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Campaign finance in the United States is the financing of electoral campaigns at the federal, state, and local levels. At the federal level, the primary source of campaign funds is individuals; political action committees are a distant second. Contributions from both are limited. These regulated donations are often referred to as hard money. Corporations and unions are prohibited from contributing directly to a candidate's campaign. Soft money are funds spent by organizations that are not contributed directly to candidate campaigns, and which do not "expressly advocate" the election or defeat of a candidate. Bundling is the practice of one donor gathering donations from many different individuals in an organization or community and presenting the sum to a campaign. Public funding is available for Democratic or Republican presidential candidates during the election campaigns during both the primaries and the general election. Eligibility requirements must be fulfilled in order to qualify for public funding and those that do accept public funding are subject to spending limits. Races for state and local offices operate under the laws of their jurisdictions. Over half the states allow some level of corporate contributions. Some states have limits on contributions from individuals that are lower than the national limits, while others have no limits at all. These state rules apply to races for state and local offices.

Campaign finance is a controversial issue, pitting concerns about free speech against concerns about corruption and inequality on the part of those who favor existing or further restrictions.

Contents 1 Hard money and soft money 2 Bundling 3 Current provisions of federal campaign finance laws 3.1 Disclosure 3.2 Independent Expenditures 3.3 Corporate and Union Activity 3.4 Political Party Activity 4 Public Financing of Campaigns 5 See also 6 References 7 Further reading 8 External links

Prior to the 2002 passage of the Bipartisan Campaign Reform Act (also known as "McCain-Feingold"), political parties and other organizations could spend unregulated "soft money" for a variety of activities, including "issue advertising", a broad term that included any advertising that stopped short of expressly advocating the election or defeat of a candidate through words and phrases such as "vote for," "vote against," "support," "defeat," "elect" and the like. As it was not actually received or spent by the candidate's campaign, and did not expressly advocate the election or defeat of a candidate, there were no legal limits. McCain-Feingold prohibited national political parties from raising or spending "soft money," but other organizations may still do so.

Pursuant to the 1976 U.S. Supreme Court decision Buckley v. Valeo (1976), limitations on donations to candidates were held to be constitutional in order to meet the compelling government interest in preventing corruption or the "appearance of corruption". On the other hand, the Court said, limitations on campaign spending were an unconstitutional abridgment of free speech. Additionally, Buckley v. Valeo held that only speech that expressly advocated the election or defeat of a candidate could be regulated.

Beginning in the late 1970s, parties successfully petitioned the Federal Election Commission to be allowed to spend soft money on non-federal party building and administrative costs. Soon, this use of soft money expanded to voter turnout and registration activities, and issue advertising. For example, a wealthy individual could give a large contribution in soft money to a political party. The party could then spend this money on political ads. These ads could not explicitly or expressly advocate the election or defeat of a candidate through words and phrases such as, "Vote for Smith", "Elect Smith", "Send Smith to Congress", "Vote Against Jones", or "Defeat Jones." However, they could read something like this: "John Smith is an honest man who stands up for the people. Bill Jones is a chronic liar who's taken money from special interests and advocated cutting Social Security. Call Bill Jones and tell him how you feel about this."

Campaign finance reform had been debated for years without any major changes to campaign finance laws. The Reform Party, founded by Ross Perot, made it a central issue in its platform, and when Perot ran for president in 1992 and 1996 he strongly argued for it. It again became a major issue in the 2000 U.S. presidential election, especially with candidates John McCain and Ralph Nader. Organizations in favor of campaign finance reform include Common Cause, Democracy 21, the Campaign Legal Center, and Democracy Matters. Opposition came from organizations such as the American Civil Liberties Union, the National Rifle Association, and National Right to Life. The Bipartisan Campaign Reform Act was passed in 2002, which banned national political party committees from accepting or spending soft money contributions. The legislation was challenged in McConnell v. FEC (2003), and for the most part was upheld by the Supreme Court. It was further challenged in Wisconsin Right to Life v. FEC (2007), and, with new members on the Supreme Court, parts of McConnell were reversed.

As a result, many of the soft money-funded activities previously undertaken by political parties have been taken over by various 527 groups, which funded many issue ads in the 2004 Presidential election. In 2006 the Campaign Finance Institute issued a study on 527 groups. The study shows that many advocacy groups deploy three different types of organization -- PACs, 527s, and 501(c) advocacy entities -- in their efforts to influence federal elections and public policy. These cumulative, coordinated efforts increase the groups’ financial influence in elections. The CFI analysis presents much new information about the major role played by 501(c)(4) social welfare, (c)(5) labor union and (c)(6) trade association organizations in elections, and the different ways in which they and related 527 organizations are used by Republican and Democratic-oriented groups. (Nonprofit Interest Groups' Election Activities and Federal Campaign Finance Policy). At the same time, a large body of political science literature exists showing that campaign contributions play little, if any, role in directly shaping legislative behavior [no citation].

Another consequence of the limitation upon personal contributions from any one individual ($2,300 in 2007) is that campaigns seek out "bundlers", people who can gather contributions from many individuals in an organization or community, and present the sum to the campaign. Campaigns then elevate and publicise these bundlers to an elite level. Bundlers became especially important after the 2002 revision to campaign finance law made unrestricted soft money more difficult to get through corporations and other big organizations.^[1]

Bundling had existed in various forms since limits on contributions were enacted at the federal level and in most states in the 1970s. ^[2] Emily's List is a particularly well known bundling organization. However, bundling became organized in a more structured way in the 2000s, spearheaded by the "Bush Pioneers" for George W. Bush's 2000 and 2004 presidential campaigns. An example of a "bundler" in Democratic Party circles is apparel manufacturer Norman Hsu, who achieved a prominent role as one of Hillary Rodham Clinton's "Hillraisers" for her 2008 presidential campaign.^[1] Hsu was then found to be a fugitive from an early 1990s fraud charge; in such cases, campaigns usually return or donate to charity the contributions that the person in question gave, but are left with the thorny question of whether to return all the other contributions that bundler gave. In some cases, including Hsu's, bundlers are suspected of having donated their own money under others' names (to circumvent the individual contribution limit) or of having pressured employees or others to make contributions with their own money. And in general, bundlers are a constant worry to campaigns who desire the money they raise but fear the not-infrequent revelations about them.^[3]

During the 2008 campaign the six leading primary candidates (three Democratic, three Republican) had listed a total of nearly two thousand bundlers.^[1]

Current campaign finance law at the federal level requires candidate committees, party committees and PACs to file periodic reports disclosing the money they raise and spend. Federal candidate committeees must identify, for example, all PACs and party committees that give them contributions, and they must provide the names, occupations, employers and addresses of all individuals who give them more than $200 in an election cycle. Additionally, they must disclose expenditures to any individual or vendor.

Similar reporting requirements exist in many states for state and local candidates and for PACs and party committees.

Increasingly, political committees on all levels are required to electronically file campaign finance statements.

Most political advertising, including all advertising that specifically advocates the election or defeat of a candidate for federal office, is required to identify the source of its funding. In elections for national office (Congress and president/vice-president), television ads from a candidate must feature a shot of the candidate's face and have the candidate personally identify himself/herself, saying, "I approved this message." This rule was added by the Bipartisan Campaign Reform Act so that candidates could not engage in negative campaign advertising without the source of the ads being clear. Although as of 2007 little empirical research had been done on its effects, the general perception appears to be that it has not had a noticeable effect on the tone of campaigning.

The Supreme Court's ruling in Buckley v. Valeo (1976) held limits on expenditures made independently of a candidate's campaign could not be limited under the Constitution. If expenditures are made in "coordination" with a campaign, however, they may be regulated as contributions.

Even though corporations and labor organizations may not make contributions or expenditures in connection with federal elections, they may establish PACs. Corporate and labor PACs raise voluntary contributions from a restricted class of individuals. In the case of unions, this consist of union members and their families. For corporations, the restricted class consists of managerial employees and stockholders and their families. These funds may be used to support federal candidates and political committees, either through independent expenditures or through contributions to candidates. A PAC is limited to a maximum contribution of $5000 to a candidate committee.

Although prohibited from using their resources to "expressly advocate" the election or defeat of federal candidates, or to make contributions directly to candidates or parties, corporations and labor organizations may conduct a variety of activities related to federal elections, in addition to those conducted through a PAC. Though they may not use general treasury funds to pay for "electioneering communications" - broadcast ads referring to candidates for federal election without expressly advocating their election or defeat -- in the 60 days prior to a general election, or 30 days prior to a primary election, they may advocate for political issues and mention federal candidates while doing so, if outside the 30/60 day time frame for "electioneering communications," or at any time through non-broadcast media. They may also engage in certain non-partisan voter registration and get-out-the-vote campaigns.

Additionally, over half the states allow some level of direct corporate contributions or spending in state and local races.

Political parties are active in federal elections at the local, state and national levels. Most party committees organized at the state and national levels as well as some committees organized at the local level are required to register with the FEC and file reports disclosing their federal campaign activities.

Party committees may contribute funds directly to federal candidates, subject to the contribution limits. National and state party committees may make additional "coordinated expenditures," subject to limits, to help their nominees in general elections. National party committees may also make unlimited "independent expenditures" to support or oppose federal candidates. However, since 2002, national parties have been prohibited from accepting any funds outside the limits established for elections in the Federal Election Campaign Act. State party and local committees are also subject to restrictions on the funds they may spend in connection with an election in which a federal candidate is on the ballot.

Party committees must report with the FEC once their federal election activities exceed certain dollar thresholds specified in the law.

At the federal level, public funding is limited to subsidies for presidential candidates. To receive subsidies in the primary, candidates must qualify by privately raising $5000 in each of 20 states. For qualified candidates, the government provides a dollar for dollar "match" from the government for each contribution to the campaign, up to a limit of $250 per contribution. In return, the candidate agrees to limit his spending according to a statutory formula.

From the inception of this program in 1976 through 1992, almost all candidates who could qualify accepted matching funds in the primary. However, in 1996 Republican Steve Forbes opted out of the program. In 2000, Forbes and George H. W. Bush opted out. In 2004 Bush and Democrats John Kerry and Howard Dean chose not to take matching funds in the primary. In 2008, most of the leading candidates in both parties, including Hillary Clinton and Barack Obama among Democrats, and Rudy Giuliani, Mitt Romney and Ron Paul among Republicans, have decided not to take matching funds. So far, John McCain^[4], Tom Tancredo^[5], John Edwards^[6], Chris Dodd^[7], and Joe Biden^[8] have qualified for and elected to take public funds in the primary.

By refusing matching funds, these candidates are free to spend as much money as they can raise privately. In addition to primary matching funds, the federal government subsidizes the nominating conventions of the major parties. The nominees are then offered the opportunity to accept government funds for the general election. If they accept the government funds, they agree not to raise or spend private funds or to spend more than $50,000 of their personal resources. No major party has turned down government funds for the general election since the program was launched in 1976. However, several major party candidates have indicated that they may refuse public funds for the general election in 2008. During this period, funds are raised by the candidates for the parties^[9] or for General Election Legal and Accounting Compliance Funds (GELACs), which pay for attorneys and closeout costs but are not supposed to pay for campaigning or advertising.^[10]

The presidential public financing system is funded by a $3 tax check-off on individual tax returns (the check off does not increase the filer's taxes, but merely directs $3 to the presidential fund). However, the number of taxpayers who use the check off has fallen steadily since the early 1980s, and in 2006 fewer than 8 percent of taxpayers were directing money to the fund. [1].

A small number of states and cities have started to use broader programs for public financing of campaigns. One method, which its supporters call Clean Money, Clean Elections, gives each candidate who chooses to participate a certain, set amount of money. In order to qualify for this money, the candidates must collect a specified number of signatures and small (usually $5) contributions. The candidates are not allowed to accept outside donations or to use their own personal money if they receive this public funding. Candidates who choose to raise money privately rather than accept the government subsidy are subject to significant administrative burdens and legal restrictions, with the result that most candidates accept the subsidy. This procedure has been in place in races for all statewide and legislative offices in Arizona and Maine since 2000, where a majority of officials were elected without spending any private money on their campaigns. Connecticut passed a Clean Elections law in 2005, along with the cities of Portland, Oregon and Albuquerque, New Mexico. Early studies by the Congressional Office of Management and Budget, however, found that public funding has little effect on legislative behavior or competition in elections.^{[citation needed]}

A California initiative on the ballot in November 2006, Proposition 89, the California Clean Money and Fair Elections Act would have provided Clean Money public financing of political campaigns, strict contribution limits, and strong disclosure and enforcement provisions. This initiative was defeated overwhelmingly with 74.5% of voters voting no.^[11]

• Campaign finance
• Campaign finance reform
• Political action committee
• Pacific scandal
• Clean Elections

• Green, Mark (2002). Selling Out, How Big Corporate Money Buys Elections, Rams Through Legislation, and Betrays Our Democracy. Regan Books (Harper Collins). ISBN 0-06-052392-1. 
• Samples, John (2006). The Fallacy of Campaign Finance Reform. University of Chicago Press. ISBN 978-0226734507. 
• Smith, Bradley (2001). Unfree Speech: The Folly of Campaign Finance Reform. Princeton University Press. ISBN 978-0691113692. 
• Smith, Rodney (2006). Money, Power & Election: How Campaign Finance Reform Subverts American Democracy. Louisiana State University Press. ISBN 978-0807131282. 
• Public Funding of Presidential Elections. Federal Election Commission. Retrieved on August 3, 2005.
• The Federal Election Campaign Laws:A Short History. Federal Election Commission. Retrieved on August 3, 2005.
• Bipartisan Campaign Reform Act. The Campaign Finance Institute. Retrieved on August 3, 2005.

• Center for Competitive Politics
• Campaign Finance Institute
• Public Campaign
• PoliticalMoneyLine
• Open Secrets
• The National Institute on Money in State Politics
• Buck Buckley Campaign
• 28amen.org, A Proposed 28th Amendment dealing with Campaign Finance Reform