don’t go much further than that.
Unlike the traditional PACs discussed above, super PACs cannot contribute directly to candidates or political party committees.
Both traditional PACs and super PACs can spend unlimited amounts of their funds on independent expenditures in federal races, which are ads communicating a message that “expressly advocates” in support or opposition to a specific federal candidate’s election.
But unlike a traditional PAC, a super PAC may also solicit and accept unlimited contributions, including from unions and corporations to pay for its independent expenditures.
The supposed independence of super PAC spending is essential to why such groups are permitted to accept huge contributions to fund their election spending. The Supreme Court in Citizens United concluded that such independent spending could not be corrupting.
For this reason, a key condition of super PACs’ ability to accept contributions in unlimited amounts is that such money may not be used for direct contributions to candidates or for “coordinated” expenditures with a candidate.
Otherwise, a super PAC would function as a vehicle to enable wealthy individuals and special interests to underwrite the candidate’s campaign, raising obvious corruption concerns.
Despite these rules, illegal coordination is common between both Democratic and Republican-affiliated super PACs and candidates – largely thanks to the FEC’s refusal to crack down on it, and in some cases, even seemingly permitting the practice. The agency has never even fined a super PAC for working hand in glove with a candidate.
3. Secret Spending/Dark Money Groups
Secret spending groups, sometimes referred to as dark money groups, are most often nonprofit organizations that claim tax exempt status under Sections 501(c)(4) or 501(c)(6) of the Internal Revenue Code. These groups can accept unlimited contributions and are not required to publicly disclose their donors.
Under federal tax law, these groups are permitted to spend on elections, including by making independent expenditures and contributions to super PACs, but election spending cannot be their “primary purpose,” which has often been interpreted to mean that it cannot take up 50% or more of their spending throughout the year.
In recent years, spending by these groups has increased dramatically, prompting heightened scrutiny and an increase in the groups’ financing their election spending through donations to super PACs rather than directly spending on independent expenditures.
In some cases, a super PAC has received the vast majority of its funding from one or more of these money groups, leaving voters with no clue where the super PAC’s money actually came from.
This fosters a political culture of secret influence by wealthy individuals and special interests.
Even if super PACs publicly disclose their contributions and expenditures, as campaign finance laws require, funneling super PAC donations through these groups enables the true sources of election spending to remain secret, undermining voters’ right to know who is spending vast amounts of money to rig the system in their favor.
To reduce political corruption, we need real transparency about who is spending big money on elections. Thankfully, there are some in our government who have realized this and introduced legislation to curb the tide of secret spending.
One solution is the Democracy Is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act, which is a draft bill that would require organizations making political expenditures to disclose donors who have contributed $10,000 or more during an election cycle and provide additional disclosures on certain political ads.
As wealthy special interests continue to inject more money into our elections, it is more important than ever to protect voters’ right to know who exactly is funding this spending.