Political Action Committee (PAC)

What Is a Political Action Committee (PAC)?

In the U.S., a political action committee (PAC) is a political committee that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. PACs are typically formed to represent business, labor, or ideological interests by individuals who wish to privately raise money to donate to a political campaign.

The first PAC was formed in 1944 in order to raise money for the re-election of then-President Franklin D. Roosevelt.

How a Political Action Committee Works

At the federal level, an organization is considered a PAC when it receives or spends more than $1,000 for the purpose of influencing a federal election.

There are many types of restrictions that guide how PACs are able to fundraise for and donate their contributions to political campaigns and/or causes. They can contribute $5,000 to a candidate committee per election (primary, general, or special). They can also give up to $15,000 annually to any national party committee, and $5,000 annually to any other PAC. PACs may receive up to $5,000 from any one individual, PAC, or party committee per calendar year.

A PAC must register with the U.S. Federal Election Committee within 10 days of its formation, and it must provide the name and address for the PAC, its treasurer, and any affiliated organizations. For the purpose of contribution limits, all affiliated PACs are treated as one donor.

PACs are also required to disclose information about all individuals who contribute to them. However, sometimes these names are not disclosed until after the election (when votes have already been cast).

Types of Political Action Committees (PACs)

There are many categories of PACs, including separate segregated funds (SSFs), nonconnected committees, Super PACs, and Leadership PACs.

Separate Segregated Funds (SSFs)

Corporations, labor unions, membership organizations, or trade associations can establish separate segregated funds (SSFs). Once established, these committees can only receive contributions from individuals that are associated with that connected or sponsoring organization.

Nonconnected Committees

Unlike SSFs, nonconnected committees are not sponsored by a specific entity or organization. As a result, they can accept contributions from the general public.

Super PACs

Super PACs can receive unlimited contributions from individuals, corporations, labor unions, and other PACs.

Hybrid PACs

A hybid PAC can act as both a PAC and a Super PAC. Hybrid PACs must maintain segregated bank accounts for their unlimited Super PAC activities and their normal PAC fundraising and contributions, which are subject to the same statutory limitations as a regular PAC.

Leadership PACs

A leadership PAC is a PAC that is established by a candidate or an individual holding federal office. It is common for members of Congress and other political leaders to establish leadership PACs in order to support candidates for various elected offices. Leadership PACs can only contribute up to $5,000 per election to a federal candidate committee.

PACs vs. Super PACs

Super PACs were created in 2010 after the U.S. Court of Appeals' decision in SpeechNow.org v. Federal Election Committee. This decision allowed for a greater level of deregulation as to how political funds are raised and distributed. While Super PAC funds cannot be donated directly to a campaign, Super PAC managers and political candidates are permitted to collaborate and discuss strategy.

Since the inception of Super PACs, they have quickly grown to be a hugely influential force in American politics. In fact, it is estimated that during the 2012 Republican primaries, Super PACs spent more money during the election cycle than the individual candidates' campaigns did. The majority of this money was donated by individuals rather than businesses.

Special Considerations

Corporations cannot contribute directly to a campaign; however, a 2010 Supreme Court decision–Citizens United v. Federal Election Committee–made it legal for corporations to support a PAC. The decision overruled the 2002 Campaign Reform Act, which prevented corporations, unions, and other entities from donating money to political campaigns. 

The new laws allow these entities to contribute a limited amount of money to a PAC, which can, in turn, be donated to a campaign. In the case of Super PACs, a corporation can contribute an unlimited amount of money. Even though this money can't be directly given to a campaign, it can be spent to indirectly influence an election.