Glossary
Campaign Finance Terminology
Direct dollars given to a candidate, political party, or PAC.
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Example: Jane is running for president. John gives money to Jane to help run her campaign.
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Contribution
Funds given to “social welfare” organizations—sometimes called by their tax code status“501c(4)”—that are then used to influence elections. Originally conceived as a way to allow traditional charities also to take part in political action, they have grown massively in the last decade. By law, these organizations are required to devote a majority of their activities to social welfare rather than political purposes, so they wouldn’t appear to be an efficient channel for campaign funds. But, for donors who prefer to keep their identities secret, they work: Neither the FEC nor IRS requires 501c(4) organizations to disclose the sources of their funds. Thus the moniker “dark money.”
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Example: Jane is running for president. John gives money to a 501c(4) organization, which in turn donates that money to a campaign or super PAC, effectively hiding John’s name from the record.
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Federal Election Commission (FEC)
Established by Congress through a 1974 amendment to the “Federal Election Campaign Act,” the FEC began its work in 1975. Its mandate is to oversee and enforce campaign finance rules, though a series of court cases have removed or weakened some of the rules that the agency was established to enforce. The FEC’s six commissioners are appointed by the president with approval from Congress. By law, no more than three can be affiliated with the same political party. Commissioner Ann Ravel observes that many FEC rules are not currently being enforced because “three Commissioners repeatedly and consistently vote against enforcing the law,” even though, she stresses,such deadlock has not been the historic pattern.
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Independent expenditure
Coordination
The FEC mandates a “three-pronged test” to determine whether a communication is coordinated:
1) Who paid for it?
2) Is its content an election communication?
3) Did it result from a request or suggestion from the candidate, campaign, or committee?
All three “prongs” must point to coordination for a communication to be deemed “coordinated.” Given the explosive growth of independent expenditures, however, Commissioner Ravel notes that relevant FEC rules need updating.
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Example: Jane is running for president. Without consulting Jane or her campaign, John spends money on his own or donates it to a super PAC to support Jane’s winning the presidency.
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Any spending by an individual or group for political objectives that is not coordinated with a candidate or the candidate’s campaign committee or party; and therefore is not restricted.
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Joint Fundraising Committee
Dark money
A joint fundraising committee (JFC) allows a single entity [SM1] to raise funds on behalf of:
· National campaign committees
· State campaign committees
· National political party committees
· State political party committees
· Multiple candidates
Rather than a donor giving the legal individual maximum to those groups individually, the donor can write a single check for the combined legal maximum values to a JFC. For donors, this doesn’t change the possible total amount that could be donated, but it greatly simplifies the process by allowing them to give large amounts of money at once. For the committees that make up the JFC, it allows them to combine fundraising costs and then split the proceeds.
Use of JFCs:
Pre-McCutcheon:
Individual total giving was limited -- the more committees there were in a JFC meant each committee got a smaller amount of the money given, as the total amount of money from an individual cannot change. Therefore, there was less incentive to band together.
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Post-McCutcheon:
Individual total giving is not limited -- more committees in a JFC means a larger single check an individual can write, enabling wealthy individuals to easily give massive donations.
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Example: Jane wants to run for President. Rather than asking her wealthy donor to give to her party, her national campaign, and 50 different individual state campaigns, Jane can ask for one very large donation to her joint fundraising committee. This committee will then do the work of dispersing the money appropriately according to individual contribution limits for each group in the committee.
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PAC (Political Action Committee)
Originating in 1944, a political action committee is a group affiliated with a party, issue, or candidate that raises or spends money for political purposes. Regulated by theFEC, PACs must reveal the source of their donations in regular reports. Contributors to PACs are limited in what they can donate and PACs themselves are limited in what they can donate to other political bodies. Unlike super PACs (see below), however, these groups may coordinate directly with candidates and campaigns.
Example: Jane is running for president. Any group that wants to work with Jane’s campaign can form a PAC, but that group will have to register with the FEC and report its donations and spending to the FEC.
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Political spending
Any money spent for political ends. In addition to contributions (see above), this term also includes expenditures directly by candidates, PACs, and parties, as well as independent expenditures by groups or individuals. Of all the types of political spending, courts have ruled that only contributions directly given to registered PACs, parties, or candidates can be limited by the law.
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Example: Jane is running for president. Anyone, including Jane, who spends any money to support (or counter) Jane’s campaign through any means is engaging in political spending.
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Super PACs
Technically known as “Independent Expenditure-Only Political Action Committees,” these groups emerged following two major 2010 court decisions (Citizens United v. FEC, SpeechNow.org v.FEC), which made them legal. These groups are required to submit records of donors and political spending to the FEC, but are not limited in terms of how much they can collect or spend. Unlike regular PAC’s, however, these groups can only make independent expenditures.
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Example: A group collects as much money as they’d like and spends it on commercials to support Jane for president. As long as they don’t “coordinate” with Jane or her campaign, they can raise and spend as much money as they like.
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"Super-Duper PACs"
As of early 2016, several efforts are underway to create hybrid PAC models that have separate accounts so they can (A) collect and spend all they want on independent expenditures like a super PAC from one account, and (B) give directly to candidates like a regular PAC from another account. Only spending under section B would be regulated by the FEC and therefore subject to limits on donors and spending. Courts have not weighed in on this model’s constitutionality.
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Types of Organizations
501c(3) (Charity of Public Charity)
Nongovernmental organizations that range from charities to advocacy organizations, including a majority of the groups in this Guide. They can advocate for causes but are forbidden from contributing to political campaigns.
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501c(4) (Social Welfare Organization)
Similar to charities except these groups are allowed to engage in political campaigns as long as this work does not use more than 50% of their resources in a given year. Because they are not required to report the source of donations, these groups are used by those who prefer to hide their identity. Their political spending is thus called “dark money.”
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527 (PACs, Political Parties, Political Committees or Super PACs)
PACs, Political Parties, Political Committees:
Strictly political groups monitored by the FEC and subject to all FEC requirements and limits. They are allowed to work directly with candidates and campaigns to coordinate activity.
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Super PACs:
PACs that only make independent expenditures (see above). They are exempt from FEC spending and fundraising limits.
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PACs, Political Parties, Political Committees (527)
Strictly political groups monitored by the FEC and subject to all FEC requirements and limits. They are allowed to work directly with candidates and campaigns to coordinate activity.
Social Welfare Organization (501c(4))
Similar to charities except these groups are allowed to engage in political campaigns as long as this work does not use more than 50% of their resources in a given year. Because they are not required to report the source of donations, these groups are used by those who prefer to hide their identity. Their political spending is thus called “dark money.”
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Super PACs (527)
PACs that only make independent expenditures (see above). They are exempt from FEC spending and fundraising limits.
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Major U.S. Supreme Court Cases
Buckley v. Valeo (1976)
Decision by Supreme Court except where noted otherwise:
Limits on contributions to individual parties or campaigns are constitutional. But limits on most types of independent, total political spending by an individual are not constitutional because they limit free speech.
Resulting Rule Change:
All limits are eliminated for:
1.) Independent expenditures by individuals
2.) Total campaign spending by a campaign itself
3.) Use of personal funds by a candidate or candidate’s family for a campaign.
Citizens United v. FEC (2010)
Decision by Supreme Court except where noted otherwise:
Corporations acting as groups of individuals have many of the same political rights as the individuals within that group. Therefore, the 1976 Buckley v. Valeo decision applies equally to corporations and individuals.
Resulting Rule Change:
Corporations and unions can now, like individuals, spend unlimited amounts on independent expenditures.
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McCutcheon v. FEC (2014)
Decision by Supreme Court except where noted otherwise:
While limits on contributions to PACs, parties, and candidates are constitutional, aggregate limits for individual contributions to these entities are not.
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Resulting Rule Change:
Since 1976, individuals and groups have been limited in how much they could give directly to a candidate, party, or PAC; and until McCutcheon, total political contributions within a given two-year period were also limited. This ruling, however, eliminated aggregate limits so that individuals and groups can now give the maximum legal amount directly to campaigns, parties, or PACs in every race during every electoral season.
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SpeechNow.org v. FEC (2010)
Decision by Supreme Court except where noted otherwise:
The D.C. Court of Appeals, in the first major decision to cite Citizens United, rules that if individuals and corporations can make unlimited independent expenditures, it is unconstitutional to limit contributions to independent expenditure-only political groups.
Resulting Rule Change:
The decision enabled the emergence of super PACs—a.k.a. independent expenditure-only organizations—that can receive and pool unlimited contributions and spend as much as they want, as long as that spending is not “coordinated” with a campaign or party.
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