Types of Contributions

May 13, 2000

The Federal Election Commission regulates campaign contributions and expenditures for congressional and presidential campaigns. Congress has established limits on contributions (hard money) for federal races, but few limits on spending. Spending limits have consistently been rejected by federal courts as unconstitutional. Some lawmakers have introduced legislation to regulate contributions to party committees (soft money) used for issue ads and non-federal races. The following chart outlines types of contributions with their limits and reporting requirements.

CATEGORY	DEFINITION	CONTRIBUTION LIMITS	REPORTING
Hard Money: Contributions to federal committees & candidates	These are political contributions from individuals or political action committees (PACs) that can be spent directly to advocate the election or defeat of a federal candidate. Direct contributions are not permitted from corporations or labor unions.	Individuals and business partnerships can contribute $1,000 per election to congressional and presidential candidates. The primary, runoff and general election are considered separate elections. Individuals and partnerships can contribute $5,000 per year to political action committees (including state and local party committees) and $20,000 per year to a national party committee. An individual or partnership cannot make total hard money contributions of more than $25,000 per year. Most PACs may contribute $5,000 per election to federal candidates and $15,000 per year to national party committees. National party committees may contribute $17,500 per cycle directly to a Senate candidate and $5,000 per election directly to a House	Hard money contributions and expenditures must be reported to the Federal Election Commission (FEC).
Coordinated expenditures	Political party committees such as the Republican National Committee and the Democratic Congressional Campaign Committee are permitted to spend a fixed amount of hard money in conjunction with a candidate's general election campaign. They may coordinate with the campaign on the best use of that money, but they may not give money directly to the campaign.	Limits for Senate races are set by a formula based on the voting age population of the state in which a candidate is running. Limits range from $67,560 in Delaware to $1,636,438 in California.The limit for House races for 2000 is $33,780, except in states with only one congressional district, where the limit is $67,560. State party committees may spend equal amounts or transfer their limits to national party committees, effectively doubling the national committees' expenditure limits in those states or districts.	Coordinated expenditures must be reported to the FEC by the party committee.
Independent expenditures	Individuals, party committees and any PAC may spend hard money independently of a candidate, advocating that candidate's election or defeat. The candidate's campaign may not coordinate with the source of the independent expenditure.	N one.	Expenditures must be reported to the FEC.
Soft Money: Direct contributions	These are contributions given mostly to national party committees to be used in state and local elections and for administrative expenses. They also pay for so-called issue ads that do not expressly advocate the election or defeat of a federal candidate.	Individuals, corporations and unions may donate unlimited amounts to national party committees and to leadership PACs, which are federal PACs associated with presidential candidates and members of Congress.	National parties must disclose soft money contributions to the FEC. Leadership PACs are not required to disclose contributions or expenditures, even though some of that money is used for leadership PAC administrative expenses.
Contributions to state committees and candidates	These are contributions given to political committees and candidate committees organized under state laws. The committees can use soft money for issue ads or to advocate the election or defeat of a nonfederal candidate	Limits vary by state law. In Virginia, for example, there are no limits on contributions to a state PAC. But that PAC cannot contribute directly to a federal candidate or advocate the election or defeat of a federal candidate	Committees generally file reports with a state agency. They do not file reports with the FEC.
Contributions to Joint Fundraising Committees	These are contributions given to a fundraising committee that can collect both hard and soft money to jointly benefit a federal candidate and a national party committee. Senate campaigns often use joint fundraising committees. House candidates have used such committees to distribute hard money among several candidates.	Limits are the same as for hard and soft money. A joint fundraising committee sets a formula for allocating money collected to recipients. In some situations, the first $2,000 of a contribution is counted as hard money and goes to the candidate's campaign, while any remaining amount is treated as soft money and transferred to the national party committee.	Contributions must be disclosed to the FEC by the joint fundraising committee. Transfers of the money to the candidate's campaign committee or a party committee must be disclosed by the joint fundraiser and the recipient party committee or candidate
Unregulated Money	This is money raised and spent on political activity that falls outside the scope of federal regulation. The activity can include almost any political message that does not expressly advocate the election or defeat of a federal candidate. Organizations that conduct these activities typically are created under Sections 501 and 527 of the tax code	Individuals, corporations and unions can donate unlimited amounts to these types of organizations. A 501(c)(3) organization is generally a nonprofit charity; not all such groups are involved in politics. A 501(c)(4) organization is a social welfare group; those involved in politics are generally lobbying groups. A 527 is a political group formed to influence elections. An example of a 527 organization is Republicans for Clean Air, which aired advertisements critical of presidential candidate Sen. John McCain, R-Ariz., during this year's Republican primaries.	For 501(c)(3) and 501(c)(4) groups, the only filing requirement is an annual IRS Form 990 summarizing financial activity without listing donors or expenditures. Groups formed under Section 527 file an annual confidential tax return if they earned more than $100 in interest income.

Source: Congressional Quarterly Weekly (May 13, 2000), pp. 1086-1087.