Candidates, Groups, and the Campaign Finance Environment

This report briefly discusses the current campaign finance environment and the implications of changes to campaign finance policy over the past several decades.

CRS Insights Candidates, Groups, and the Campaign Finance Environment R. Sam Garrett, Specialist in American National Government (, 7-6443) May 19, 2015 (IN10280) More than 300 presidential candidates have alerted the Federal Election Commission (FEC) that they plan to seek the nation's highest office in 2016. Few would be widely regarded as major candidates, and some undeclared candidates have nonetheless received substantial media attention. According to one recent media report, "[f]ifteen White House contenders are being boosted by big-money groups run by their close allies. Most have not yet declared their candidacies but are instead" fundraising for super PACs. Reports suggest that super PACs and entities organized under Sections 501(c) or 527 of the Internal Revenue Code (IRC) are filling roles traditionally played by campaigns or parties, such as developing policy positions and conducting opposition research. Various entities reportedly are preparing for 2016, especially the presidential contest, but also congressional and other races. Some of this activity has been controversial amid debate over whether groups are primarily influencing campaigns versus engaging in policy advocacy. This CRS Insight highlights the various political entities that influence presidential and congressional elections, and which, in turn, shape the environment for candidates. The Campaign Environment and Campaign Finance Policy Historically, political parties and candidates were the major actors in campaigns. Party influence waned during the 20th century as voters and campaigns became more "candidate-centered." The landscape changed more substantially with the Supreme Court's 1976 Buckley v. Valeo decision, which lifted restrictions on independent expenditures (IEs) calling for election or defeat of candidates. Buckley marked the beginning of a distinction between contributions and expenditures that permitted groups other than parties and candidates to influence campaigns. More recently, the 2010 Citizens United ruling invalidated a prohibition on corporate and union IEs in federal (and other) elections. New groups, which found new ways to support and oppose candidates, emerged after both decisions. Understanding the roles that different groups play in elections depends on two questions. First, are the groups regulated primarily by federal election law or federal tax law? Second, can they make contributions, expenditures, or both? Figure 1 below provides an overview. Figure 1. Major Political Entities in the Campaign Finance Environment Source: Congressional Research Service. Contributions to Candidates Party committees, candidate committees, and traditional political action committees (PACs) are political committees, regulated primarily by the Federal Election Campaign Act (52 U.S.C. § 30101 et seq.; FECA). Along with contributions from individuals, most financial support for candidates comes from these political committees, subject to contribution limits. Parties and PACs can also spend independently supporting or opposing candidates, and parties can make limited coordinated expenditures in consultation with candidates. Candidate committees, party committees, and traditional PACs dominated the campaign finance landscape into the 1990s, and especially before Citizens United (2010). Candidates (usually congressional candidates) can also rely on leadership PACs to support colleagues' campaigns. Originally associated with members of the House and Senate leadership, many officeholders now maintain leadership PACs. Similarly, congressional and presidential candidates can raise money through joint fundraising committees with parties or other candidates. Some believe that joint fundraising committees, leadership PACs, or both could become more important following the Supreme Court's 2014 McCutcheon decision, which lifted aggregate caps on individual contributions. Independent Spending Some groups that are prohibited from making campaign contributions can nonetheless influence elections through IEs. The three entities on the right side of Figure 1 have been especially prominent since 2010. Super PACs developed shortly after Citizens United through a related appellate court ruling in SpeechNow v. FEC. Super PACs are political committees subject to FECA's reporting requirements, but may accept unlimited contributions. They may not contribute to campaigns. Super PACs are, therefore, arguably somewhat similar to two groups discussed below, 501(c) and 527 organizations. 501(c)s and 527s are primarily governed by tax law. They can accept unlimited contributions, but may not contribute to campaigns. 501(c)(4) social welfare groups, 501(c)(5) unions, and 501(c)(6) trade associations must have a "primary purpose" devoted to activities other than elections. These groups have engaged in campaignrelated activities since at least the early 2000s. Citizens United removed lingering questions about whether the groups could make IEs. All political committees fall under Section 527 for tax purposes, but as popularly used, the term "527" refers to entities that argue they are devoted to elections but are not political committees. They were especially active during the 2004 presidential campaign (most notably Swift Boat Veterans for Truth). 527s faded in federal elections thereafter, perhaps due to FEC enforcement actions. Implications The distinctions between election law and tax law, and between contributions and expenditures, determine which entities can do what in campaigns. If Congress chooses to examine whether the groups discussed here should be subject to more or less regulation, at least three other factors may be relevant. Coordination—FEC "coordination" regulations are designed to ensure that goods or services are not provided to campaigns in excess of FECA limits. In practice, establishing that prohibited coordination occurred is difficult. Existing regulations require satisfying a complex three-part test examining conduct, communications, and payment. Relatedly, some have suggested that Bipartisan Campaign Reform Act (BCRA; P.L. 107-155) provisions preclude some candidate fundraising for 501(c) and 527 activities affecting elections. Disclosure—Political committees must publicly report their donors to the FEC, as must 527s to the IRS. 501(c) groups' donors are not publicly reported, and the original sources of some contributions for IEs can avoid disclosure. Reporting requirements can affect donors' willingness to contribute to various groups. Exploratory Committees—FEC regulations permit potential candidates to "test the waters" by raising and spending limited funds while considering campaigns. Debate continues about whether some potential candidates' activities cross the line from testing to candidacy. For additional information, see CRS Report R41542, The State of Campaign Finance Policy: Recent Developments and Issues for Congress, by R. Sam Garrett.