Soft Money Explained: History of Soft Money

In fundraising for political committees and parties, soft money refers to funds not intended for specific party candidates. These nonfederal funds, theoretically, are for more general expenditures and common causes, such as increasing voter registration or sustaining local parties. Individuals and political action committees can gift soft money to the Democratic or Republican Party but not as campaign contributions for a particular candidate. While soft money cannot go directly toward federal candidates’ campaigns, some gray areas and loopholes in this form of fundraising exist, making it easy for party treasuries to take advantage of the funds.

Soft money contributions have always helped fund nonprofits, party-building activities, and get-out-the-vote efforts.

• The FEC Act: In 1974, the Federal Election Campaign Act (FEC Act) put contribution limits on how much hard money (money given to specific political candidates running for federal office) individuals and political action committees could donate. This regulation led to a drastic increase in soft money donations.
• Bipartisan Campaign Reform Act: In 2002, the Bipartisan Campaign Reform Act, also known as the McCain-Feingold Act, banned soft money donations. In the years since, Supreme Court decisions have weakened that bill.
• McCutcheon v. Federal Election Commission: McCutcheon v. FEC, a 2014 case, eliminated aggregate limits for donations. National political parties can court donations from wealthy individuals, further empowering sway over election cycles.

In political fundraising, hard money is the funds given directly to certain political campaigns, and soft money describes funds for a political party in a more general sense. For example, hard money might go to a US senate, congressional, or presidential election candidate. Campaign finance laws limit how much money individuals and interest groups can give an individual candidate.

Soft money, however, is for political parties, not individuals, and faces fewer regulations. A donator may agree with a party’s stances on, for example, labor unions, and so they will give money to that party to enable more of those policy efforts, but the money, at least theoretically, can not go toward an individual candidate.

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