Soft money

What Is Soft Money?

Soft money refers to political contributions made to political parties or organizations for purposes other than directly advocating for or against a particular candidate. These funds are generally raised and spent outside the strict limits and reporting requirements of federal election law, falling under the broader category of campaign finance. While not directly given to a candidate, soft money can be used for "party-building activities" such as voter registration drives, get-out-the-vote campaigns, issue advocacy, and generic party advertising. The flexibility surrounding soft money historically made it a significant, albeit controversial, component of U.S. political fundraising, often blurring the lines between regulated and unregulated political contributions. Its impact on election law and the influence of large donors has been a subject of ongoing debate and legislative efforts.

History and Origin

The concept of soft money emerged largely from interpretations of the Federal Election Campaign Act (FECA) of 1971. While FECA placed strict limits on "hard money" contributions directly to federal candidates and political action committees (PACs), it allowed for unlimited contributions to political parties for non-federal election activities. This loophole expanded significantly in the 1980s and 1990s as parties began to use these unregulated funds for activities that indirectly benefited federal candidates, such as broad issue advertisements that stopped short of explicitly endorsing or opposing a candidate.

Concerns over the perceived corrupting influence of large, undisclosed soft money donations led to widespread calls for reform. This culminated in the passage of the Bipartisan Campaign Reform Act (BCRA) of 2002, commonly known as McCain-Feingold. The BCRA aimed to eliminate soft money by prohibiting national political party committees from raising or spending any funds not subject to federal limits and restricting the use of such funds by state and local parties for activities affecting federal elections.⁸,⁷, The Supreme Court largely upheld the key provisions of BCRA, including the soft money ban, in McConnell v. Federal Election Commission (2003).⁶,⁵,

Key Takeaways

• Soft money refers to unregulated political contributions to parties or organizations, not directly to candidates.
• It was historically used for "party-building" or "issue advocacy" activities.
• The Bipartisan Campaign Reform Act (BCRA) of 2002 largely banned soft money contributions to national political parties.
• Despite the ban, new avenues for unlimited spending, such as Super PACs, have emerged, raising similar concerns about the influence of large donors.
• Soft money's role highlights the ongoing tension between free speech and the desire to prevent corruption in political parties.

Interpreting Soft Money

Before the BCRA, understanding soft money involved recognizing its dual nature: while legally distinct from direct candidate contributions, its application often had a direct impact on federal elections. Large soft money donations could significantly bolster a party's ability to engage in expansive communication campaigns, voter mobilization efforts, and other activities that indirectly supported its slate of candidates. The interpretation centered on whether these "party-building" activities genuinely served a general purpose or were thinly veiled attempts to circumvent federal contribution limits for specific candidates. Post-BCRA, the term "soft money" primarily refers to the pre-2002 era of unregulated party contributions, though the spirit of such spending has arguably continued through other channels designed to exert influence without direct coordination with candidate committees.

Hypothetical Example

Imagine a time before the Bipartisan Campaign Reform Act of 2002. A wealthy individual wants to support a particular political party but has already contributed the maximum legal "hard money" amount to their preferred federal candidate. Instead of stopping there, this individual could make a massive "soft money" donation to the national committee of their chosen party. The party might then use these funds to run a nationwide advertising campaign highlighting its stance on a general issue like economic growth, or to fund a large-scale voter registration drives in key swing states. While the ads don't explicitly say "vote for Candidate X," they implicitly promote the party's platform, which is directly aligned with Candidate X's agenda, thereby indirectly benefiting the candidate's election prospects without violating direct contribution limits.

Practical Applications

While the original form of soft money was largely curtailed by the BCRA, the concept remains relevant in understanding the evolution of campaign finance regulation. Today, organizations like Super PACs and certain "social welfare" groups (classified under section 501(c)(4) of the IRS code) can raise and spend unlimited amounts of money on independent expenditures. These expenditures are often used for political advertising or issue advocacy and must not be coordinated with a candidate's campaign. This post-BCRA landscape represents a new iteration of largely unregulated spending, often referred to as "dark money" when donor disclosure is not required. Organizations like OpenSecrets actively track the flow of these funds, providing insights into their impact on elections and public policy.⁴,

Limitations and Criticisms

The primary criticism of soft money, particularly before the BCRA, was its potential to lead to actual or apparent corruption by allowing wealthy donors and special interest groups to exert undue influence over political parties and, by extension, elected officials. Opponents argued that the unlimited nature of soft money contributions undermined the principle of equal access and distorted the democratic process by giving disproportionate voice to those with deep pockets. Even after the BCRA, the spirit of soft money persists in other forms. The rise of independent expenditure-only committees like Super PACs, which can raise unlimited funds, has led critics to argue that the underlying problem of large, unregulated money influencing elections was merely redirected, not eliminated.³,² Legal challenges, such as McConnell v. Federal Election Commission, highlight the ongoing judicial scrutiny and debate over the constitutionality of various campaign finance regulations and their impact on First Amendment free speech rights.¹ Concerns about limited disclosure requirements for some of these new entities continue to fuel debate over transparency in financial regulation.

Soft Money vs. Hard Money

The fundamental distinction between soft money and hard money lies in their regulation under federal election law.

• Hard Money: These are direct contributions to political candidates, their authorized campaign committees, or PACs that are explicitly limited by federal law in terms of source and amount. These contributions are fully disclosed to the Federal Election Commission (FEC). For example, individuals can contribute only a specific amount to a candidate per election cycle.
• Soft Money: Historically, these were contributions made to political parties or other organizations for "party-building activities" or "issue advocacy" that were not subject to federal limits or, at times, full disclosure. The critical difference was that soft money was not intended for direct candidate support, though its indirect benefits were often significant. The Bipartisan Campaign Reform Act of 2002 largely banned soft money contributions to national parties, drawing a clearer line between regulated and unregulated funds.

Confusion often arose because while hard money was strictly regulated and went directly to candidates, soft money, though ostensibly for party activities, could be leveraged to indirectly benefit candidates by boosting the party's overall electoral efforts. The intent of soft money reforms was to close this loophole and prevent unlimited funds from flowing into campaigns through party committees.

FAQs

What was soft money used for before the ban?

Before the Bipartisan Campaign Reform Act of 2002, soft money was primarily used by political parties for "party-building" activities. This included expenses for voter registration drives, get-out-the-vote efforts, administrative costs, and broad "issue ads" that promoted a party's stance on policies without explicitly telling people to vote for or against a specific federal candidate. These activities, while not direct campaign contributions, could significantly aid a party's electoral success.

Is soft money still legal today?

Direct soft money contributions to national political party committees for federal election activities were largely banned by the Bipartisan Campaign Reform Act of 2002. However, the landscape of political spending has evolved, leading to the rise of new forms of unlimited contributions, such as those made to Super PACs. While these new entities operate under different rules (e.g., they cannot coordinate directly with campaigns), they allow for vast sums of money to be spent in elections, often fulfilling a similar role to what soft money once did.

How did the Bipartisan Campaign Reform Act impact soft money?

The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as McCain-Feingold, was designed to eliminate the influence of soft money in federal elections. It prohibited national political parties from raising or spending unregulated funds. It also restricted state and local party committees from using soft money for activities that affected federal elections, such as generic party advertising that benefited federal candidates. The law aimed to restore integrity to election financing by enforcing stricter limits and disclosure rules.

What is the relationship between soft money and "dark money"?

While distinct, there is an evolutionary relationship. Soft money referred to unregulated contributions to political parties. "Dark money" typically refers to spending by politically active non-profit organizations (like 501(c)(4) "social welfare" groups) that are not required to disclose their donors. After the soft money ban, some large donors shifted their contributions to these non-profits, which then engage in independent expenditures, effectively allowing vast sums of undisclosed money to influence elections. This represents a continued effort to influence politics through channels with less transparency.