Money in American elections flows through multiple distinct channels, each governed by its own set of rules, limits, and disclosure requirements. Understanding the system requires knowing not just what each type of entity is, but how they interconnect — how a dollar given by a private donor can pass through several organizations before appearing in a political advertisement, and what information about that journey is available to the public.
Candidate Committees
The most straightforward vehicle is the candidate’s own campaign committee — the formal organization a federal candidate must establish to raise and spend money in pursuit of office. Under the Federal Election Campaign Act (FECA), these committees are subject to strict contribution limits and must report all receipts and expenditures to the Federal Election Commission.
For the 2023–2024 election cycle, an individual could give no more than $3,300 per election to a single candidate — meaning $3,300 for the primary and another $3,300 for the general election, for a maximum of $6,600 per cycle from one donor to one candidate. A multicandidate PAC (one that has been registered for at least six months and has received contributions from more than 50 donors) may give $5,000 per election. These limits are indexed for inflation and adjusted each cycle by the FEC.
Direct contributions from corporations and national banks are prohibited outright — a prohibition that dates to the Tillman Act of 1907 and remains in place today. The same prohibition applies to foreign nationals. Cash contributions from any single source are capped at $100.
Party Committees
National, state, and local political party committees occupy a distinct category. They can both raise money and transfer it to candidates, subject to their own set of limits. For 2023–2024, individuals could give up to $41,300 per year to a national party committee. Parties can make direct contributions to candidates, and they can also make “coordinated expenditures” on a candidate’s behalf — expenditures made in consultation with the campaign — up to amounts set by formula based on the size of the voting population.
In addition to these base accounts, national party committees are permitted to maintain separate accounts for building funds, recounts, and nominating conventions. Individual contributions to each of these accounts were capped at $123,900 per year in the 2023–2024 cycle.
Soft money — unlimited contributions to parties for “party-building” activities — was a major feature of campaign finance through the 1990s. The Bipartisan Campaign Reform Act of 2002 (commonly called McCain-Feingold) banned it at the federal level. That prohibition remains law.
Traditional PACs
A political action committee (PAC) is a political committee that pools contributions from members, employees, or affiliated individuals to make contributions to candidates or independent expenditures. The term covers a wide range of entities — corporate PACs, labor union PACs, trade association PACs, and nonconnected PACs (those without an affiliated organization).
Traditional PACs operate under two-sided limits: they can accept contributions of up to $5,000 per year from individuals (and $5,000 per year from other multicandidate PACs), and they can give up to $5,000 per election to a candidate committee. They must register with the FEC, disclose their donors, and report all receipts and disbursements. A corporate or union PAC must be funded with voluntary contributions from its affiliates — corporations and unions may not use general treasury money to fund PAC contributions to federal candidates.
This category of entity is sometimes called a “connected PAC” or “SSF” (separate segregated fund) when it has a sponsoring corporation or union, to distinguish it from nonconnected PACs that have no parent organization.
Super PACs
Super PACs — formally known as independent expenditure-only committees — emerged in 2010 following two federal court decisions. Unlike traditional PACs, they can accept unlimited contributions from individuals, corporations, unions, and other organizations. What they cannot do is give money directly to a candidate committee or coordinate their spending with a campaign.
This distinction — between a direct contribution and an independent expenditure — is constitutionally significant. Under the framework established by Buckley v. Valeo (1976) and extended by Citizens United v. FEC (2010), the government may limit direct contributions to campaigns because such contributions risk corruption, but it may not limit independent expenditures because independently spent money does not pose the same corruption risk. Super PACs exist in this second category.
Super PACs must register with the FEC and disclose all contributions and expenditures. However, because they can accept money from other entities — including nonprofit organizations that do not themselves disclose their donors — the trail of original funding can be obscured. According to OpenSecrets, 2,502 super PACs raised a combined $5.1 billion in the 2024 cycle and spent $2.7 billion.
501(c)(4) “Dark Money” Nonprofits
Section 501(c)(4) of the tax code covers “social welfare” organizations, which are tax-exempt and not required to disclose their donors publicly. Under IRS regulations, these groups may engage in political activity as long as politics is not their “primary” purpose — a standard the IRS has interpreted to mean that an organization may spend up to approximately 49 percent of its resources on electoral activity while retaining its tax-exempt status.
Because 501(c)(4) organizations do not disclose their donors, political spending channeled through them is commonly called “dark money.” These organizations can make independent expenditures reported to the FEC, but they can also contribute to super PACs — which means that disclosed super PAC spending may itself trace back to undisclosed original sources. According to the Brennan Center for Justice, dark money groups spent more than $1.9 billion on the 2024 federal elections, a record figure.
On the right, major dark money vehicles have included One Nation (aligned with Senate Republican leadership) and the American Action Network (aligned with House Republicans). On the left, Future Forward USA Action — the primary dark money group supporting the Biden and Harris campaigns — contributed more than $304 million to its affiliated super PAC and on its own direct spending in 2024. Both parties’ congressional leadership maintain affiliated dark money operations that each spent hundreds of millions in the 2024 cycle.
501(c)(6) Trade Associations
Trade associations — organizations representing industries or professional sectors — also hold tax-exempt status under section 501(c)(6). Like 501(c)(4)s, they are not required to disclose their donors. They may also make independent expenditures and contribute to super PACs. The U.S. Chamber of Commerce is among the best-known examples of a trade association that has been active in independent spending. Labor unions, which hold tax-exempt status under section 501(c)(5), can similarly spend on elections from general treasury funds for independent expenditures, a right confirmed by Citizens United alongside corporations.
527 Organizations
Before super PACs existed, 527 organizations — named for the section of the tax code that governs them — were the primary vehicle for large outside spending in federal elections. A 527 organization can spend unlimited amounts on election-related activity, but it must disclose its donors to the IRS. During the soft money era and through the mid-2000s, 527s were significant players: in the 2004 cycle, groups like Swift Boat Veterans for Truth (opposing John Kerry) and America Coming Together (supporting John Kerry) spent tens of millions through this structure.
After Citizens United and SpeechNow, the 527 lost much of its appeal as a vehicle for large-scale undisclosed political activity because it requires donor disclosure. Political operatives who wanted the spending capability of a super PAC without disclosure requirements migrated to 501(c)(4) structures instead. Today, 527s continue to exist but play a smaller role in the overall landscape than they did before 2010.
LLCs and Shell Companies
Limited liability companies, if they are not themselves corporations or labor organizations, fall into a regulatory gap. An LLC that is not a corporation under state law may be treated as an individual contributor or as a partnership for FEC purposes, potentially allowing contributions at individual rates — or, if structured as a disregarded entity, as a pass-through. In practice, LLC contributions have raised concerns about the ability to conceal the true source of money. A foreign individual who forms a domestic LLC, for example, could theoretically route money through that entity in a way that obscures the foreign origin — though such contributions remain prohibited. The FEC has issued guidance on LLC contributions, but enforcement has been limited by the commission’s frequent partisan deadlocks, which prevent the four-vote majority required to take any significant enforcement action.
The Coordination Prohibition
The legal distinction between a candidate’s committee and an outside group depends entirely on the concept of coordination. An outside group that coordinates its spending with a campaign is treated as making an in-kind contribution to that campaign — which means it becomes subject to contribution limits and source prohibitions. An outside group that acts independently faces no such limits.
The FEC’s coordination rules define coordination along three dimensions: whether the communication was made at the request or suggestion of the campaign; whether it was based on material information about the campaign’s plans, projects, or needs; or whether it was made in cooperation with the campaign. There is also a 120-day “cooling off” period before a former campaign staffer may join a super PAC without triggering coordination concerns. The rules contain significant gaps that allow campaigns and outside groups to share vendors, staff, and strategic information under certain conditions — a persistent source of legal debate.
Coordination is the legal linchpin of the entire independent-expenditure framework. The constitutional permission for super PACs to raise and spend unlimited money rests on the premise that independent spending cannot corrupt — but that premise dissolves if independence is nominal rather than real. The Campaign Legal Center has noted that the FEC has never fined a super PAC for coordinating with a campaign, in part because the commission’s partisan deadlock makes enforcement action difficult even in cases where there is substantial evidence of coordination.
Disclosed vs. Undisclosed Money
Federal law requires disclosure for contributions and expenditures made directly to and by candidate committees, party committees, and PACs (including super PACs). It does not require disclosure from organizations, like 501(c)(4)s, that make “electioneering communications” — broadcast ads that mention a candidate within 30 days of a primary or 60 days of a general election — unless those organizations use a segregated fund for the purpose. Contributions to 501(c)(4)s that make independent expenditures are disclosed only if they are earmarked for a specific expenditure.
The result is a two-tier system: money that flows directly to or from registered political committees is disclosed; money that flows through nonprofit intermediaries may not be. The gap between what is disclosed and what is actually spent is substantial. In 2024, OpenSecrets reported that outside spending on federal elections hit a record $4.5 billion, with more than half coming from groups that do not fully disclose the source of their funding.
How the Pieces Connect
The entities described above do not operate in isolation. A wealthy individual can give $3,300 directly to a candidate, $44,300 to a national party committee, an unlimited amount to a super PAC, and an unlimited amount to a 501(c)(4) — all in the same election cycle. A 501(c)(4) can give an unlimited amount to a super PAC. The super PAC can spend that money on broadcast advertising that expressly calls for a candidate’s election or defeat, disclosing the super PAC as the spender but not the original donor to the 501(c)(4).
This structure — permitted by law, upheld by the courts, and actively used by sophisticated political organizations on both sides — means that the nominal disclosure requirement attached to super PAC spending does not necessarily reveal where the money came from. The question of whether that gap should be closed, and how, is the central issue in the current campaign finance reform debate.
This article was researched and drafted with AI assistance under human review. See our full AI and editorial practices.