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.
