At Spending Spotlight, our initial focus has been on political contributions made directly from corporations to specific legislators – dollars that can be tracked directly from donor to recipient. But this is only one pathway through which money can flow from corporations (and individuals) to legislators and the other pathways can be far murkier, making it hard to see who is pulling the financial strings for an elected official. We will be expanding our company rating methodology over time to include as many of these additional methods as possible, but for now we thought it might be helpful to provide some basic information on what these pathways are and how they work.

This is the first in a series of posts summarizing how the rules for political contributions and influence are structured to favor large corporations and wealthy individuals, and how these structural advantages are often being used against us. This first post is a primer on the basic categories of political donors as recognized by the Federal Elections Commission (FEC)*, and how varying rules pertaining to each category create huge power disparities in our political system. Future posts in this series will focus on corporate lobbying, advocacy organizations (like the NRA), and other methods many corporations use to shape our politics in their favor.

Part 1 – What are PACs, Super PACs, and Dark Money?

In today’s politics, the influence of corporations and wealthy individuals on elections and policymaking is pervasive, directly impacting laws created that can either support or restrict your rights as an individual. For example, corporations using their financial power to support politicians who want to restrict LGBTQ+ rights, roll back reproductive freedom, or block common-sense gun reforms are financing efforts to impose values that go against the will of the majority of Americans**.

We are, of course, free to financially support the candidates or issues of our choice, within the contribution limits, rules, and guidelines established by the FEC (see here for the latest limits).  However, due to a series of court decisions over the last fifteen years, those FEC rules have been changed in ways that significantly tilt the playing field to the advantage of large corporations and wealthy donors. Deep-pocket organizations and individuals can now pour unlimited funds into our elections (measuring now in the billions of dollars for the ‘23 – ‘24 election cycle), and do so anonymously. While technically available to all of us, these unlimited, anonymous contribution pathways significantly favor those with the financial resources to take full advantage, whether Republican or Democrat.

To understand the advantages that our current system provides ultra-wealthy entities, it is important to understand the basic types of “donor” recognized by the FEC, and the varying rules*** pertaining to each. For this post, we’re going to limit the scope to federal elections.

There are four main categories of “donor” we’re going to look at:

1. Individuals
2. PACs
3. Super PACs
4. Dark Money Groups

The Limits on Individual Donations

The FEC establishes individual contribution limits for every campaign cycle – the current limit is $3,300 per-person per-election for federal candidates. With primary and general elections considered separate elections, this means the average person is typically limited to spending $6,600 per candidate for a federal election cycle. These contributions are required to be filed with and publicly disclosed by the FEC, providing transparency into the sources and amounts of individual political contributions.

What are PACs?

PACs, or political action committees, are organizations created to help elect or defeat political candidates. PACs have been around since 1944, and many PACs are corporate or union PACs (Boeing PAC, Microsoft PAC, UAW PAC, etc.) soliciting donations from employees and making contributions directly to candidates. PACs can contribute up to $5,000 per election directly to candidates, and individuals can contribute $5,000 per PAC, creating another method for individuals to exert influence on an election through their contributions. Again, contributions by PACs are filed with and publicly disclosed by the FEC.

How are Super PACs different from PACs?

Super PACs were created following a 2010 federal court decision. They are a form of PAC that is prohibited from directly contributing to candidates, but they can both raise and contribute unlimited amounts of money to independently advocate for or against a candidate. They’re just not supposed to coordinate directly with a candidate’s campaign, although in practice there are many loopholes campaigns exploit to coordinate Super PAC spending on their behalf. When you read about the skyrocketing amounts being spent on advertising and other election expenses by “outside groups”, much of this growth is due to the activities of Super PACs (as of August 26th, Super PACs had raised over $2.2 Billion for the ‘23-’24 election cycle). Super PACs are still required to identify all of their donors in FEC filings, so while unlimited, they are not anonymous. 

Except when combined with…

Dark Money Groups

These groups are typically politically active nonprofit organizations (501c4s). Current rules allow them to accept unlimited contributions and they are not required to publicly disclose their donors, thus the term “dark money” – we often don’t know the source. Dark money organizations can spend on elections, including making unlimited contributions to super PACs. So while Super PACs are required to disclose their donors, a donor who wishes to remain anonymous can legally sidestep Super PAC disclosure rules by making their contribution through dark money groups that are under no obligation to reveal their funders; only the dark money group’s name is listed. This “loophole” in the disclosure process has led to the creation of dark money shell organizations whose only real purpose is to enable unlimited political contributions by entities that want to remain hidden in the shadows.

Both Democrats and Republicans use dark money groups.

It is important to emphasize that dark money groups are used extensively by both Democrats and Republicans, with estimates that Joe Biden received over six times as much financial support from dark money groups compared to Donald Trump in 2020. The appeal of using unlimited, untraceable contributions to shape elections clearly crosses party lines.

So as an individual contributing directly to candidates, you are limited in the amount you can give and your contributions must be publicly disclosed. But if you are a corporation, organization, or individual with the means and the intent to give far more than allowed under individual contribution limits, there are legal methods available to you to tilt the playing field and stay hidden while doing so.

In our next post in this series, we’ll look at specific examples of how groups on both sides of the aisle, like the NRA, the Sixteen Thirty Fund, and many others, are using PACs and Dark Money to hide donors who want to influence our elections without transparency or accountability for their actions.

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*The Federal Election Commission (FEC) is an independent regulatory agency established in 1975 with jurisdiction over the financing of campaigns for the U.S. House, Senate, Presidency and the Vice Presidency.

**Sources: LGBTQ+, Reproductive Freedom, Guns

***This post provides a summary of some of the key rules shaping federal political contributions; for a comprehensive listing and description of all the rules and regulations governing political contributions, please refer to the FEC website at FEC.gov.