A political action committee (PAC) is a formal political committee that raises and spends money to influence elections, ballot measures, or legislation. At the federal level, an organization becomes a PAC once it receives or spends more than $1,000 to influence a federal election. PACs collect contributions from individuals and then donate to candidates, party committees, other PACs, independent expenditures, or issue campaigns according to the law that governs their type.
Key takeaways
– PACs pool contributions to support candidates, parties, or issues; they are regulated by the Federal Election Commission (FEC).
– Traditional (connected and nonconnected) PACs are subject to contribution limits and source restrictions; Super PACs may raise and spend unlimited amounts but must operate independently of candidates’ campaigns.
– PACs must register with the FEC, identify a treasurer, follow disclosure rules, and file periodic reports.
– Choosing the right PAC structure (SSFs, nonconnected, Super PAC, hybrid, leadership PAC) determines who you can solicit and how you may spend funds.
How a PAC works (overview)
– Fundraising: PACs solicit contributions from permitted donors (rules differ by PAC type). Traditional PACs have limits on how much one donor can give; Super PACs do not.
– Pooling and spending: PACs aggregate funds and spend them on contributions to candidates, party committees, independent expenditures, advertising, voter outreach, or issue advocacy.
– Reporting and disclosure: PACs must register and periodically report receipts, disbursements, and contributors to the FEC for federal PACs (state PACs have their own rules).
– Coordination rules: Independent-expenditure entities (like Super PACs) are prohibited from coordinated communications with candidates or their campaigns; coordination rules are central to what activities are allowed.
Types of PACs (federal-level)
1. Separate Segregated Funds (SSFs, “connected PACs”)
– Established and sponsored by corporations, unions, trade associations, membership organizations, or other entities.
– May solicit only a “restricted class” (e.g., employees, members).
– Subject to standard PAC contribution limits.
2. Nonconnected Committees
– Not sponsored by a connected organization; operate independently.
– May solicit the general public and accept contributions from any individual.
3. Super PACs (independent-expenditure-only committees)
– Arose after SpeechNow.org v. FEC (D.C. Cir., 2010) and Citizens United v. FEC (U.S. Supreme Court, 2010).
– May accept unlimited contributions from individuals, corporations, labor unions, and other entities.
– Must not contribute directly to candidates or coordinate with candidates’ campaigns; they make independent expenditures (e.g., ads) to influence elections.
– Must register and disclose donors and expenditures.
4. Hybrid PACs (carefully structured)
– Maintain two separate bank accounts: one that follows traditional PAC contribution limits and rules, and one that functions as a Super PAC (for independent expenditures).
– Must strictly account for funds and keep the accounts segregated.
5. Leadership PACs
– Established by candidates or officeholders to support other candidates and political activity.
– Can be used by politicians to build influence, raise funds for travel, events, and support other campaigns.
– Subject to contribution limits when contributing to candidate committees.
PACs vs. Super PACs (key differences)
– Contribution limits: Traditional PACs—limits on contributions from individuals and to candidate committees. Super PACs—no limits on incoming contributions.
– Direct contributions: Traditional PACs can donate directly to candidates within limits. Super PACs cannot donate directly to candidates.
– Coordination: Traditional PACs that donate to candidates often coordinate with those recipients as allowed by law; Super PACs must not coordinate with candidates.
– Disclosure: Both must disclose to the FEC, but donors can obscure identity through intermediaries in some cases.
Legal background (important court decisions)
– Citizens United v. FEC (2010): Held that independent political spending by corporations and unions is protected speech; opened the door to corporate political spending in independent expenditures.
– SpeechNow.org v. FEC (2010): D.C. Circuit decision resulted in creation of independent-expenditure-only committees (Super PACs), allowing unlimited contributions for independent expenditures.
Contribution limits and disclosure (federal)
– Traditional PAC limits (federal): A PAC may generally contribute up to $5,000 to a candidate per election, $15,000 per year to a national party committee, and $5,000 per year to another PAC. A PAC may accept up to $5,000 per year from an individual (these are statutory limits—confirm current figures with the FEC because they may change).
– Registration: A PAC must register with the FEC within 10 days of becoming a political committee (i.e., when it receives or spends > $1,000 to influence a federal election) by filing the Statement of Organization (FEC Form 1), and must list its treasurer and affiliated organizations.
– Disclosure timing: PACs disclose contributors and expenditures in periodic reports. However, reporting periods mean some donor names may not appear publicly until after an election. Some donors may use intermediary organizations (e.g., 501(c) groups) to obscure their identity—creating “dark money” pathways.
Special considerations and concerns
– Coordination rules: Independent expenditure groups (Super PACs) cannot coordinate with candidates. “Coordination” is a complex legal standard; running ads, sharing strategy or materials with campaigns risks reclassification and penalties.
– Corporate and union involvement: Corporations and unions can fund political activity indirectly via PACs or Super PACs (post-Citizens United), but corporate treasury funds cannot be given directly to traditional PACs—only SSFs funded by employees/members in some structures.
– Dark money and donor privacy: Nonprofit groups (e.g., 501(c)(4) social welfare organizations) may not have the same disclosure requirements and can donate to Super PACs, obscuring ultimate donors.
– State laws: State-level PAC rules (limits, reporting, registration) vary—check state election authorities before operating at the state level.
– Tax treatment: Contributions to PACs are not tax-deductible as charitable contributions.
Practical steps to start and operate a PAC (step-by-step)
1. Define purpose and choose structure
– Decide whether the PAC will be connected (SSF), nonconnected, a leadership PAC, a Super PAC (independent-expenditure-only), or a hybrid. The choice determines who you can solicit and how you can spend.
2. Establish organizational details
– Choose a name, identify officers, and appoint a treasurer (the treasurer is legally responsible for filings).
– Draft bylaws or an operating agreement outlining objectives, donor policies, and contribution/expense approval processes.
3. Obtain an Employer Identification Number (EIN)
– Apply for an EIN from the IRS (useful for banking and filings).
4. Open a bank account and set up financial controls
– Open a dedicated bank account(s) in the PAC’s name; hybrid PACs must open and maintain separate accounts for limited and unlimited activities.
– Set internal controls: dual signatures, bookkeeping systems, expense approval policies.
5. Register with the FEC (if engaging in federal elections)
– File FEC Form 1 (Statement of Organization) within 10 days of becoming a political committee. Provide the PAC’s name, address, treasurer, connected organization (if any), and bank information.
6. Implement compliance and bookkeeping systems
– Track all receipts with donor details and dates, and all disbursements with purpose and recipient.
– Record donor occupation and employer for individuals as required by the FEC.
7. Fundraising plan and legal solicitation rules
– For SSFs: solicit only the permitted “restricted class” (employees, members).
– For nonconnected PACs and Super PACs: plan public solicitations and events; ensure solicitation materials include required disclaimers (“Paid for by [PAC name]”).
– Be mindful of the limits and donor eligibility if you intend to make direct candidate contributions later.
8. File required reports and disclosures
– File periodic campaign finance reports with the FEC (quarterly, pre- and post-election, and special reports as required). Use the correct FEC forms (Form 1 to register, then periodic reports appropriate to your committee type).
– File state reports as required if you engage in state or local activity.
9. Ongoing compliance and training
– Train staff and volunteers on solicitation limits, coordination rules, recordkeeping, and disclaimer requirements.
– Retain counsel or a compliance vendor for complex issues (coordination, in-kind contributions, vendor contracts).
10. Public communications and disclaimers
– All public communications generally must include disclaimers identifying the sponsoring committee. Internet ads and digital fundraising also have specific FEC guidance—include proper attribution.
Ongoing compliance checklist
– Timely FEC registration and filings (Form 1 then periodic reports).
– Accurate contributor records (name, address, employer, occupation when required).
– Proper use of funds and segregated accounts (for hybrid PACs).
– Clear disclaimers on communications and advertising.
– Avoid coordination if functioning as an independent-expenditure-only committee.
– Monitor state laws and coordinate required state-level filings.
What is an example of a PAC?
– National Association of Realtors PAC (a large, connected PAC formed to promote industry interests).
– Examples of influential Super PACs include Restore Our Future (2012) and others that spent heavily in presidential primaries. OpenSecrets tracks top PACs and spending by cycle.
Who can start a PAC?
– Any individual or group can form a PAC (subject to rules): individuals, unions, corporations (often establish SSFs), trade associations, advocacy groups, and elected officials (leadership PACs). Federal PACs must follow FEC registration and reporting rules; state PACs follow state rules.
Advantages of Super PACs (and considerations)
Advantages
– Unlimited fundraising capacity (can accept contributions from individuals, corporations, unions, and other PACs).
– Can spend large sums on independent advertising and issue advocacy to influence public opinion and elections.
Considerations
– Cannot contribute directly to candidate committees.
– Must avoid legal coordination with candidates, which is a fact-intensive legal standard and can limit strategic cooperation.
– Donor transparency issues: while Super PACs disclose donors, intermediaries like 501(c) groups can obscure donors’ identities.
Penalties and enforcement
– The FEC enforces federal campaign finance rules and can levy civil fines for reporting failures or contribution limit violations.
– Knowing and willful violations may carry criminal penalties enforced by the Department of Justice.
– State enforcement agencies administer state campaign finance penalties for violations of state law.
Resources and next steps (practical)
– Consult the FEC before forming a PAC: review FEC guidance pages on PACs, registration, contribution limits, and reporting.
– If you plan to operate in a state or local jurisdiction, consult that state’s election authority for specific registration and filing rules.
– Engage legal counsel or a compliance specialist experienced in campaign finance to draft bylaws, set up accounting systems, and advise on coordination and independent expenditure rules.
– Use established compliance software or vendors to track contributions and generate accurate reports for filings.
Selected sources and further reading
– Federal Election Commission (FEC), “Political Action Committees (PACs)”: https://www.fec.gov/help-candidates-and-committees/political-action-committees-pacs/
– Federal Election Commission (FEC), “Registering as a committee/Statement of Organization (Form 1)”: https://www.fec.gov/help-candidates-and-committees/registering-committees/
– Federal Election Commission (FEC), “Contribution Limits” (see current FEC guidance for the latest limits)
– Citizens United v. Federal Election Commission, 558 U.S. 310 (2010): https://www.supremecourt.gov/opinions/09pdf/08-205.pdf
– SpeechNow.org v. FEC (D.C. Cir., 2010)
– Investopedia, “Political Action Committee (PAC)” (overview and examples): https://www.investopedia.com/terms/p/political-action-committee-super-pac.asp
– OpenSecrets, “Top PACs”: https://www.opensecrets.org/pacs/
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.