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Understanding Campaign Financing: Sources, Regulations, and Money Types

Campaign financing is crucial for electoral candidates, regulated by laws limiting contributions at federal, state, and local levels. Key sources of financing include private contributions and public treasury through the Federal Election Campaign Act, which ensures public funding, contribution limits for candidates, and public disclosure of expenses. Different financing types are available, such as donations from small contributors and wealthy individuals, as well as funds from candidates’ own reserves and Political Action Committees (PACs). Understanding the distinction between soft and hard money is essential for grasping campaign finance dynamics.

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Understanding Campaign Financing: Sources, Regulations, and Money Types

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  1. It’s All About Money Financing a Campaign

  2. Spending • Laws limit the amount individuals and groups may contribute to federal, state, and local candidates. • Two sources of financing a campaign: • 1. Private Contributions • 2. Public Treasury

  3. Federal Election Campaign Act • Provides for a system of financing based on three principles: • Public funding of presidential elections • Limitations on the amounts presidential and congressional candidates may receive from contributors • Public disclosure of the amount candidates spend to get elected.

  4. Types of Financing • 1. Small Contributors: those who give $5 or $10 donations occasionally. • 2. Wealthy individuals: can afford a large donation and find it in their best interest to donate.

  5. Types of Financing • 3. Candidates: The candidates and their families contribute their own campaign funds. • 4. PACs (Political Action Committees): are the political arms of special interest groups, which have a major stake in public policy.

  6. Types of Financing • 5. Temporary Organizations: Temporarily formed for the immediate purpose to help finance a campaign.

  7. Soft vs. Hard Money • In state and local campaigns, campaign contributions are unlimited but must be reported. • For this reason, many people get around the regulations on how much money one can spend on a candidate by donating to the political party at the local level. This is called soft money (used for “party-building activities”, get out the vote drives, party mailings, and advertisements).

  8. Soft vs. Hard Money • Hard Money: campaign money that is regulated by the FEC (Federal Election Commission).

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