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What is Campaign Finance Reform? - Definition & History

Instructor: Charlotte Bunch

Charlotte has been teaching secondary education for five years. She has a bachelor's degree in Secondary Education and a master's degree in Curriculum and Instruction.

In the United States, campaigns last for a very long time and are very expensive. In this lesson, explore how lawmakers and the Supreme Court have tried to reform the way campaigns are financed.

Financing Campaigns

It's that time of year again. The weather is getting colder, leaves are changing colors, and on every street corner you see signs with names written largely across them. You get home and sit down to turn on the television only to see back-to-back commercials discussing those same names. When you get on social media, you see several advertisements discussing the good and the bad qualities of these names. Finally, you realize it's campaign season. In the United States, campaigns last for an extended time and are very expensive. How candidates raise these funds and the sources of the funds have caused a significant amount of controversy. Campaign finance reform is the actions that have been taken to regulate how campaigns can raise money and how this money can then be spent.

The Federal Election Campaign Act

This history of financing campaigns is a lengthy one and goes all the way back to the original political parties. However, campaign finances have been largely unregulated since that time. In 1971, Congress passed one of the first major forms of legislation to regulate campaign contributions and spending. The Federal Election Campaign Act (FECA) was passed to establish strict rules for reporting campaign contributions and expenditures. FECA had many new requirements surrounding campaign finance. Some of these are listed below:

1. Who was donating and what amounts were being donated to campaigns had to be disclosed.

2. Limits were placed on how much an individual could contribute to a candidate.

3. Political Action Committees (PACs) , corporations, labor unions, or 'nonconnected' groups that collect money and contribute money to campaigns were created and regulated.

4. Soft money , money that is spent on expenses that are not directly spent on an individual candidate but on activities related to the campaign, was limited (ie. political advertisements that discuss issues of a campaign without actually giving money to a campaign).

Federal Election Commission

In 1974, amendments were made to FECA including a new regulatory agency. The Federal Election Commission (FEC) is an independent agency that enforces limits on contributions to national campaigns, the disclosure of campaign spending, and organizes public funding of presidential campaigns. The agency contains six members, all appointed by the president with Senate approval. No more than three members are from the same political party and they serve a six-year term.

Buckley v Valeo

A larger debate surrounding the First Amendment grew once these new regulations were implemented. In 1976 the Supreme Court heard the case Buckley v Valeo, which upheld limits on contributions, but struck down limits on spending on behalf of candidates by individuals or organizations. The Supreme Court decided that these actions were protected under the First Amendment. The decision also limited the FEC's ability to regulate advertisements. The FEC was limited to regulating only advertisements encouraging a candidate's outcome with 'vote for' or 'vote against'.

Bipartisan Campaign Reform Act (BCRA)

John McCain
John McCain

Russ Feingold
Russ Feingold

As the amount of money being donated and spent on campaigns grew, members of Congress and the population became concerned with how it was being regulated. In 2002 Republican Senator John McCain and Democratic Senator Russell Feingold worked together to pass a new law regulating campaign finance. The Bipartisan Campaign Reform Act (BCRA), also known as the McCain-Feingold Act, raised limits on individual spending and banned soft money. By banning soft money, the advertisements we discussed earlier that discuss issues of a campaign without actually giving money to a campaign were banned. Originally the Supreme Court upheld the law, but in 2007 BCRA's ban of these ads was struck down. This allowed for independent campaign spending by non-party groups to increase drastically.

Citizens United v. Federal Election Commission

Supreme Court

In 2010 Citizens United v. Federal Election Commission ruled against BCRA's ban on spending by corporations and ruled that corporations, unions, and nonprofit organizations are able to spend money to support or oppose candidates, as long as the expenses are not coordinated with campaigns. The Supreme Court looked at this basic question: does having corporations donate money in elections allow for corruption or is it within a corporation's freedom of speech to donate to campaigns?

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