Political action committees (PACs) and super PACs are increasingly important and influential forces in local, state, and federal elections. Organizations that wish to engage in political activities or weigh in on policy issues should familiarize themselves with these committees and how they operate.
Understanding PACs
A political action committee (PAC) is a political committee that is set up to receive limited contributions from two or more third parties. The PAC uses those funds to make contributions directly to support or oppose candidates for elected office. Generally, PACs contribute funds toward the campaigns of state and local offices. However, PACs can also use funds to support or oppose ballot measures or other political committees, distribute communications that support campaigns and parties, and make independent expenditures. PACs are not operated by political parties or candidates for political office but by third-party individuals or groups who support them.
PACs can raise funds from individuals associated with a particular organization or corporation, known as Separate Segregated Funds (SSFs). Alternatively, they can raise funds from individuals who wish to contribute to the committee, known as Nonconnected PACs.
Different rules and laws apply to PACs donating to federal, state, and local political parties and candidates. For example, a federal PAC can donate to federal and state candidates and parties and thus is subject to federal and state campaign finance laws. However, a federal PAC can also create a state PAC, which can donate to state and local candidates and parties, subject to state campaign finance laws.
California’s most common type of PAC is a “large” or “traditional” PAC, a Nonconnected PAC. A traditional PAC can receive up to $8,100 per calendar year from any person if making contributions to state candidates. However, if the person contributes for purposes other than making contributions to state candidates, the contribution is unlimited.
Under Cal. Govt. Code § 85300 et seq., a traditional PAC may contribute the following amounts:
- Up to $4,900 per election to state legislative candidates;
- Up to $4,900 per election to city or county candidates;
- Up to $8,100 per election to any other candidate for statewide office;
- Up to $32,400 per election to any candidate for Governor;
- Up to $40,500 per election to any state and/or local political party per year to make contributions to state candidates;
Starting January 1, 2021, the state laws on PAC contribution limits began to apply by default to city or county candidates, except where cities or counties already enacted contribution limits on such candidates. Examples of local jurisdictions that have enacted such limits include Los Angeles, San Diego, San Francisco, and other large California cities. Furthermore, primary and general elections also count as separate elections, which can lead to PACs contributing double the above limits in a calendar year.
Distinguishing Super PACs from PACs
Super PACs are a relatively new type of PAC created as a result of the U.S. Supreme Court’s ruling in Citizens United v. Federal Elections Commission. In that case, the Supreme Court ruled that the First Amendment permits unions and corporations to make independent political expenditures that the government cannot prohibit. However, in a subsequent decision construing Citizens United, the U.S. Court of Appeals for the District of Columbia invalidated federal contribution limits on independent expenditure-only committees as violative of the First Amendment. As a result, the Federal Elections Commission (FEC) soon clarified that unlimited contributions to super PACs were permissible.
Super PACs are Independent Expenditures Only Political Action Committees (IEOCs). These committees may receive unlimited contributions from two or more third parties to finance independent expenditures and other independent political activities. Super PACs commonly receive contributions from corporations, unions, associations, political action committees, and individuals. They then can use those funds to overtly advocate for or against candidates for political office. However, they cannot use the contributions to donate directly to individual candidates or political parties, whether they are direct, in-kind, or coordinated contributions.
Once a Super PAC’s contributions or expenditures exceed $1,000 in a calendar year, it must register as a political committee. Super PACs must report their donors to the Federal Election Commission (FEC) monthly or quarterly. During an election year, they must report their donors every month.
However, the identity of super PAC donors is often far from clear. For example, super PACs can accept money from donors who have no legal duty or responsibility to disclose the source of their funding, such as limited liability companies (LLCs) and tax-exempt social welfare organizations. Meanwhile, the super PAC need only disclose the name of the entity that donated the funds to it, not the identity of the individual, corporation, or union who donated.
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