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How Political Donations Work: Facts About Campaign Finance

4 min read

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By Matt Jacobson

Campaign finance laws limit who can donate and how donations are handled. Discover what candidates and supporters need to know about political donations.

Political campaigns in the United States require funding, and donations from supporters help pay for the expenses involved. In 2016, the total amount raised and spent on federal political campaigns, including the presidential election, Senate races and House races, was $6.5 billion dollars.

Congress writes the laws that govern how federal campaigns, such as presidential and Congressional campaigns, can be funded and who can donate, and the Federal Election Commission (FEC) enforces those laws. Local and state races are governed by individual state laws. Only American citizens or green card holders can donate to political campaigns in the United States, so foreign nationals are prohibited from donating.

Individual Political Donations

Individual citizens can donate directly to the political candidate of their choice or to the national party as a whole. The FEC sets limits on how much each person can donate. In the 2019-2020 campaign cycle, individuals could donate up to $2,800 to each candidate and up to $35,000 to the national party.

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Political Action Committees

Political action committees, commonly referred to as PACs, are private groups that donate large amounts of $1,000 or more to a political candidate or party. Individual donors can give up to $5,000 to a PAC in a given year, and PACs could donate up to $5,000 per race to a candidate and up to $15,000 to a political party per year during the 2019-2020 election cycle. Primary and general races are considered different races, so a PAC can donate to a candidate during the primaries and again during the general election. PACs can also spend money on ads or other promotion of a candidate as long as they don’t coordinate with the campaign itself. If a PAC makes an ad, they have to add a disclaimer stating that the PAC paid for it.

There are a few different types of PACS with different organizational structures and guidelines.

Connected PACs

Connected PACs collect contributions from a specific group of people, such as labor union members or people in a specific trade group. People who aren’t members of that group cannot contribute.

Non-Connected PACs

Non-connected PACs allow contributions from anyone and are typically focused on a specific issue.

Leadership PACs

Leadership PACs are a type of non-connected PAC sponsored by an elected official. Officials cannot use the funds from a leadership PAC to pay for their own campaigns but can donate to other candidates, such as down-ballot candidates from their own parties. This type of PAC can also spend money on things not directly related to the politician’s campaign, such as travel expenses or polling.


SuperPACs operate independently of a particular campaign and spend money to help elect a candidate. As independent expenditure-only political action committees, these SuperPACs are prohibited from donating directly to a candidate or political party. Instead, these organizations produce ads and promote a campaign without coordinating directly with the campaign or party. Because SuperPACs operate completely independently from the candidate, there are no limits on donations or expenditures. An individual can donate any amount to a SuperPAC, and the organization can spend as much as they want to promote a candidate.


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Nonprofit Organizations Donating to Political Campaigns

Nonprofit groups focused on a specific issue can donate to political campaigns or spend money on independent promotions that don’t benefit the campaign directly. Many of these groups donate to local and regional campaigns. There are two main types of nonprofit organizations that help finance political campaigns.

527 Groups

These organizations are after the section of the IRS tax code governing their operation. They often spend money on things not directly tied to a specific campaign, such as voter registration and advocating for a specific issue.

501(c) Organizations

A nonprofit 501(c) organization is typically focused on a single specific issue and may spend money to support candidates who support their position, though they cannot donate directly to candidates or parties. 501(c) groups can include labor unions, chambers of commerce and social organizations. Some notable 501(c) organizations that get involved in political campaign finance include the National Rifle Association (NRA), Planned Parenthood and the American Civil Liberties Union.

Self-Financing a Political Campaign

While individuals are limited in how much they can contribute to a candidate or party, there’s no limit on how much someone can spend on their own campaign. Wealthy people running for office can spend as much of their own money as they want. Millionaires and billionaires sometimes use self-funding as the primary source of money for their campaigns.

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Loopholes in Campaign Finance

The rules governing campaign finance and political donations can get complicated, and wealthy donors sometimes use loopholes to skirt FEC regulations limiting how much they can donate. Donations to SuperPACs and nonprofits that support a specific issue have fewer limitations, so these are sometimes used to boost a candidate’s chances without going over the individual contribution limit.

Bundling, which involves gathering contributions from a group of people and donating the money all at once to promote a special interest or gain access to a candidate, is another strategy donors use to skirt campaign finance regulations.

Warning: In the past, some people have formed an LLC to hide their political donations, but more recent disclosure laws have limited this tactic.


Campaign finance is often controversial, particularly because there are so many guidelines and loopholes involved. Major court cases, such as the Citizens United case heard in the Supreme Court in 2008, have set specific guidelines on political campaign funding. This case was what allowed political organizations to spend unlimited amounts on independent expenditures not coordinated with a specific campaign, so it directly led to the existence of SuperPACs. Overturning Citizens United has been a campaign issue during some national elections, with various candidates coming out specifically for or against the ruling.

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