Campaign finance in the United States

The financing of electoral campaigns in the United States happens at many levels, including federal, state, and local levels. People, companies, groups called political action committees, and sometimes the government all help pay for these campaigns. Over the years, the money spent on campaigns has gone up a lot. For example, someone who won a seat in the U.S. House of Representatives in 1990 spent about $1 million in today’s money, but by 2022, that number had grown to around $3 million. In the Senate, the average spending for winners went from about $9.5 million in 1990 to nearly $29 million in 2022.

In 2020, about $14 billion was spent on federal elections, making it the most expensive campaign in U.S. history. Some people worry that very wealthy individuals and groups can spend huge amounts of money to influence elections. They say this makes it hard for ordinary people’s voices to be heard. In 2024, Elon Musk gave $277 million to support Trump and other Republicans, becoming the biggest individual donor in recent U.S. election history.

Laws about how much money can be given and spent on campaigns are made by Congress and enforced by the Federal Election Commission. Some groups watch how money is used in politics. There are also rules for public money that can help candidates for President of the United States, but they must follow certain rules to get this help. Each state has its own rules about campaign money, and these can be very different from one another.

Terminology, definitions

In the United States, there are special terms used to describe money used in elections. "Campaign funds" are monies used to support a candidate’s effort to win a federal election.

"Dark money" refers to spending on elections where the source of the money is kept secret from voters.

Soft Money is money used for state and local elections or for general party activities like registering voters, but it is not meant to directly support or oppose a specific federal candidate. Unlike hard money, there are no limits on how much soft money can be given.

Hard Money is regulated money given by individuals or political groups to support federal candidates or parties, and it is used specifically for federal elections.

Campaign spending

Money used for elections in the United States has gone up over time, especially in recent years. In the past, big donations caused a lot of concern. For example, a donation that seemed very large in 1972 would be worth much more today.

In 2022, about $16.7 billion was spent on elections. This was more than past elections. Most of the money came from people who support one group, and they spent more than others.

In 2024, around $15.9 billion was spent, making it one of the most expensive election years ever. Much of this money was used in races for Congress and the presidency.

Impact of contributions

A study from 2016 showed that politicians were more willing to meet with people who had given money to their campaigns. Another study found that companies that gave more money to candidates often got more government contracts in return. However, some research suggests that giving money does not always bring direct benefits, like lower taxes for companies.

When looking at elections, some experts say that spending a lot of money does not always guarantee a win. For example, Donald Trump won an election even though he had less money than his opponents. Yet, in many cases, the candidate who spends the most usually wins, especially in races for the U.S. House of Representatives. This may be because donors tend to support candidates who already seem strong, or because the money helps lesser-known candidates win.

At the state level, money can influence decisions in legislatures in many ways, such as shaping what bills get discussed or written. However, the effect of money seems stronger in states where legislators are paid more and have more professional roles. Some studies comparing states with loose rules on contributions to those with strict rules found little difference in corruption or public trust.

Criticism

People worry that when very rich people and big companies give lots of money to help someone get elected, it can cause problems. They say it might make leaders favor the rich instead of helping everyone. This can make people lose trust in their leaders and care less about what happens in the government.

Some think we should change how money works in elections. Ideas include using public money to help candidates who get small donations from many people, and making sure all spending is publicly known. Others suggest closing loopholes that let candidates raise money in secret ways.

However, some believe that limiting money in politics takes away people's right to speak freely. They think that more money in politics is okay and that rules to stop it are unfair. Some experts also say there is not strong proof that having less money in politics makes government better or less corrupt.

Sources of campaign funding

Political parties also raise a lot of money for elections, giving it to candidates, spending it for them, and using it to help voters. In 1992, the Republican and Democratic parties together raised about $650 million. By 2020, that number had grown to nearly $2.7 billion.

Campaign money for federal offices comes from a few main sources: small donors who give $200 or less, larger donors who give more than $200, political action committees, and the candidate’s own money. Very wealthy people, including billionaires, give a large share of the money. For example, during the 2016 presidential campaign, just a few hundred very rich families provided almost half of the public campaign money.

Federal law stops companies and labor unions from giving money directly to candidates. It also sets limits on how much individuals and groups can give to campaigns and parties. Each state has its own rules for non-federal elections, and some states allow companies and unions to give money while others have no limits at all.

Some people, called “bundlers,” collect money from many others and give it to campaigns. These bundlers sometimes get special treatment from the candidates they support. Lobbyists also help with campaign money by organizing fundraisers and connecting donors with candidates.

A type of donation called “soft money” goes to parties instead of directly to candidates. After some court decisions in 2010, there are no limits on this kind of spending. This has led to large amounts of money flowing into elections through groups that do not have to name their donors. These groups can spend money to support ideas or parties but not to directly tell people to vote for a specific candidate. One common way they spend money is through committees that can raise and spend unlimited amounts to support or oppose candidates, as long as they do not work directly with the candidates.

Spending by outside organizations/independent expenditures

Organizations that are not individual candidates or their campaigns also help pay for elections. These groups can give money to campaigns, but they can also spend money themselves to try to influence elections. This is called "independent expenditures".

All groups that are not political parties — except for a few traditional PACs that make independent expenditures — can accept any amount of money from individuals, corporations or unions.

Political action committees

Main article: Political action committee

Federal law allows for different types of political action committees (PACs).

• Connected PACs: The Federal Election Campaign Act stops corporations and labor unions from giving money directly to support federal elections. But they can create a "separate segregated fund" (SSF), called a "connected PAC". These PACs can only get money from certain people, like managers and shareholders for a corporation. The organization that sponsors the PAC can help pay for the PAC’s costs. As of January 2009, there were 1,598 corporate PACs, 272 for labor unions, and 995 for trade groups.
• Nonconnected PACs: A nonconnected PAC pays for itself. It must use the money it collects to cover its own costs. If an organization helps a nonconnected PAC, that help counts as a donation and has limits.
• Leadership PACs: Elected leaders and political parties can’t give more than a certain amount directly to other candidates. But they can create a leadership PAC that spends money to help other candidates, as long as it’s not worked out with the candidate. Leadership PACs can accept donations from people and other PACs. Since current officeholders often get more support, leadership PACs help the party in power win more seats. A leadership PAC cannot use money to help the official who created it run for office, but it can pay for travel, office costs, helpers, polls, and other things that are not directly for the campaign.
• "Super PACs": Super PACs are different from other PACs because they can collect any amount of money from people, corporations, unions, and other groups, if they follow the rules. They are officially called "independent-expenditure only committees" because they cannot give money directly to candidate campaigns or parties. They must spend money on their own. Super PACs must tell the public who gives them money, but some groups are hard to trace. Super PACs started in the 2010 election. They became possible because of two court decisions. First, the U.S. Supreme Court decided in Citizens United v. Federal Election Commission that the government cannot stop unions and corporations from spending money independently to support elections. Second, a court decided that groups making independent expenditures can accept any amount of money from any source. Independent spending has grown over time. In the 2019-2020 election, Super PACs collected over $2.5 billion and spent nearly $1.3 billion.
• Hybrid PAC: A hybrid PAC is like a Super PAC but can give small amounts of money directly to campaigns while also spending large amounts independently.

Main article: Hybrid PAC

501(c) organizations

Main article: 501(c) organization

Some groups, like social welfare groups, labor unions, and chambers of commerce, can take part in political campaigns and elections as long as their main goal is not to support specific candidates. They do not have to tell the public who gives them money.

527 organizations

Main article: 527 organization

A 527 organization is a type of group named after a part of the U.S. tax law. Most political groups are 527s, but usually this term means groups that are not controlled by state or federal campaign finance laws because they do not directly support or oppose a candidate. When they follow the law, there are no limits on how much money they can get or spend. But they must register with taxes, tell the public who gives them money, and report what they spend it on.

Political parties

Political parties can give money directly to candidates, but there are limits. National and state parties can also spend money to help their candidates in general elections, but there are limits. National party committees can also spend any amount to support or oppose federal candidates. But since 2002, national parties cannot accept money that goes over the limits set for elections.

Disclosure rules

Campaign finance laws in the United States require groups like candidates, political parties, and special committees to share information about the money they collect and spend. They must list who gave money, how much was given, and where the money went. This information is kept in a public database and shared online by the Federal Election Commission.

However, there are gaps in these rules. One big gap is called "dark money." This is money given to political groups that do not have to tell the public who received the money or how much was spent. In the 2020 election, over $1 billion in dark money was used in federal campaigns. This kind of money has been growing quickly in recent years.

Various organizations, like OpenSecrets, collect data on political contributions to show how different groups influence elections. In 2014, an app called "Buypartisan" was created to let people scan product barcodes in stores and see which political groups the companies support.

History of campaign finance in the United States

Further information: Campaign finance reform in the United States § History

Andrew Jackson was one of the first American politicians to use common campaign methods, like having staff to help raise money and secure votes, and committees to organize events.

After the Civil War, the first federal campaign finance law was introduced. Wealthy families soon realized they could gain by supporting election campaigns. In the late 1800s and early 1900s, secret donations from rich business leaders caused several scandals.

In 1905, President Teddy Roosevelt tried to stop corporations from giving money to campaigns, but it didn’t work. The Tillman Act of 1907 tried to stop corporations and banks from giving directly to candidates, but it was hard to enforce.

In 1971, new laws were made to require more reporting and set limits on contributions. In 1976, a court case said some spending limits were not allowed, but donation limits and reporting were okay.

In 2002, new rules tried to stop unlimited donations called “soft money.” But some groups found ways around these rules. In 2010, important court cases changed the rules again, allowing more spending by groups that did not work directly with candidates. This led to more money in campaigns from groups called “Super PACs.”

These changes have greatly increased the amount of money spent on campaigns over the years.

Public financing of campaigns

See also: Campaign finance reform in the United States § Current proposals for reform

After some important court decisions changed the rules about campaign spending, people worried that only a few big donors could have too much power. So, they started looking at ways to use public money to help pay for political campaigns. One idea is to match small donations with public funds, so candidates would need many supporters instead of just a few big donors.

At the federal level, public money is only used for presidential campaigns. There are two main parts: matching funds for the first $250 of each donation during the primary, and money for the main party candidates in the general election. To get these matching funds in the primary, candidates must raise a little money from many states. If they agree to spend only a certain amount, they can get public money to match small donations. But some candidates choose not to take public money and raise their own instead.

In the past, most presidential candidates took public money, but since 2012, very few have done so. For the general election, public money is offered, but candidates can choose to raise their own funds instead. The amount of public money changes each year to keep up with costs. In 2012, neither the main party candidates used public funds. Public money was also once used to pay for party conventions, but that rule was changed in 2014.

Some states and cities have tried their own ways to publicly fund campaigns. For example, in Arizona and Maine, candidates can get a set amount of public money if they collect enough small donations and signatures. They cannot take private donations or use their own money if they take public funds. Other places have tried similar ideas, but some have faced problems or been voted down by people.

Ethics of spending campaign funds

Sometimes, politicians might be tempted to use money meant for their election campaigns for personal things instead. For example, a U.S. Representative from California, was punished in 2020 for using money from his campaign to pay for family trips and school fees.

There are rules to help decide what counts as proper use of campaign money. The Federal Election Commission checks to make sure that any spending that benefits the person, not just the campaign, is not allowed.

Sources of data

Many places have their own rules for sharing information that are not mentioned here.