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Campaign Finance: Sources, Regulations & Reform Video

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  • 0:03 Campaign Financing
  • 1:15 Campaign Finance Sources
  • 3:38 Campaign Finance Regulations
  • 5:17 Campaign Finance Reform
  • 6:23 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

Modern presidential campaigns often last up to two years and involve extensive media operations. This means a successful campaign will be expensive. This lesson discusses campaign finance, including sources, regulations, and reform efforts.

Campaign Financing

What costs approximately $500 million dollars and comes with a prestigious title? It's our U.S. presidency! Throughout history, campaign finance has played an increasingly important role in elections. Campaign finance refers to all money raised and spent when politicians run for public office. It's the money produced to pay for an election effort. It includes the election funds used to support particular candidates, political parties, and policies.

For example, George W. Bush and John Kerry generated nearly half a billion dollars in private funding during the 2004 presidential election. Since then, the cost of a successful election has increased. The cost of a nationally televised 30-second ad costs, on average, around $100,000. It can cost as much as $4 million when aired during the Super Bowl. Think of how many political ads you saw during the last presidential election!

Campaign Finance Sources

Let's take a look at where all this money comes from. Presidential candidates use a variety of ways to raise election funds. However, most money comes from these three sources:

  • Individuals
  • Political Action Committees, or PACs
  • 527 groups

In 2014, an individual could donate up to $2,600 to a single candidate or candidate's committee and up to $32,400 to a political party each calendar year. For this reason, most fundraising efforts are geared toward individuals. For example, candidates often raise large sums in a single night by hosting a dinner for interested, wealthy individuals. Attendees pay to attend these high-profile events.

These same individuals can also give up to $5,000 to a PAC each year. PACs are private organizations that donate or spend more than $1,000 for the purpose of influencing an election. Generally, PACs are limited to donating no more than $5,000 to a single candidate and no more than $15,000 to a political party each election.

527 groups are similar to PACs. However, 527 groups don't directly donate to or work with a particular campaign. Because of this difference, 527 groups aren't regulated the same as PACs. These groups can have a significant impact on elections nonetheless. For example, John Kerry's 2004 presidential campaign faltered after Swift Boat Veterans for Truth 527 group ran television ads disputing Kerry's military service.

Note that there's no limit on how much an individual can donate to his or her own campaign. This means wealthy individuals often hold a distinct advantage over those dependent on fundraising. Mitt Romney used much of his own money to finance his 2008 and 2012 presidential campaigns.

Campaign Finance Regulations

Naturally, some candidates raise more funds than others. In an attempt to keep elections as fair as possible, campaign finance is heavily regulated. The group responsible for regulating campaign contributions is the Federal Elections Commission, or FEC. It's an independent regulatory agency that governs campaign donations and spending. The agency administrates all federal campaign finance laws. The FEC also administers the Presidential Election Campaign Fund, or PECF. This fund provides public funds to presidential candidates.

The FEC was created in 1974 as an amendment to the Federal Election Campaign Act, or FECA. FECA was passed in 1971. Prior to that, there were very few controls on campaign financing. FECA requires political candidates to disclose their donors. Subsequent amendments to FECA have restricted private donations as well as donations from PACs and political parties.

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