Please ensure Javascript is enabled for purposes of website accessibility

Lesson Plans

Understanding Campaign Finance Law

June 7, 2016

Full Lesson


by Amanda Wilcox

campaign financeCampaign finance has been a major point of contention during the 2016 election season. Most notably, Sen. Bernie Sanders has criticized Secretary Hillary Clinton for her connections to wealthy Wall Street donors and has demanded that “big money” be removed from the political process. Simultaneously, he has emphasized that his campaign has received millions of individual donations averaging approximately $27. Meanwhile, the expected GOP nominee, Donald Trump, claims that he is financing his campaign independently.

As much media attention has been devoted to this disagreement between the two Democratic candidates, there has been no evidence to indicate that Secretary Clinton has financed her campaign inappropriately. Nor are contributions to Sen. Sanders’ campaign superior to those to Secretary Clinton’s simply by virtue of being small and individual.

A solid understanding of campaign finance law is critical so that voters can distinguish between campaign rhetoric and the actual constraints of the law.

Here’s a brief overview of the regulations that candidates must observe in federal elections.

Federal Election Campaign Act (FECA)

In 1971, the Federal Election Campaign Act (FECA) was Congress’ first attempt at comprehensive campaign finance regulation, and it sought to address corruption fears among the American electorate, especially in the aftermath of the Watergate scandal. One of FECA’s most important features was a disclosure requirement regarding contributions and information about donors.

This provision created a “money trail”: Since donations could be traced to individuals, wealthy Americans could no longer act as candidates’ secret benefactors. FECA also imposed limits on how much individuals, special interest groups and political action committees (PACs) could contribute. A PAC is an organization that pools contributions from its members to influence elections.

The debate over whether or not spending money constitutes free speech, which is still hotly contested today, developed on the heels of the passage of FECA. In 1976, the Supreme Court determined in Buckley vs. Valeo that it is a constitutional violation of free speech to limit a candidate’s expenditures on his or her own campaign.

In addition, FECA allowed a major campaign finance loophole: soft money. There was no limit placed on how much individuals could contribute, or political parties could spend, on expenses not expressly associated with individual candidates such as issue advertising and get-out-the-vote initiatives. Even though soft money never reached campaigns’ bank accounts, the activities it was used for certainly boosted individual candidates in the polls and allowed donors to slip under the wire. The passage of the 2002 McCain-Feingold Act (also known as the Bipartisan Campaign Reform Act) banned soft money in time for the 2004 presidential race.

Watch then-Sen. John McCain discuss the Citizens United decision with Judy Woodruff.

Another loophole that has developed in campaign finance law involves 527 organizations, which are tax-exempt advocacy groups. While they don’t donate to or associate directly with candidates, they can influence elections by running issue-oriented advertising campaigns, commenting on candidates’ records, and organizing get-out-the-vote efforts. Moreover, they are not subject to spending or contribution restrictions because they are categorized as “educational” organizations.

Citizens United vs. Federal Election Commission

Most recently, in the 2010 case Citizens United vs. Federal Election Commission, the Supreme Court articulated two principles that have fundamentally changed campaign finance. First, it stated that the First Amendment extends to large corporations; thus, corporations are entitled to all of its protections including freedom of speech. Second, it ruled that spending money qualifies as free speech. Therefore, it is a Constitutional violation for the government to restrict corporations’ political expenditures. Corporations still can’t exceed contribution limits to individual candidates, but they can spend unlimited amounts on advertising and other tools to convince the electorate to vote in a certain way.

Citizens United gave billionaires a glaring way around campaign finance laws: Super PACs can now accept and spend unlimited donations from the wealthiest Americans provided that they do not “coordinate” or communicate with a particular candidate. Unfortunately, given that candidates have found exceedingly creative loopholes in coordination rules, these unlimited sources of money have become closely tied to single candidates and contribution limits have essentially become meaningless.

The future of campaign finance rests heavily on the next President’s Supreme Court picks–an additional liberal or conservative justice’s vote could either overturn Citizens United or uphold it for many election cycles to come.

Click here for opposing reactions to the Citizens United ruling on the PBS NewsHour in 2010.

Click here for the transcript of McCain’s 2001 PBS NewsHour interview discussing the McCain-Feingold Act.

Amanda Wilcox is a senior at T.C. Williams High School in Alexandria, Virginia.