Money in Politics 101

501(c)4. SuperPac. Dark Money. If you have been in the space for a minute, you have probably heard these terms thrown around. You may have even googled around the web of terms, but it can be hard to digest without having lived it.

During the ‘24 canvassing season, PV used money from many different buckets, having direct consequence on the day to day lives of those of us in the program. In this article, I'll break down the laws on paper, and share how they impacted our operations.

A quick breakdown of campaign funding, with full details below. Note that this applies to federal offices - there are state-specific regulations for state offices.

Fundraising is hard, except when it's soft

The entire goal of political fundraising laws is to prevent bribery and corruption. Nobody can give freely to a candidate - depending on which type of organization you are, different restrictions apply:

• Coordinated or Hard side organizations are able to freely coordinate directly with the candidate. However, they have extremely strict contribution limits - An individual can only donate a few thousand dollars to any hardside organization, and hardside organizations can only donate a few thousand dollars from one to another, each cycle.
• Independent or Soft side organizations were created in the wake of Citizens United, when it was determined that the campaign finance system placed an undue burden on freedom of speech, and it was decided that there was another way to achieve the goal of preventing bribery: Preventing coordination. These groups can take unlimited funding, but cannot coordinate directly with candidates.

Anytime you see massive fundraising numbers, you are looking at a soft-side org. These orgs can do basically whatever they want - put up yard signs, make movies, create and distribute messaging. But they cannot exchange strategic, non-public information with the campaigns.

There are a few cheeky ways around this. Candidates cannot direct specific superpacs on what to do, but they can share public information for what they would want people who support them to do. “Redboxing” is the practice of drawing a gigantic red box around items on your campaign site that you want to draw your soft-side supporters attention to: Demographics that you want them to hit, messaging you want them to use, etc. Redboxing refers to any mechanism that publicly announces what you want superpacs to do.

Comments on Committees

Committees are a general term for groups that are working to achieve political outcomes:

• Party committees - most famously the “Democratic National Committee”, are the political parties we know and love. It is worth noting that the parties are not government entities - they are just groups of citizens working together to amass political power
• Candidate committees - A specific candidate's campaign.
• Political Action Committees (PACs) - Any organization focused on political action is a PAC. Pacs are traditionally hard side
• Super PACS - Created after citizens united, these pacs are soft-side, and can accept unlimited contributions, but cannot coordinate with the other committees.

It's worth noting that any goods and services transferred from one org to another count as a contribution - If you buy a candidate a coffee or order your graphics guy to make a poster for a DNC event, these both count as contributions. Volunteer work you do in your individual capacity is protected free speech, and is never considered a contribution - but if you are exposed to non-public strategic information, and are a decision maker for an organization, this can still cause problems, so it is generally avoided.

Spilling the Chari-Tea

Charities are groups that are working to make society better. They are intended to do this through means other than electoral politics, but because “everything is political”, they are a useful vehicle for political change. These orgs are more limited on the political activity they can engage in than super pacs, but are more tax advantaged.

• 501c(3) charities: These are standard charities, like UNICEF or the Red Cross. Generally, they stay totally out of politics. They cannot influence partisan electoral outcomes by, for example, declaring support for one candidate or buying yard signs. But they can spend “an insubstantial” (<5%) portion of their budget lobbying politicians in office to change laws - for example, the red cross might advocate for better vaccine preparedness.
• 501c(4) social welfare organizations: These groups advocate for specific cause areas - for example, the NRA advocates for gun rights. They can spend up to 49% of their budget on partisan electoral outcomes, as long as the majority of their funds are spent elsewhere.

So long as you are not acting in a partisan fashion, (using the names of candidates or dates of elections in communications are big no-nos), you can speak freely about issues like drug decriminalization or election participation within your community as a c4 org. Additionally, once you reach that 51% non-partisan spending threshold, you can spend the rest of your budget on openly partisan messaging. If a large amount of spend is done early in the campaign season, like for a large GOTV event, it can get you closer to that 51% spend, and allow you to transition to more partisan messaging sooner.

There is one more key property to charities. Donations to all PACs must be reported, and must be from US citizens. But anyone, including foreign nationals, can anonymously donate to c4 charities. This is referred to as “Dark Money” is a spooky loophole in politics. While c4s that accept foreign donations are absolutely banned from partisan electoral outcomes, they can participate in unlimited lobbying or work on ballot measures - votes for specific policy, as opposed to candidates.

Bringing it all together - literally

Each of the different organizational structures we discussed has different benefits depending on your goals. Generally, you want to use the most tax-advantaged organization you are allowed to for your project if you are accepting mass donations, and may consider adjusting project scope to allow a more preferable structure to be used. But there is a way to have your cake and eat it too: You can use hybrid orgs to have separate “money buckets”, and pay for different parts of the project with different buckets to get the best of all worlds.

There is also one more organization that we have not discussed: Freely associated citizens, enjoying their free speech protections to coordinate without spending any money, and hence without needing to worry about political finance regulations.

My favorite such org is the DGG political action server, which you should join today!