THE FEDERAL ELECTION COMMISSION 

Twenty Year Report 

APRIL 1995 
2

FEDERAL ELECTION COMMISSION 

Danny L. McDonald, Chairman (1995) 

Lee Ann Elliott, Vice Chairman (1995) 

Joan D. Aikens, Commissioner 

John Warren McGarry, Commissioner 

Trevor Potter, Commissioner 

Scott E. Thomas, Commissioner 

John C. Surina, Staff Director 

Lawrence M. Noble, General Counsel 

Lynne A. McFarland, Inspector General 

Prepared by: 

Louise D. Wides, Assistant Staff Director, 

Information Division 

Gregory J. Scott, Writer, Information Division 

Robert W. Biersack, Supervisory Statistician, 

Data Division 

R. Blake Lange, Chart Design, Administrative 

Division 
3

TABLE OF CONTENTS 

Introduction 1 

Chapter 1 

Historical Context 2 

Early Reform 2 

The 1971 Election Laws 3 

1974 Amendments 4 

Buckley v. Valeo 4 

1976 Amendments 5 

1979 Amendments 5 

Subsequent Amendments 5 

Chapter 2 

Administering and Enforcing the FECA 6 

Customer Service 7 

Enforcement 10 

Presidential Public Funding 12 

National Clearinghouse on 

Election Administration 15 

Chapter 3 

Key Issues Before the Commission 16 

Corporate Communications 16 

Soft Money 19 

Personal Use of Campaign Funds 22 

Best Efforts 23 

Foreign Nationals 23 

Chapter 4 

Continuing Debate Over Reform 25 

The Role of Political Parties 25 

The Role of PACs 27

The Cost of Campaigns 32 

Conclusion 35 

Appendices 

1. FEC Commissioners and 

Officers 1975-1995 36 

2. FEC Budget and Staffing History 38 

3. FEC Organization Chart 39 
4

TABLE OF CHARTS 

Chapter 2 

Administering and Enforcing the FECA 

2-1: Overall Financial Activity 

Reported to the FEC 6 

2-2: Telephone Inquiries on the 800-line 7 

2-3: Persons Served in Public Records 8 

2-4: Direct Access Usage by Month 9 

2-5: Number of Detailed Contribution and 

Expenditure Transactions Processed 9 

2-6: Number of Phone Calls 

to the Press Office 9 

2-7: Number of Reports Reviewed by the 

Reports Analysis Division 10 

2-8(a): Conciliation Agreements and Civil 

Penalties by Calendar Year 11 

2-8(b): Median Civil Penalty 

by Calendar Year 11 

2-9: Presidential Fund Income 

Tax Checkoff Status 13-14 

Chapter 3 

Key Issues Before the Commission 

3-1(a): Party Federal and 

Nonfederal Receipts 20 

3-1(b): Sources of Party Receipts 21 

3-1(c): Party Federal and 

Nonfederal Disbursements 21 

Chapter 4 

Continuing Debate Over Reform 

4-1: Sources of Campaign Receipts 26 

4-2: Federal Spending 

by PACs and Parties 27 

4-3: Number of PACs 

Registered with FEC 29 

4-4: PAC Contributions 

by Type of Campaign 29 

4-5: Contributions by the 

50 Largest Committees 30 

4-6: Possible Effect of 

$2,000 PAC Limit in 1992 31 

4-7: Congressional Campaign Activity 32 

4-8: Comparison of Presidential 

and Congressional Spending 33 

Appendix 2 

FEC Budget and Staffing History 38 
INTRODUCTION 

Twenty years ago, Congress created the Federal Election Commission (FEC) to administer and 

enforce the Federal Election Campaign Act 

(FECA)—the statute that governs the financing of 

federal elections. The regulation of federal campaigns emanated from a congressional judgment 

that our representative form of government needed 

protection from the corrosive influence of unlimited and undisclosed political contributions. The 

laws were designed to ensure that candidates in 

federal elections were not—or did not appear to 

be—beholden to a narrow group of people. Taken 

together, it was hoped, the laws would sustain and 

promote citizen confidence and participation in the 

democratic process. 

Guided by this desire to protect the fundamental tenets of democracy, Congress created an 

independent regulatory agency—the FEC—to disclose campaign finance information; to enforce the 

limits, prohibitions and other provisions of the 

election law; and to administer the public funding 

of Presidential elections. 

Fulfilling that mission places the agency at the 

center of constitutional, philosophical and political 

debate. On one hand, the Commission must administer and enforce the FECA, which the Supreme 

Court has said serves a legitimate governmental interest. On the other hand, the Commission must remain mindful of the Constitutional freedoms of 

speech and association, and the practical implications of its actions. The Commission, of course, 

does not bear this responsibility alone. Congress 

and the courts must also balance these competing 

interests. 

This tension between valid governmental interests and certain constitutional guarantees frames 

many of the issues discussed in this report. While 

the report commemorates the Commission’s 20th 

anniversary, it does not chronicle the entire 20-year 

period. Instead, it offers a current snapshot of the 

agency, focusing on significant Commission actions of recent years. 

Chapter 1 provides an historical context for 

the report. 

Chapter 2 looks at the Commission’s administration and enforcement of the FECA. 

Chapter 3 examines some of the key issues the 

Commission is currently debating or has recently 

resolved. 

Chapter 4 offers FEC statistics to supplement 

the continuing national debate on the role of PACs 

and parties, and the costs of political campaigns. 

What emerges from this discussion is a portrait of an agency that has accomplished much, 

even as it has grappled with difficult issues whose 

resolution has helped define the proper balance between governmental interests and constitutionallyprotected political activity. The Commission’s administration and enforcement of the FECA have 

also helped ensure the continued legitimacy of our 

representative form of government. 

5 
CHAPTER 1 

HISTORICAL CONTEXT 

The origins of campaign financing in the 

United States date back to 1791, when groups supporting and opposing Alexander Hamilton published competing newspapers designed to sway 

the electorate. These minimal expenditures set the 

tone for campaigns over the next several decades. 

In the Presidential election of 1832, however, 

the financing of campaigns changed. The Bank of 

the United States, whose charter-renewal was 

threatened by President Andrew Jackson, spent 

heavily to elect Henry Clay, who supported renewal of the bank’s charter. The bank’s tactics 

backfired, however, when Jackson characterized it 

as a “money monster,” and won reelection. 

During the 1840s and 50s, the size of the electorate grew and so did the amount of campaign 

spending. Still, during the pre-Civil War period, 

“costs were relatively moderate, corruption...was 

the exception rather than the rule, fundraising was 

conducted in an amateur fashion, and the alliance 

between economic interests and politicians, though 

growing, was loose and flexible.” (Thayer, Who 

Shakes the Money Tree, p. 35) By contrast, the postwar years have been called the most corrupt in U.S. 

history. Historian Eugene H. Roseboom describes 

financier Marcus A. Hanna’s fundraising for President McKinley’s 1896 campaign: 

“For banks the [campaign finance] assessment was fixed at one quarter of one percent of their capital. Life insurance companies contributed liberally, as did nearly all 

the great corporations. The Standard Oil 

Company gave $250,000 to Hanna’s war 

chest. The audited accounts of the national 

committee revealed collections of about 

$3,500,000.” (CQ, Dollar Politics, p. 3) 

Early Reform 

The drive to institute comprehensive campaign finance reform began around the turn of the 

century, when the muckrakers revealed the financial misdeeds of the 1896 election.1

 Their stories of 

corporations financing candidates’ campaigns in 

hopes of influencing subsequent legislation 

prompted President Theodore Roosevelt to proclaim: “All contributions by corporations to any 

political committee or for any political purpose 

should be forbidden by law.” In 1907, Congress 

passed the Tillman Act, which prohibited corporations and national banks from contributing money 

to federal campaigns. Three years later, Congress 

passed the first federal campaign disclosure legislation. Originally, the law applied only to House 

elections, but Congress amended the law in 1911 to 

cover Senate elections as well, and to set spending 

limits for all Congressional candidates. 

The Federal Corrupt Practices Act of 1925, 

which applied to general election activity only, 

strengthened disclosure requirements and increased expenditure limits. The Hatch Act of 1939 

and its 1940 amendments asserted the right of Congress to regulate primary elections and included 

1

The first campaign finance law actually predates these practices. 

Congress passed legislation in 1867 that prohibited Federal officers 

from soliciting Navy Yard workers for contributions. 

6 
provisions limiting contributions and expenditures 

in Congressional elections. The Taft-Hartley Act of 

1947 barred both labor unions and corporations 

from making expenditures and contributions in 

federal elections. 

These legislative initiatives, taken together, 

sought to: 

• Limit contributions to ensure that wealthy 

individuals and special interest groups did 

not have a disproportionate influence on federal elections; 

• Prohibit certain sources of funds for federal 

campaign purposes; 

• Control campaign spending, which tends to 

fuel reliance on contributors and fundraisers; 

and 

• Require public disclosure of campaign finances to deter abuse and to educate the electorate. 

None of these laws, however, created an institutional framework to administer the campaign finance provisions effectively. As a result, those provisions were largely ignored. The laws had other 

flaws as well. For example, spending limits applied 

only to committees active in two or more states. 

Further, candidates could avoid the spending limit 

and disclosure requirements altogether because a 

candidate who claimed to have no knowledge of 

spending on his behalf was not liable under the 

1925 Act. 

When Congress passed the more stringent disclosure provisions of the 1971 Federal Election 

Campaign Act (FECA), the shortcomings of the 

earlier laws became apparent. In 1968, still under 

the old law, House and Senate candidates reported 

spending $8.5 million, while in 1972, after the passage of the FECA, spending reported by Congressional candidates jumped to $88.9 million.2 

The 1971 Election Laws 

The Federal Election Campaign Act of 1971 

(P.L. 92-225), together with the 1971 Revenue Act 

(P.L. 92-178), fundamentally changed the federal 

campaign finance laws. The FECA, effective April 

7, 1972, not only required full reporting of campaign contributions and expenditures, but also limited spending on media advertisements and limited spending from candidates’ personal funds.3 

(These limits were later repealed to conform with 

judicial decisions.) 

The FECA also provided the basic legislative 

framework for corporations and labor unions to establish separate segregated funds,4

 popularly referred to as PACs (political action committees). Although the Tillman Act and the Taft-Hartley Act of 

1947 banned direct contributions by corporations 

and labor unions to influence federal elections, the 

FECA provided an exception whereby corporations and unions could use treasury funds to establish, operate and solicit voluntary contributions for 

the organization’s PAC. These voluntary donations 

from individuals could then be used to contribute 

to federal campaigns. 

Under the Revenue Act—the first of a series of 

laws designed to implement federal financing of 

Presidential elections—citizens could check a box 

on their tax forms authorizing the federal government to use one of their tax dollars to finance Presidential campaigns in the general election.5 Congress implemented the program in 1973 and, by 

1976, enough tax money had accumulated to fund 

the 1976 Presidential election—the first publicly 

funded federal election in U.S. history. 

Like its predecessors, the Federal Election 

Campaign Act of 1971 did not provide for a single, 

independent body to monitor and enforce the law. 

Instead, the Clerk of the House, the Secretary of the 

Senate and the Comptroller General of the United 

States, head of the General Accounting Office 

(GAO), monitored compliance with the FECA. The 

Justice Department was responsible for prosecuting violations of the law referred by the three su2

Congressional Quarterly Weekly Report, Vol. xxvii, No. 49, December 5, 

1969, p. 2435; Clerk of the House, “The Annual Statistical Report of 

Contributions and Expenditures Made During the 1972 Election 

Campaigns for the U.S. House of Representatives” (1974), p. 161; 

Secretary of the Senate, “The Annual Statistical Report of Receipts 

and Expenditures Made in Connection with Elections for the U.S. 

Senate in 1972” [undated], p. 33. 

3

“Contribution” and “expenditure” are defined in 2 U.S.C. and 11 

CFR. 

4

“Separate segregated fund” is described in 2 U.S.C. and 11 CFR. 

5

In 1966, Congress enacted a law to provide for public funding of 

Presidential elections, but suspended the law a year later. It would 

have included a taxpayers’ checkoff provision similar to that later 

embodied in the 1971 law. 

7 
pervisory officials. Following the 1972 elections, 

however, the Justice Department prosecuted few of 

the 7,100 cases referred to it.6 

1974 Amendments 

In 1974, following the documentation of campaign abuses in the 1972 Presidential elections, a 

consensus emerged to create an independent body 

to ensure compliance with the campaign finance 

laws. Comprehensive amendments to the FECA 

(P.L. 93-443) established the Federal Election Commission, an independent agency to assume the administrative functions previously divided between 

Congressional officers and GAO. The Commission 

was given jurisdiction in civil enforcement matters, 

authority to write regulations and responsibility 

for monitoring compliance with the FECA. Additionally, the amendments transferred from GAO to 

the Commission the function of serving as a national clearinghouse for information on the administration of elections. 

Under the 1974 amendments, the President, 

the Speaker of the House and the President pro 

tempore of the Senate each appointed two of the 

six voting members of the newly created Commission. The Secretary of the Senate and the Clerk of 

the House were designated as nonvoting, ex officio 

Commissioners. The first Commissioners were 

sworn in on April 14, 1975. 

The 1974 amendments also expanded the public funding system for Presidential elections. The 

amendments provided for partial federal funding, 

in the form of matching funds, for Presidential primary candidates and also extended public funding 

to political parties to finance their Presidential 

nominating conventions. 

Complementing these provisions, Congress 

also enacted strict limits on both contributions and 

expenditures. These limits applied to all candidates 

for federal office and to political committees influencing federal elections.7 

Another amendment relaxed the prohibition 

on contributions from federal government contractors. The FECA, as amended, permitted corporations and unions with federal contracts to establish 

and operate PACs. 

Buckley v. Valeo 

The constitutionality of key provisions of the 

1974 amendments was immediately challenged in 

a lawsuit filed by Senator James L. Buckley (Conservative Party, New York) and Eugene McCarthy 

(former Democratic Senator from Minnesota) 

against the Secretary of the Senate, Francis R. 

Valeo. The Supreme Court handed down its ruling 

on January 30, 1976. Buckley v. Valeo, 424 U.S. 1 

(1976). 

In its decision, the Court upheld contribution 

limits because they served the government’s interest in safeguarding the integrity of elections by 

preventing even the appearance of corruption of 

public officials. However, the Court overturned the 

expenditure limits, stating: “It is clear that a primary effect of these expenditure limitations is to 

restrict the quantity of campaign speech by individuals, groups and candidates. The 

restrictions...limit political expression at the core of 

our electoral process and of First Amendment freedoms.” Acknowledging that both contribution and 

spending limits had First Amendment implications, the Court stated that the new law’s “expenditure ceilings impose significantly more severe restrictions on protected freedoms of political expression and association than do its limitations on financial contributions.” The Court implied, however, that the expenditure limits placed on publicly 

funded candidates were constitutional because 

Presidential candidates were free to disregard the 

limits if they chose to reject public financing; later, 

the Court affirmed this ruling in Republican National Committee v. FEC. 445 U.S. 955 (1980). 

The Court also sustained other public funding 

provisions and upheld disclosure and 

recordkeeping requirements. However, the Court 

found that the method of appointing FEC Commissioners violated the constitutional principle of 

separation of powers, since Congress, not the President, appointed four of the Commissioners, who 

8 

6

Comptroller General of the United States, “Report of the Office of 

Federal Elections of the General Accounting Office in Administering 

the Federal Election Campaign Act of 1971” (February 1975). pp. 23 

and 24. 

7

“Political committee” is defined in 2 U.S.C. and 11 CFR. 
exercised executive powers.8

 As a result, beginning 

on March 22, 1976, the Commission could no 

longer exercise its executive powers.9

 The agency 

resumed full activity in May, when, under the 1976 

amendments to the FECA, the Commission was reconstituted and the President appointed six Commission members, who were confirmed by the Senate. 

1976 Amendments 

In response to the Supreme Court’s decision, 

Congress again revised the campaign finance legislation. The new amendments, enacted on May 11, 

1976, repealed most expenditure limits (except for 

candidates who accepted public funding) and revised the provision governing the appointment of 

Commissioners. 

Among the 1976 amendments were provisions 

to limit the scope of PAC fundraising by corporations and labor organizations. Preceding this curtailment of PAC solicitations, the FEC had issued 

an advisory opinion, AO 1975-23 (the SunPAC 

opinion), confirming that the 1971 law permitted a 

corporation to use treasury money to establish, operate and solicit contributions to a PAC. The opinion also permitted corporations and their PACs to 

solicit the corporation’s employees as well as its 

stockholders. The 1976 amendments, however, put 

significant restrictions on PAC solicitations, specifying who could be solicited and how solicitations 

would be conducted. In addition, a single contribution limit was adopted for all PACs established by 

the same union or corporation. 

1979 Amendments 

Building upon the experience of the 1976 and 

1978 elections, Congress made further changes in 

the law. The 1979 amendments to the FECA (P.L. 

96-187), enacted on January 8, 1980, included provisions that simplified reporting requirements, encouraged party activity at state and local levels and 

increased the public funding grants for Presidential 

nominating conventions. 

Subsequent Amendments 

Since 1979, Congress has adopted several 

amendments of more limited scope, including provisions to: 

• Ban honoraria for federal officeholders; 

• Repeal the “grandfather clause” that had 

permitted some Members of Congress to convert excess campaign funds to personal use 

(see page 22); and 

• Increase funding for national nominating 

conventions. 

In addition, Congress enacted legislation that: 

• Assigned significant new administrative 

duties to the Commission under the National 

Voter Registration Act (see page 15); and 

• Increased the tax checkoff for the Presidential Election Campaign Fund from $1 to $3. 

(see page 12.) 

Although Congress has continued over the 

years to consider major reform of the current election laws, in recent years relatively few changes to 

the law have occurred. The focus of activity has, in 

effect, shifted from legislative initiatives to administrative and judicial actions. New developments 

have occurred at the Federal Election Commission, 

as it has attempted to implement and enforce the 

law, and in the courts. These developments are the 

subject of the next two chapters. 

8

Similarly, in 1993, the U.S. Court of Appeals for the District of 

Columbia ruled that the Commission’s two Congressionallyappointed ex officio members “violate[d] the Constitution’s 

separation of powers.” In compliance with the court’s decision, the 

Commission reconstituted itself as a six-member body, comprising 

only the Presidentially-appointed Commissioners. As a precaution, 

the reconstituted Commission ratified all of its previous decisions to 

ensure uninterrupted enforcement of the FECA. The Commission 

petitioned the Supreme Court for a writ of certiorari in the case, but 

in December 1994, the Court dismissed the Commission’s petition, 

concluding that the agency lacked statutory authority to seek 

Supreme Court review on its own, in cases arising under the FECA. 

The Court’s decision left standing the appeals court ruling. (FEC v. 

NRA Political Victory Fund) 

9

The Supreme Court stayed its judgment concerning Commission 

powers for 30 days; the stay was extended once. 

9 
CHAPTER 2 

ADMINISTERING AND ENFORCING THE FECA 

The Federal Election Campaign Act (FECA) 

regulates the financing of elections for federal office. It limits the sources and amounts of funds 

used to support candidates for federal office, requires disclosure of campaign finance information 

and—in tandem with the Primary Matching Payment Act and the Presidential Election Campaign 

Fund Act—provides for the public funding of 

Presidential elections. (Chart 2-1 provides a 

glimpse of the activity regulated by the federal 

election law.) 

CHART 2-1 

Overall Financial Activity Reported to the FEC 

Actual Amounts 

Millions 

$3,000 

$2,500 

$2,000 

$1,500 

$1,000 

$500 

$0 

*The “Other” category includes communication costs and 

independent expenditures. 

* 

1994199219901988198619841982198019781976 

Other

Soft Money 

Presidential Convention 

Presidential General 

Presidential Primary 

PACs 

Parties 

Senate Candidates 

House Candidates 

Inflation Adjusted Amounts† 

Millions 

$3,000 

$2,500 

$2,000 

$1,500 

$1,000 

$500 

$0 

†

Activity is expressed in 1994 dollars. This means the values in earlier 

years have been increased to account for inflation between that year 

and 1994. 

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 

10 
As the agency charged with administering 

and enforcing the FECA, the Federal Election Commission has four major responsibilities: 

• Providing disclosure of campaign finance 

information; 

• Ensuring that candidates, committees and 

others comply with the limitations, prohibitions and disclosure requirements of the 

FECA; 

• Administering the public funding of Presidential elections; and 

• Serving as a clearinghouse for information 

on election administration. 

This chapter highlights the Commission’s 

stewardship of the FECA, focusing on recent improvements the agency has made in carrying out 

its responsibilities. 

Customer Service 

Since its beginning, 20 years ago, the FEC has 

prided itself in providing outstanding service to 

the public, the press and the regulated community. 

Transcending the Commission’s prescribed duties, 

the commitment to customer service is most evident in the Commission’s efforts to encourage voluntary compliance with the FECA and to facilitate 

public access to campaign finance data. This section demonstrates how the agency’s outreach and 

disclosure programs serve the agency’s customers. 

Outreach 

For political committees, outreach begins 

early. A committee’s first contact with the FEC often comes through the agency’s toll-free information hotline. Staff from the Information Division 

explain the requirements of the FECA and send the 

committee a registration packet that contains forms 

and publications geared toward its needs. 

When a committee submits its registration 

documents, the Commission’s Data staff assign it 

an identification number and enter the registration 

information into the FEC database. Microfilm and 

paper copies of the registration are placed on the 

public record, and the committee is automatically 

added to the mailing list for all official notices and 

correspondence from the Commission, including 

the agency’s award-winning monthly newsletter, 

the Record. 

As questions about the FECA arise, committee 

staff can choose from a variety of FEC services designed to help them understand the law and voluntarily comply with its provisions. (These services 

are available to anyone interested in learning about 

the law. As shown in Chart 2-2, thousands of callers dial the toll-free information hotline for help 

each year.) Public affairs specialists answer their 

questions about the law, and reports analysts, who 

review the actual reports filed by committees, are 

also available to respond to questions and offer 

guidance on the law. (The Commission’s Audit 

staff helps Presidential committees comply with 

the special rules that govern publicly funded campaigns.) Committee staff can also attend instructional workshops and conferences and/or request 

free FEC publications that explain particular aspects of the law. Should committee staff need a 

publication or other document quickly, they can 

call the agency’s automated “flashfax” system and 

receive the document immediately by fax, 24 hours 

a day, seven days a week. More than 2,500 documents were faxed during the system’s first six 

months of operation (July - December 1994). 

If a committee wants official, legally binding 

guidance from the Commission, it may request an 

advisory opinion (AO). The Commission responds 

to these requests within 60 days, or within 20 days 

if a candidate’s committee submits the request just 

CHART 2-2 

Telephone Inquiries on the 800-line 

120,000 

100,000 

80,000 

60,000 

40,000 

20,000 

0 

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 

11 
before an election. An AO answers the requesting 

committee’s question and also serves as a precedent for other committees in similar situations. The 

Commission has issued more than 1,000 AOs since 

1975. 

To further assist committees, the Commission 

sends reminder notices along with the necessary 

reporting forms shortly before reports are due. 

Disclosure 

Disclosing the sources and amounts of funds 

used to finance federal elections is perhaps the 

most important of the FEC’s duties. In fact, it 

would be virtually impossible for the Commission 

to effectively fulfill any of its other responsibilities 

without disclosure. The Commission could not, for 

example, enforce the law without knowledge of 

each committee’s receipts and disbursements. Disclosure also helps citizens evaluate the candidates 

running for federal office and it enables them, 

along with the agency, to monitor committee compliance with the election law. Given these facts, the 

Commission has devoted substantial resources to 

providing effective access to campaign finance 

data. 

When a committee files its FEC report, the 

Commission’s Public Records Office ensures that a 

copy is available for public inspection within 48 

hours. Simultaneously, the agency’s Data staff begins to enter the information disclosed in the report into the FEC computer database. The amount 

of information disclosed has grown dramatically 

over the years. By December 1994, more than 12 

million pages of information were available for 

public review. 

In the Public Records Office citizens can inspect microfilm and paper copies of committee reports, as well as the FEC’s computer database and 

more than 25 different computer indexes that make 

the data more accessible. (The G Index, for example, lists individuals who have given more than 

$200 to a committee during an election cycle. The K 

and L Indexes offer broader “bank statement” 

views of receipts and disbursements for PACs, parties and candidates.) Public Records staff assist 

thousands of callers and visitors every year. (See 

Chart 2-3.) 

On-line computer access to a committee’s financial data is also available in a number of state 

offices through the State Access Program (SAP), 

and to individual subscribers linked by modem to 

the Commission’s Direct Access Program (DAP). 

These systems afford access not only to raw financial data, but also to the various categorical indexes 

mentioned above. (Chart 2-4 tracks DAP usage 

since December 1989.) 

In the near future, computers will play an 

even larger role in disclosure. The Commission is 

adding a digital imaging system to permit a user to 

view a committee’s report on a high resolution 

computer screen (or a paper copy), just as the 

document appeared in its original form. Further, 

the Commission plans to develop and implement 

an electronic filing program within the next few 

years to expedite disclosure and to ease the data 

entry burden the agency now faces. (See Chart 2-5.) 

Members of the news media may review 

committee reports using any of the methods described above, and may receive assistance from the 

Commission’s Press Office. Staff answer reporters’ 

questions, issue press releases summarizing campaign finance data and significant FEC actions, and 

respond to requests under the Freedom of Information Act (FOIA). The press office logs thousands of 

calls each year. (See Chart 2-6.) 

CHART 2-3 

Persons Served in Public Records 

50,000 

40,000 

30,000 

20,000 

10,000 

0 

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 

12 
CHART 2-4 

Direct Access Usage by Month 

0 

50 

100 

150 

200 

250 

300 

350 

Hours 

1990 1991 1992 1993 1994 

CHART 2-5 

Number of Detailed Contribution 

and Expenditure Transactions Processed* 

0 

200,000 

400,000 

600,000 

800,000 

1,000,000 

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 

CHART 2-6 

Number of Phone Calls 

to the Press Office 

0 

5,000 

10,000 

15,000 

20,000 

25,000 

77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 

*The Commission lowered its data entry threshold from $500 to $200 

in 1989, and began entering soft money transactions in 1991. 

13 
The Commission also makes available a variety of agency documents, including: advisory opinions, closed enforcement and litigation files, audit 

reports and both written minutes and audio tapes 

of Commission meetings. 

Enforcement 

As effective as the Commission’s efforts to encourage voluntary compliance with the FECA have 

been, none would have succeeded without the deterrent provided by the agency’s enforcement program. As noted in Chapter 1, earlier campaign finance laws were largely ineffectual because no 

single, independent agency handled enforcement. 

By contrast, under the current law, the Commission has exclusive jurisdiction over civil enforcement. 

Enforcement cases are generated through 

complaints filed by the public, referrals from other 

federal and state agencies and the FEC’s own 

monitoring procedures. The Commission’s Reports 

Analysis Division reviews each report a committee 

files in order to ensure the accuracy of the information on the public record and to monitor the 

committee’s compliance with the law. If the information disclosed in a report appears to be incomplete or inaccurate, the reviewing analyst sends the 

committee a request for additional information 

(RFAI). The committee may avoid a potential enforcement action and/or audit by responding 

promptly to such a request. (Most responses take 

the form of an amended report.) Although the 

Commission does not have authority to conduct 

random audits of committees,1

 it can audit a committee “for cause” when the committee’s reports 

indicate violations of the law. (Chart 2-7 tracks report review activity.) 

The agency must attempt to resolve enforcement matters through conciliation. If conciliation 

fails, however, the Commission (rather than the 

Justice Department) may take a respondent to 

CHART 2-7 

Number of Reports Reviewed 

by the Reports Analysis Division 

50,000 

40,000 

30,000 

20,000 

10,000 

0 

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 

court. Likewise, when Commission actions are 

challenged in court, the Commission conducts its 

own defensive litigation.2

 The Commission has 

been involved in more than 350 court cases since 

1980.3 

Prioritization 

Until recently, the Commission handled every 

enforcement matter, regardless of its significance. 

As the number and complexity of cases increased, 

a backlog developed, jeopardizing the 

Commission’s ability to effectively enforce the law. 

Given its limited resources, the Commission recognized that it could not enforce the law effectively if 

it continued to handle every enforcement matter 

1

In its legislative recommendations, the Commission has asked 

Congress to reinstate the agency’s authority to conduct random 

audits. Congress revoked that authority as part of the 1979 

amendments to the FECA. 

2

With regard to cases that are appealed to the Supreme Court, 

however, the high Court ruled, in December 1994, that the FEC could 

not unilaterally bring cases before it, except those involving the 

Presidential public funding program. Instead, the Commission must 

ask the Justice Department either to represent the agency or to grant 

approval for the Commission to represent itself before the Court. 

(FEC v. NRA Political Victory Fund) 

3

The Commission has won 90 percent of those cases (excluding cases 

that were dismissed). 

14 
that came before it. As a result, the Commission 

developed an enforcement prioritization system. 

Under this system, the Commission ranks enforcement cases based on specific criteria, and assigns 

only the more significant cases to staff. Less significant cases are held until staff becomes available, 

and those that do not warrant further consideration are dismissed. While the prioritization system ensures that the agency devotes its resources 

to the more significant cases on its docket, the 

Commission continues to pursue a wide range of 

cases at all times. 

The Commission introduced the prioritization 

system in 1993. At the same time, the Commission 

began to seek higher civil penalties when it found 

serious violations of the law. The agency believes 

that this combination of prioritization and higher 

penalties will help deter future violations of the 

law. (As shown in Chart 2-8, the agency’s new approach has had a significant impact.) 

CHART 2-8(a) 

Conciliation Agreements and 

Civil Penalties by Calendar Year* 

Thousands Number 

Number of Agreements 

Total Dollar Amount in Civil Penalties 

$2,000 400

$1,500 300 

200 $1,000 

100 $500 

0 $0 

86 87 88 89 90 91 92 93 94 

CHART 2-8(b) 

Median Civil Penalty 

by Calendar Year* 

15 

$5,000 

$4,000 

$3,000 

$2,000 

$1,000 

$0 

86 87 88 89 90 91 92 93 94 

*An enforcement case may include several respondents. Because 

some respondents enter into conciliation agreements more quickly 

than others, agreements calling for civil penalties in a single 

enforcement case may be concluded in different years. The figures in 

this chart represent the total penalties included in all conciliation 

agreements entered into during the calendar year specified, whether 

or not the case itself was concluded during that year. 

Note that conciliation agreements for a given case are not made 

public until the entire case closes. 
Presidential Public Funding 

Every Presidential election since 1976 has 

been financed with public funds. While the concept 

of public funding dates back to the turn of the century, a public funding program was not implemented until the early 1970s. 

Congress designed the program to correct the 

problems perceived in the Presidential electoral 

process. Those problems were believed to include: 

• The disproportionate influence (or the appearance of influence) of the wealthiest contributors;

• The demands of fundraising that prevented

some candidates from adequately presenting

their views to the public; and

• The increasing cost of Presidential campaigns,

which effectively disqualified candidates who

did not have access to large sums of money.4 

To address these problems, Congress devised 

a program that combines public funding with limitations on contributions and expenditures. The 

program has three parts: 

• Matching funds for primary candidates;

• Grants to sponsor political parties’ Presidential nominating conventions; and

• Grants for the general election campaigns

of major party nominees and partial funding

for qualified minor and new party candidates.

Based on statutory criteria, the Commission 

determines which candidates and committees are 

eligible for public funds, and in what amounts. The 

U.S. Treasury then makes the necessary payments. 

Later, the Commission audits all of the committees 

that received public funds to ensure that they used 

the funds properly. Based on the Commission’s 

findings, committees may have to make repayments to the U.S. Treasury. 

Audits 

Ensuring the proper use of public funds requires Commission auditors to review thousands 

of transactions involving millions of dollars for 

each Presidential candidate who receives public 

funds. The time required for these audits, and the 

campaigns’ response to the Commission’s conclusions, can extend several years after the election. 

These delays have frustrated everyone involved, 

including the Commission, the candidates and the 

public. 

To minimize these frustrations, the Commission recently introduced a number of innovations 

to expedite the presidential audit process. In 1991 

and 1992, the agency revised its regulations, 

amended its audit procedures, expanded its use of 

technology and increased staffing to hasten the 

completion and disclosure of Presidential audits. 

The new methods have paid off. The agency issued 

the final audit reports of all the 1992 Presidential 

candidates by the end of 1994. In past elections, 

some reports had taken up to four years to complete. 

Tax Checkoff 

The public funding program is exclusively 

funded by the dollars that taxpayers designate for 

the Presidential Election Campaign Fund on their 

1040 tax forms. Beginning in 1980, fewer and fewer 

taxpayers designated a dollar to the Presidential 

Fund, even as Fund payments to candidates increased with inflation. (See Chart 2-9.) 

The Commission warned Congress of an impending shortfall in the Fund and launched a public education program, urging taxpayers to “make 

an informed choice” regarding the checkoff. 

In August 1993, Congress preserved the Fund 

in the short run by increasing the checkoff amount 

from $1 to $3. The legislation did not, however, index the checkoff amount to inflation. Since payments from the Fund will continue to increase with 

inflation, a shortfall at some future point remains 

inevitable. Should a shortfall occur, current law requires the U.S. Department of Treasury to allocate 

remaining funds, giving first priority to the conventions, second priority to the general election 

and third priority to the primaries. (For further information, see The Presidential Public Funding Program, a 1993 FEC publication.) 

4

See S. Rep. No. 93-689, pp. 1-10 (1974). 

16 
17

FEDERAL ELECTION COMMISSION PRESS OFFICE (202)219-4155 (800)424-9530 FE E E E D RAL L CT C I I I N N M O M SS O O T T O E S UNITED S A AC A I R E F M ★★★★★★ ★★ ★ ★★ ★★ ★★★ ★★★ ★★ ★ ★★ Februa

PRESIDENTIAL FUND — INCOME TAX CHECKOFF STATUS

CALENDAR YEAR 1994 1993 1992 1991 1990 1989 1988 1987 1986 JANUARY $ 840,258 $ 496,442 $ 185,784 $ 55,917 $ 191,076 $ 51,752 $ 189,239 $ 180,021 $ 93,644 FEBRUARY 9,603,292 4,169,736 5,350,532 3,859,981 3,851,840 3,350,332 3,577,465 2,193,576 2,433,902 MARCH 13,670,027 5,626,467 6,543,872 8,967,739 9,103,550 7,231,448 7,217,318 9,554,967 7,928,518 APRIL 16,726,728 5,020,155 5,731,339 6,419,427 6,395,132 6,300,921 6,998,769 7,148,608 9,944,248 MAY 11,537,067 5,582,833 5,808,728 5,854,209 5,519,508 7,536,090 7,295,836 6,615,806 6,718,371 JUNE 9,281,193 3,555,265 3,635,585 4,845,602 4,707,103 3,903,518 3,216,574 4,071,899 4,092,492 JULY 5,567,974 1,936,487 1,119,885 958,772 1,228,985 1,402,031 2,219,724 2,033,012 2,453,593 AUGUST 903,022 337,847 254,933 506,805 434,132 1,347,288 1,096,980 830,094 947,562 SEPTEMBER 1,155,429 458,471 502,316 364,392 545,024 669,189 686,710 100,870 690,992 OCTOBER 1,181,278 172,882 201,739 144,866 162,037 172,340 155,329 550,265 100,254 NOVEMBER 722,307 227,725 194,241 294,056 258,973 250,685 279,726 267,288 260,196 DECEMBER 128,420 52,672 63,781 50,570 65,619 70,052 80,317 105,541 90,065 

TOTAL CHECK-OFF YEAR–TO–DATE $71,316,995 $27,636,982 $29,592,735 $32,322,336 $32,462,979 $32,285,646 $33,013,987 $33,651,947 $35,753,837 

TOTAL REPAYMENTS YEARTO-DATE $136,601.00 $129,707.22 $566,078.68 $595,419.14 $39,148.13 $22,024.32 $103,499.76 $357,307.09 $61,640.71 TOTAL DISBURSEMENTS YEAR-TO-DATE $568,434.92

$101,664,546.86

$1,048,364.31

$30,779,385.78

$153,191,152.59

$4,061,060.87

$21,200,000.00

$127,144,468.62

$2,426.42

$115,426,713.48

$1,843,016.67

$82,927,012.77

$158,560,804.63

$52,462,359.12

$17,784,000.00

$177,905,676.99

$5,596.22

$161,680,422.90

FUND BALANCE 

NOTES:• MONTHLY DEPOSIT FIGURES ARE NOT AVAILABLE FOR THE YEARS 1973 – 1975.• 1973 TAX RETURNS PROVIDED TAXPAYERS THE OPPORTUNITY TO DESIGNATE FUNDS FOR 1972 AND 1973.• FIGURES FOR 1973 THROUGH 1976 CAN NOT BE VERIFIED.• ALL MONTHLY DEPOSIT FIGURES HAVE BEEN PROVIDED BY THE U.S. DEPARTMENT OF THE TREASURY.ACCORDING TO INTERNAL REVENUE SERVICE INFORMATION, THE PERCENTAGE OF TAX RETURNS PROCESSED INDICATING ONE- OR TWO-DOLLAR DESIGNATIONS WAS1976 RETURNS—27.5 %1977 RETURNS—28.6 %1978 RETURNS—25.4 %1979 RETURNS—27.4 %

1980 RETURNS—28.7 %1981 RETURNS—27.0 %1982 RETURNS—24.2 %1983 RETURNS—23.7 %

1984 RETURNS—23.0 %1985 RETURNS—23.0 %

1986 RETURNS—21.7 %1987 RETURNS—21.0 %

1988 RETURNS—20.1 %1989 RETURNS—19.8 %

1990 RETURNS—19.5 %1991 RETURNS—17.7 %

1992 RETURNS—18.9%1993 RETURNS—14.5%
H

18 

FE 

E 

E E

D

RAL 

L CT C

I 

I 

I 

N 

N 

M 

O 

M 

SS 

O O 

O T T 

E 

S 

UNITED S A AC A I R E F M 

HHH H H H H H

H HH HH 

H H H HH HH H 

H H FEDERAL ELECTION COMMISSION Februa

PRESS OFFICE(202)219-4155(800)424-9530

PRESIDENTIAL FUND — INCOME TAX CHECKOFF STATUS

CALENDAR YEAR 1984 1983 1982 1981 1980 1979 1978 1977 1976

JANUARY $  169,832 $  319,570 $  457,372 $  684,510 $  326,184 $  482,973 $  689,488 $  746,685 $  876,771 

FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTAL CHECK-OFFYEAR–TO–DATE TOTAL REPAYMENTS YEARTO-DATE TOTAL DISBURSEMENTSYEAR-TO-DATE FUND BALANCE 

3,769,428  4,077,295  3,790,858  4,141,426  7,247,271  4,583,893  5,986,292  7,811,426  7,487,457 

8,732,837  8,847,655  11,013,954  11,254,856  8,625,855  9,637,824  9,006,764  10,472,777  8,828,310 

5,482,270  7,527,099  6,338,933  7,424,035  7,186,840  6,713,117  9,765,133  7,054,795  7,090,211 

8,465,697  5,778,132  7,427,745  7,665,407  6,563,699  6,581,790  5,941,997  6,029,693  6,073,861 

2,757,257  2,987,695  4,145,029  4,592,000  3,933,738  4,233,077  4,851,826  3,618,171  2,725,832 

3,171,247  3,000,431  4,193,252  3,773,686  4,061,737  3,035,907  2,224,813  350,497  323,616 1,113,469  2,071,316  1,049,706  871,842  409,085  264,192  409,288  225,626  128,536 

669,569  583,082  272,412  300,194  235,375  166,705  136,750  88,078  225,626 208,484  172,454  143,312  140,723  109,983  123,841  127,755  47,965 

205,530  182,126  129,927  134,997  104,440  83,457  69,867  40,564  36,413 291,141  84,213  61,382  65,376  34,210  34,571  36,716  33,632  24,895 

$35,036,761 $35,631,068 $39,023,882 $41,049,052 $38,838,417 $35,941,347 $39,246,689 $36,606,008 $33,731,945 

$505,807.15 $21,899.13 $58,399.69 $202,287.60 $1,094,097.68 $23,473.82 $163,725.41 $1,037,029.10 -0-

$120,149,768.18 $11,786,485.65 $1,070.22 $630,255.73 $101,427,115.89 $1,050,000.00 $6,000.00 $521,124.42 $69,467,521.18 

$92,713,782.10 $177,320,982.13 $153,454,500.65 $114,373,289.18 $73,752,205.31 $135,246,806.52 $100,331,985.70 $60,927,571.29 $23,805,658.61 
National Clearinghouse on Election 

Administration 

The Commission’s National Clearinghouse on 

Election Administration serves as a central exchange for information and research on issues related to the administration of federal elections. 

Clearinghouse programs fall into three broad categories: 

• Conducting research, both contract and inhouse; 

• Providing information by participating in 

meetings of state and local election officials, 

briefing foreign visitors and maintaining a 

library of election information; and 

• Monitoring federal legislation that affects 

the administration of elections. 

Products of Clearinghouse research span a variety of topics including state campaign finance 

law, election case law, state ballot access procedures and state procedures for contested elections 

and recounts. The Clearinghouse also publishes the 

FEC Journal of Election Administration and a continuing series of monographs describing recent 

technological and administrative innovations in 

state and local election offices. 

In 1980, Congress directed the Commission to 

study the feasibility of developing performance 

standards for voting systems used in the United 

States. After a decade of research and dialogue, the 

Clearinghouse published Performance and Test Standards for Punchcard, Marksense, and Direct Recording 

Electronic Voting Systems. This document provides 

voluntary performance and test standards that 

states and voting systems vendors may use to improve the accuracy, integrity and reliability of computer-based voting systems. 

Following the passage of the National Voter 

Registration Act of 1993, the Clearinghouse helped 

states implement the new law. Congress enacted 

the NVRA to facilitate and increase voter registration by providing opportunities to register at a 

number of different state agencies or offices. Citizens may, for example, register to vote at state offices that provide public assistance and at those 

that provide state-funded services to persons with 

disabilities. States must also offer voter registration 

via a mail-in registration form, at armed forces recruitment offices and at offices that issue driver’s 

licenses (hence the nickname, the “Motor Voter” 

law). 

As required under the NVRA, the Clearinghouse informed state and local election officials 

and public interest groups about the law’s requirements and published a guide for the states entitled 

Implementing the National Voter Registration Act of 

1993: Requirements, Issues, Approaches, and Examples. 

In June 1994, the Commission published final 

rules concerning the information that states must 

provide to the FEC for its report to Congress on the 

NVRA’s effect on the administration of federal 

elections. The rules also describe the national mail 

voter registration form. 

The Clearinghouse designed the voter registration form in consultation with state election officials and made it publicly available in January 

1995. Under the NVRA, states must accept and use 

the form as a means of applying for voter registration or updating registration data.5 

5

In December 1994, the governor of California filed a lawsuit 

challenging the constitutionality of the NVRA. In January 1995, the 

Justice Department sued California, Illinois and Pennsylvania for 

refusing to comply with the statute. Two other states, Michigan and 

South Carolina, also failed to comply, but were not named in the suit. 

In the wake of the Justice Department’s action, South Carolina filed a 

preemptive lawsuit to prevent the government from forcing it to 

comply with the law. Nonetheless, in February 1995, the Justice 

Department filed suit against South Carolina. At the time of 

publication, none of these cases had been resolved. 

19 
CHAPTER 3 

KEY ISSUES BEFORE THE COMMISSION 

“[S]afeguarding the integrity of the electoral 

process without...impinging upon the rights of individual citizens and candidates to engage in political debate and discussion.” Those words, from 

the Supreme Court’s Buckley v. Valeo decision, describe the balance that the Commission has tried to 

achieve as it has administered and enforced the 

Federal Election Campaign Act. During the last 20 

years, the Commission has wrestled with many 

difficult issues, often searching for ways to balance 

the governmental interest of ensuring the integrity 

of the electoral process and our representative 

form of government with the constitutional rights 

to free speech and free association. This chapter examines that search, focusing particularly on a few 

of the difficult issues that the Commission is currently addressing or has recently resolved. 

Corporate Communications 

The extent to which the FECA may limit election-related communications by corporations has 

been among the most contentious and constitutionally significant topics of debate in recent years, 

both in the courts and at the Federal Election Commission. As the Supreme Court has noted, “the 

special characteristics of the corporate structure require particularly careful regulation.” (FEC v. National Right to Work Committee). The Court has 

warned that “Direct corporate spending on political activity raises the prospect that resources 

amassed in the economic marketplace may be used 

to provide an unfair advantage in the political marketplace.” (FEC v. Massachusetts Citizens for Life). At 

the same time, however, the power to regulate corporate communications is limited by the constitutional protections for political speech. 

Section 441b of the FECA prohibits all contributions and expenditures by corporations and labor organizations in connection with federal elections. The Supreme Court’s 1986 decision in FEC v. 

Massachusetts Citizens for Life (MCFL)1

 altered the 

application of that ban in two ways. First, the 

Court effectively narrowed the scope of the prohibition by concluding that “an expenditure must 

constitute ‘express advocacy’ [i.e., expressly advocate the election or defeat of a clearly identified 

candidate] in order to be subject to the prohibition 

of §441b.” Second, the Court held that §441b’s ban 

on independent expenditures—which by definition 

include express advocacy—is unconstitutional as 

applied to a small group of incorporated, nonprofit 

organizations that meet certain criteria. 

This section explores the implications of the 

MCFL decision, looking first at the express advocacy standard, then at the so-called “MCFL exemption” for nonprofit corporations and, finally, at the 

Commission’s rulemaking to implement the MCFL 

decision. 

1

The case involved an MCFL-produced newsletter that advocated the 

election of pro-life candidates. 

20 
Express Advocacy 

For some time after the MCFL ruling, it was 

the Commission’s view that the Court’s application 

of the express advocacy standard was dictum (a 

statement, but not a binding ruling) because it was 

unnecessary to the Court’s resolution of the case. 

However, a subsequent decision by the U.S. Court 

of Appeals for the First Circuit in Faucher v. FEC 

reasoned that express advocacy was essential to 

the application of 441b’s prohibition on corporate 

expenditures. Since the Supreme Court declined to 

review that decision, the agency has followed the 

express advocacy standard. 

Defining express advocacy, and distinguishing it from issue advocacy, have proven to be 

daunting tasks for the courts and the Commission. 

The “express advocacy” standard was first 

employed in the landmark Supreme Court case, 

Buckley v. Valeo (although not in the context of 

§441b). In its decision, the Court defined express 

advocacy as “communications that in express 

terms advocate the election or defeat of a clearly 

identified candidate for federal office,” including 

“communications containing express words of advocacy of election or defeat, such as ‘vote for,’ 

‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for 

Congress,’ ‘vote against,’ ‘defeat,’ [or] ‘reject.’” 

In MCFL, which is the only post-Buckley Supreme Court decision involving express advocacy, 

the Court applied its Buckley definition and concluded that the MCFL’s “Special Election Edition” 

newsletter did contain express advocacy, despite 

the absence of explicit “Vote for Smith” language. 

“The publication not only urges voters to 

vote for ‘pro-life’ candidates, but also 

identifies and provides photographs of 

specific candidates fitting that description. 

The Edition cannot be regarded as a mere 

discussion of public issues that by their 

nature raise the names of certain politicians. Rather, it provides in effect an explicit directive: vote for these (named) 

candidates. The fact that this message is 

marginally less direct than ‘Vote for 

Smith’ does not change its essential nature.” 

The courts have offered additional interpretations of Buckley’s express advocacy definition. In 

FEC v. Furgatch, which involved independent expenditures2 by an individual, the U.S. Court of Appeals for the Ninth Circuit concluded that “[political] speech need not include any of the words 

listed in Buckley to be express advocacy under the 

Act, but must, when read as a whole, and with limited reference to external events, be susceptible of 

no other reasonable interpretation but as an exhortation to vote for or against a specific candidate.” 

Elaborating on this standard, the appeals 

court held that a political communication would 

constitute express advocacy if: 

• The communication “is unmistakable and 

unambiguous, suggestive of only one plausible meaning,” even if “not presented in the 

clearest, most explicit language”; 

• The communication “presents a clear plea 

for action”; and 

• There can be no reasonable doubt about 

“what action is advocated.” 

The appeals court concluded that this express 

advocacy standard would “preserve the efficacy of 

the Act without treading upon the freedom of political expression.” 

The court warned that a more rigid application of the Buckley definition “would preserve the 

First Amendment right of unfettered expression 

only at the expense of eviscerating the Federal 

Election Campaign Act. ‘Independent’ campaign 

spenders working on behalf of candidates could remain just beyond the reach of the Act by avoiding 

certain key words while conveying a message that 

is unmistakably directed to the election or defeat of 

a named candidate.” 

The district court decision in FEC v. National 

Organization for Women relied on the Furgatch test, 

concluding: “The words listed in Buckley are not 

the only ones which will be deemed express advocacy.” 

2

An independent expenditure is an expenditure for a communication 

which expressly advocates the election or defeat of a clearly 

identified candidate and which is not made in cooperation or 

consultation with or at the request or suggestion of, or with the prior 

consent of any candidate or his or her authorized committees or 

campaign agents. 2 U.S.C. §431(17). Persons making certain 

independent expenditures must report them and include a 

disclaimer. 2 U.S.C. §§434(b)(6)(B)(iii) and (C) and 441d. 

21 
In Faucher v. FEC (noted earlier), however, the 

U.S. Court of Appeals for the First Circuit seemed 

to eschew the Furgatch interpretation of Buckley. 

“In our view, trying to discern when issue advocacy... crosses the threshold and becomes express 

advocacy invites just the sort of constitutional 

questions the Court sought to avoid in adopting 

the bright-line express advocacy test in Buckley.” 

More recent decisions on express advocacy 

have relied on a similar interpretation of Buckley. In 

FEC v. Colorado Republican Federal Campaign Committee, a district court cited Furgatch, but concluded: “Trying to determine whether the surrounding circumstances, coupled with the implications of the [publication], constitute ‘express advocacy’ leads to the type of semantic dilemma which 

the Court sought to avoid by adopting a bright-line 

rule.” The court “decline[d] to blur Buckley’s 

bright-line rule.” (Significantly, this case—for the 

first time—applied the express advocacy standard 

to §441a(d), which governs coordinated political 

party expenditures. The Commission has appealed 

the decision.) 

Similarly, in FEC v. Survival Education Fund, 

Inc., a district court concluded that “expressions of 

hostility to the positions of an official, implying 

that that official should not be reelected—even 

when that implication is quite clear—do not constitute the express advocacy which runs afoul of the 

statute.” (The Commission has also appealed this 

decision.) 

The range of express advocacy definitions espoused by the courts—from “bright line” to “reasonable interpretation”—has profoundly affected 

the Commission’s consideration of new regulations 

governing corporate communications. (See FEC 

Rulemaking, below.) 

The MCFL Exemption 

In the portion of the MCFL decision that resolved the case, the Supreme Court concluded that 

“§441b’s restriction on independent spending is 

unconstitutional as applied to MCFL.” The Court 

explained that: 

“Some corporations have features more 

akin to voluntary political associations 

than business firms, and therefore should 

not have to bear burdens on independent 

spending solely because of their incorporated status.” 

The Court identified three features of MCFL 

that were essential to its ruling that MCFL was exempt from the ban on corporate independent expenditures. Those features are: 

• The organization is a nonprofit ideological 

corporation formed “for the express purpose 

of promoting political ideas, and cannot engage in business activities.” 

• It has “no shareholders or other persons 

affiliated so as to have a claim on its assets or 

earnings.” 

• It has not been established by a corporation 

or labor union and has a policy “not to accept 

contributions from such entities.” 

In subsequent cases, courts have applied this 

three-part test to other organizations. In Austin v. 

Michigan Chamber of Commerce, for example, the Supreme Court upheld the application of a Michigan 

statute containing prohibitions similar to those 

found in §441b. The Court concluded that the 

Chamber of Commerce did not qualify for the 

MCFL exemption because it did not meet the threepart test. 

In fact, the Court concluded that the Chamber 

did not possess any of the three essential features: 

• The Chamber’s activities were not limited 

to political and public educational purposes. 

• “[T]he Chamber’s members [were] more 

similar to the shareholders of a business corporation than to the members of MCFL” because the members had an economic disincentive to withdraw support from the organization if they disagreed with its political views. 

• The Chamber had no policy against accepting contributions from corporations or unions, 

and, because three-fourths of the Chamber’s 

members were business corporations, the 

organization’s treasury contained corporate 

funds in the form of membership dues. 

FEC Rulemaking 

Shortly after the MCFL decision, the National 

Right to Work Committee (NRWC) filed a petition 

asking the FEC to rewrite its rules to adopt the 

Court’s conclusion that “express advocacy” is the 

proper standard for determining when communications by corporations and labor organizations are 

22 
prohibited under §441b. The Commission responded by publishing an Advance Notice of Proposed Rulemaking seeking comments on how the 

agency should respond to the MCFL decision. 

The Commission received more than 17,000 

comments in response to the Advance Notice, most 

of which supported the NRWC’s position on express advocacy. Nevertheless, the comments, the 

testimony at public hearings on the subject and discussions among the Commissioners themselves all 

revealed a wide range of views on how broadly or 

narrowly the Commission should define express 

advocacy. Some encouraged the Commission to 

limit express advocacy to the words and phrases 

spelled out in Buckley, while others—citing MCFL 

and Furgatch—favored a broader interpretation. 

In the wake of the Austin decision, the Commission published a second notice inviting comments on express advocacy and the MCFL exemption. Again, most of the those commenting supported adoption of a narrow express advocacy 

standard. Several also offered suggestions for 

implementing the MCFL exemption. 

In its attempt to craft regulations, the Commission has struggled to find an express advocacy 

definition that is narrow enough to avoid impinging upon First Amendment rights, but broad 

enough to ensure the effectiveness of the federal 

election laws. The definition must distinguish express advocacy from issue advocacy without creating a loophole that would, in effect, allow corporations, labor unions and individuals to sidestep the 

requirements of the election law. 

In August 1994, the Commission tentatively 

approved an express advocacy definition, but has 

not taken final action on the rulemaking. 

The Commission is also considering proposals 

to implement the MCFL exemption allowing certain nonprofit advocacy groups to make independent expenditures using treasury funds. In addition, the rulemaking proposals under consideration would revamp the applicable standards for 

corporate and union activities such as the publication of voter guides and candidate endorsements, 

in line with the MCFL decision. 

Soft Money 

soft money - n. [slang]: funds raised and/or 

spent outside the limitations and prohibitions of 

the Federal Election Campaign Act. Sometimes 

referred to as nonfederal funds, soft money often includes corporate and/or labor treasury 

funds, and individual contributions in excess of 

the federal limits, which cannot legally be used 

in connection with federal elections, but can be 

used for other purposes. 

Soft money is one of the most difficult issues 

the Commission has addressed during the last 20 

years. The origins of “soft money” lie in the United 

States’ federal system of government. The Constitution grants each state the right to regulate certain 

activities within that state. In the area of campaign 

finance, each state may establish its own rules for 

financing the nonfederal elections held within its 

borders. As a result, committees that support both 

federal and nonfederal candidates frequently must 

adhere to two different sets of campaign finance 

rules—federal and state. (Sometimes, cities and 

counties create yet a third set of rules governing 

the financing of local elections.) 

Acknowledging this fact, FEC regulations permit committees to establish separate bank accounts 

for federal and nonfederal activity. Only funds deposited into the federal bank account are subject to 

the limitations, prohibitions and disclosure requirements of the FECA. The nonfederal or “soft 

money” account is subject only to state laws, which 

may be more permissive than the FECA. As a result, only funds from the federal account may be 

used to influence federal elections. 

Some expenses incurred by these committees, 

however, may in fact relate to both federal and 

nonfederal elections. Party committees, for example, may purchase generic get-out-the-vote advertisements that benefit both their federal and 

nonfederal candidates. To pay for these ads, committees must use federal funds for the portion that 

benefits federal candidates, but may use soft 

money for the rest (i.e., the portion that benefits 

nonfederal candidates). 

During the 1980s, some argued that—among 

other things—committees were underestimating 

the federal share of their expenses. As a result, soft 

money covered not only the costs attributable to 

23 
nonfederal candidates, but also those related to 

federal candidates. At the time, FEC regulations required committees to allocate expenses between 

their federal and nonfederal accounts on a “reasonable basis.” Some public interest groups believed 

this standard was too vague and failed to provide a 

framework for monitoring improper use of soft 

money in federal elections. 

In November 1984, Common Cause submitted 

a rulemaking petition asking the Commission to 

adopt more stringent rules to preclude allocation 

and thereby close the perceived soft money loophole. In 1986, after conducting public hearings, the 

Commission concluded that evidence of improper 

use of soft money in federal elections was insufficient to justify the rule changes suggested in the 

Common Cause petition. 

Common Cause responded by filing a suit 

against the FEC. The suit asked the U.S. District 

Court for the District of Columbia to declare that 

the Commission had acted contrary to law by denying the rulemaking, and to order the Commission to act on the petition. The court upheld the 

Commission’s decision to deny the rule changes 

Common Cause had requested, but it did order the 

FEC to clarify its allocation regulations. 

In June 1990, after evaluating information 

gathered from a questionnaire, from responses to a 

notice of proposed rulemaking and from testimony 

at hearings, the Commission approved new regulations. The rules: 

• Specify formulas that committees must use 

to determine the amount of federal funds required to be spent for any activity that benefits both federal and nonfederal candidates; 

• Require expanded reporting of shared federal/nonfederal spending; and 

• Establish the presumption that funds raised 

through activities that mention a federal candidate are federal funds. 

As a result of the revised rules, which took effect January 1, 1991, the national party committees 

now disclose all of the receipts and disbursements 

of their soft money accounts. (See Chart 3-1) Other 

committees that maintain two accounts—federal 

and nonfederal—must report detailed information 

on their shared expenses and also show the 

amount of soft money used to pay the nonfederal 

portion of those expenses. 

Despite these significant new regulations, 

some legislators and public interest groups are still 

concerned about the effects of soft money. They 

say, for example, that soft money spending—even 

for the nonfederal share of expenses—influences 

federal elections because it permits committees to 

conserve federal funds that can later be spent to 

support federal candidates. 

Many are also concerned about the way committees raise soft money. They believe that the active role federal candidates and their associates 

play in raising large sums of soft money, at the 

very least, creates an appearance of undue influence by the contributors on the federal candidates 

involved. 

Others, however, view federal regulation of 

soft money as an unwarranted intrusion into the financing of nonfederal elections. They argue, in 

part, that complex federal regulations may have a 

chilling effect on grassroots electoral activity. 

(Ironically, some states regulate the financing of 

their nonfederal elections so strictly that federally 

permissible funds cannot legally be spent for state 

and local activity.) 

CHART 3-1(a) 

Party Federal and 

Nonfederal Receipts 

Nonfederal Receipts

Federal Receipts

Democratic National Committee (DNC) 

1991-92 1993-94 

Republican National Committee (RNC) 

1991-92 1993-94 

24 
CHART 3-1(b) 

Sources of Party Receipts 

1992 

1994

DNC Federal Receipts by Source 

Other 

PACs 

Individual over $200 

Individual $200 or less 

0 5 10 15 20 25 30 35 

Millions of Dollars 

RNC Federal Receipts by Source 

Other 

PACs 

Individual over $200 

Individual $200 or less 

0 10 20 30 40 50 60 70

Millions of Dollars 

Within Party 

Other 

Individual 

PAC 

Labor 

Corporate 

0 5 10 15 20

Millions of Dollars 

DNC Nonfederal Receipts by Source RNC Nonfederal Receipts by Source 

Within Party 

Other 

Individual 

PAC 

Labor 

Corporate 

0 5 10 15 20 25 

Millions of Dollars 

CHART 3-1(c) 

Party Federal and Nonfederal Disbursements - 1994 

Nonfederal 

Federal 

Other 

Building Fund 

Federal Operating Expenses 

Transfers to States 

Other Joint 

Joint Fundraising 

Joint Administrative 

Coordinated Expend 

Contributions 

DNC 

Other 

Building Fund 

Federal Operating 

Expenses 

Transfers to States 

Other Joint 

Joint Fundraising 

Joint Administrative 

Coordinated Expend 

Contributions 

0 2 4 6 8 10 12 14 

Millions of Dollars 

RNC 

0 5 10 15 20 25 30 35 

Millions of Dollars 

 25

25 
In adopting its soft money allocation rules, the 

Commission proceeded as far as its statutory authority would permit, short of barring the combined use of federal and nonfederal funds altogether. It then asked Congress to consider whether 

legislation was needed to deal not only with the 

way soft money is spent, but also with the way it is 

raised. In the package of legislative recommendations sent to the President and Congress in 1994, 

the Commission asked Congress to consider 

changes in several areas, including: 

• Expanding disclosure of soft money receipts; 

• Prohibiting the use of a federal candidate’s 

name or appearance to raise soft money; 

• Confining soft money fundraising and 

spending to nonfederal election years; and 

• Requiring that all party activity which is 

not exclusively on behalf of nonfederal candidates be paid for with federally permissible 

funds. 

Personal Use of Campaign Funds 

Congress banned personal use of excess campaign funds as part of the 1979 amendments to the 

FECA. That ban, however, did not apply to candidates who were Members of Congress on January 

8, 1980 (due to the so-called “grandfather clause”), 

nor did it define the parameters of “personal use.” 

Since most of the candidates initially seeking 

guidance under this section were incumbents, who 

were exempt under the “grandfather clause,” the 

Commission was rarely called upon to address the 

personal use issue. When questions did arise, the 

Commission tried to find answers that took into account both Congress’s desire to prohibit the (undefined) “personal use” of campaign contributions 

and the need to give candidates and campaigns the 

discretion to conduct their campaigns as they saw 

fit. Once again, the Commission was called upon to 

find a balance between legislative interests and 

constitutional freedoms, mindful of practical considerations. 

As years passed, public interest groups and 

the press began to focus public attention on the 

way certain Members of Congress and other candidates spent their campaign funds. Common Cause, 

for example, alleged that “Members are using campaign funds to buy cars, to pay for clothes and 

meals, to pay for pleasure and vacation trips, to 

pay for club dues and tickets to theater and sporting events... claiming these activities are related to 

campaign or official duties.” Others complained 

that “some campaign coffers are regarded as slush 

funds to be used by incumbents for whatever purposes meet their fancy.” (Fritz/Morris, p. 9) 

In response to the criticism, Congress repealed 

the “grandfather clause” by passing the Ethics Reform Act of 1989. That statute extended the personal use ban to all candidates, including Members 

of the House and Senate who served in the 103d 

Congress or a subsequent Congress, but it did not 

define “personal use.” 

With the repeal of the “grandfather clause,” 

the Commission expected additional questions regarding the scope of the personal use ban. As a result, the Commission initiated a rulemaking to define the term. Conflicting comments and testimony 

at public hearings demonstrated the controversial 

nature of the issue: One person’s “personal use” is 

another’s legitimate campaign expenditure. 

After carefully considering the issues, the 

Commission adopted detailed regulations that define personal use, and offer specific examples of expenses that the Commission will consider personal. 

Generally, under the new rules, expenses that 

would exist regardless of an individual’s campaign 

for federal office or duties as a federal officeholder 

are deemed personal. Examples include: 

• Household expenses; 

• Funeral expenses; 

• Tuition payments; 

• Entertainment expenses; and 

• Membership dues at clubs.3 

The Commission was unable to resolve the 

question of whether campaigns may pay a salary 

to a candidate during the campaign. Some Commissioners maintained that salary payments represented an illegal conversion of campaign funds to 

personal use. Others argued that banning campaign salaries unfairly disadvantaged challengers. 

They pointed out that challengers often had to 

leave their jobs in order to campaign, while incum3

While these expenses are generally considered personal, the 

regulations do specify certain exceptions. 

26 
bents continued to draw their Congressional salaries throughout the campaign. In its rulemaking, 

the Commission considered two proposals to address the salary question: one would have banned 

candidate salaries; the other would have allowed 

candidates to receive a salary equal to the one they 

were forced to give up in order to campaign. Neither proposal, however, garnered support from a 

majority of the Commissioners. 

The new regulations took effect in 1995. 

Best Efforts 

“Disclosure... is the single greatest check on 

the excesses of campaign finance....” (Sabato, p. 63) 

That is why the Commission devotes so much 

time, effort and money to ensure that campaign finance information is readily accessible to the public, and that the information is accurate and complete. 

Under the Act and FEC regulations, a committee must disclose the name, mailing address, occupation and employer of each individual who contributes a total of more than $200 in any calendar 

year. Although the rules do not compel individual 

contributors to provide this information, a committee must make its “best efforts” to obtain and report it. Should the committee fail to fully identify a 

contributor on its report, it must be able to demonstrate that it made its “best efforts” to do so. 

Through its regular review of reports and its 

enforcement actions, the Commission discovered 

that some committees routinely failed to disclose 

the occupation and employer for a large percentage of their $200-plus contributors. At that time, 

committees could satisfy the “best efforts” requirement by making at least one written or oral request 

for contributor information per solicitation. Some 

committees, however, printed these requests in 

small type, and did not adequately convey the importance of providing the information. Given these 

facts, the Commission decided to initiate a 

rulemaking to strengthen and clarify the “best efforts” standard. 

After soliciting public comments, conducting 

hearings and surveying the regulated community 

on the subject, the Commission promulgated new 

regulations in 1994 that specify the steps committees must take to demonstrate that they made their 

“best efforts” to obtain and report contributor information. The steps include: 

• Requesting contributor information in the 

initial solicitation; 

• Making a follow-up request solely devoted 

to seeking the missing information (if necessary); 

• Reporting the information; and 

• Filing necessary amendments to disclose 

previously unreported information. 

Given the importance of disclosure and the 

evidence of past noncompliance in this area, the 

Commission also specified the language to be used 

in the request and its minimum type size, the timing and content of any follow-up request, and the 

applicable reporting requirements. 

The three national Republican party committees4

 filed suit against the Commission challenging 

the rules. They argued that the requirements violated free speech rights, exceeded the 

Commission’s statutory authority and were contrary to Congressional intent. The U.S. District 

Court for the District of Columbia, granting the 

FEC’s request for summary judgment, rejected the 

parties’ challenge. (The case is on appeal.) 

Foreign Nationals 

Background 

Section 441e of the Federal Election Campaign 

Act explicitly prohibits foreign nationals from 

making contributions in connection with any U.S. 

election (federal, state or local), either directly or 

through another person. The contribution ban 

originated in the 1966 amendments to the Foreign 

Agents Registration Act, and was incorporated directly into the FECA ten years later. In 1989, the 

Commission modified its regulations to clarify that 

expenditures by foreign nationals—like contributions—are prohibited. The ban applies to individuals who are not U.S. citizens (except those with 

“green cards”5) and to foreign governments, politi4

The Republican National Committee, National Republican Senatorial 

Committee and the National Republican Congressional Committee. 

5

A “green card” indicates that an individual has been lawfully 

admitted for permanent residence in the United States. 

27 
cal parties, partnerships, associations and corporations. 11 CFR 110.4(a). 

Foreign-Owned Corporations 

The Commission has been asked, on numerous occasions, how the ban affects foreign-owned 

corporations which are located in the United 

States. In response, the Commission created a twopart test to determine whether these companies 

could establish federal PACs (hereafter referred to 

as separate segregated funds or SSFs) or make contributions and expenditures to influence state and 

local elections.6

 Under the test, a foreign-owned 

corporation could not establish an SSF or make 

nonfederal contributions or expenditures if: 

• Foreign nationals made any decisions regarding the SSF’s activities or the company’s 

nonfederal contributions or expenditures; or 

• The funds used to run the SSF or to make 

federal (SSF) or nonfederal (corporate) contributions or expenditures came from the foreign 

owner. (See also AOs 1992-16, 1990-8, 1989-29, 

1989-20, 1985-3 and 1982-10.) 

The Commission codified this test in 1989 

when it prescribed 11 CFR 110.4(a)(3). That section 

clarifies that foreign nationals cannot participate, 

even indirectly, in election-related decisions.7 

The two-part test, in effect, respects both a legitimate government interest (prohibiting foreign 

involvement in U.S. elections) and the constitutional guarantees of free speech and association. 

On the one hand, the test ensures that foreign entities will not influence U.S. elections while, on the 

other hand, it preserves the rights of domestic corporations and their U.S. employees to form an SSF 

to support federal candidates and/or to make 

nonfederal corporate contributions or expenditures, subject to state law. 

Despite the clear standards the Commission 

established, violations of the foreign national ban 

have occurred. Consequently, the Commission has 

taken action in several enforcement matters. In 

1994, for example, the Commission concluded two 

investigations that uncovered more than $312,000 

in illegal foreign donations to state and local campaigns in Hawaii. (MURs 2892 and 3460) The illegal donors were mostly foreign-owned U.S. corporations that had either used funds provided by 

their foreign owners or allowed foreign individuals 

to make decisions (either directly or indirectly) 

concerning the contributions. The Commission 

fined the donors a total of $219,225 and sent admonishment letters to the recipient candidates and 

party committees instructing them to refund the illegal donations or otherwise rid their accounts of 

the money. 

6

The FECA prohibits corporate contributions and expenditures in 

connection with federal elections. 2 U.S.C. 441b. Some states, 

however, allow corporations to use their treasury funds to support 

nonfederal candidates. 

7

In 1990, the Commission considered, but rejected, a proposed rule 

that would have treated a domestic corporation as a foreign national 

if its foreign ownership exceeded 50 percent. 

28 
CHAPTER 4 

CONTINUING DEBATE OVER REFORM 

Although the last major amendments to the 

Federal Election Campaign Act (FECA) were 

adopted in 1979, campaign finance reform continues to spark debate both within Congress and 

throughout the country. This chapter examines 

some of the fundamental issues at the top of the reform agenda, supplemented by FEC statistical 

data. 

The Role of Political Parties 

For many years conventional wisdom has 

held that political parties are gradually becoming 

less relevant in the American political arena. Up 

until the 1950s and ’60s, the parties dominated the 

electoral process. (Sorauf, Inside Campaign Finance, 

p. 3) Then, a number of factors—including social, 

political, technological and governmental 

changes—coalesced to reduce party influence. 

• Direct primaries limited the role parties 

played in selecting nominees. 

• Changes in civil service laws limited patronage, which parties had used to reward 

loyalists. 

• Higher education levels spawned issueoriented campaigns, where voters and candidates were less reliant on party guidance. 

• Television replaced the party as the primary link between candidates and voters. 

(Sabato, Paying for Elections: The Campaign Finance Thicket, p. 47 and Crotty, American Parties in Decline, p. 75) 

Some suggest that the FECA has further 

weakened the parties. “The regulation of political 

finance... seldom took direct aim at party organizations and practices. Nevertheless, it has altered the 

parties’ roles, the base of resources, and the campaign environment to which they must adapt.” 

(Price, Bringing Back the Parties, p. 239) It is argued, 

for example, that the Presidential public funding 

program, which provides public money directly to 

qualified candidates, has further reduced the parties’ role in selecting Presidential nominees by encouraging the trend toward candidate-centered 

politics. (Price, p. 243) 

Critics believe that the FECA has also bolstered PACs at the parties’ expense: “[A]s PACs 

began gathering strength in the 1970s, the parties 

began a steady decline in power.” (Sabato, p. 17) In 

fact, they say, “PACs have emerged as major competitors of the parties in financing campaigns, aggregating interests, and claiming the attention and 

loyalty of candidates and officeholders.” (Price, p. 

244) 

Many attribute this turn of events to the 

FECA’s contribution limits. They affect both the 

flow of money into the parties and the stream of 

party contributions to candidates. Although the 

limit on individual contributions to parties 

($20,000/year to a national party committee and 

$5,000/year to a state party) is higher than (or 

equal to) the limit on contributions to PACs 

($5,000/year), some suggest that the party limit 

poses a greater obstacle. Party fundraising, they 

say, tends to rely on long-term relationships between the party and wealthy donors. These con29 
tributors, who once gave in abundance, must now 

curtail their federal contributions to comply with 

the limits (or contribute nonfederal “soft money”). 

Issue-oriented PACs, on the other hand, may inspire immediate enthusiasm among a multitude of 

individual contributors who may contribute less 

individually, but make up for it in their numbers. 

(Price, p. 244) 

On the other side of the equation, parties and 

PACs both may contribute $5,000 per election to a 

candidate,1

 but PAC contributions consistently 

comprise a higher percentage of candidates’ total 

funds. Even if one accounts for the parties’ additional coordinated party expenditures, which can 

amount to hundreds of thousands of dollars per 

candidate, the parties’ piece of the campaign pie 

remains comparatively small.2

 (See Chart 4-1.) The 

discrepancy can be attributed largely to the fact 

that there are thousands of federally-registered 

PACs and only a relative handful of registered 

party committees. Prior to the passage of the 

FECA, there were virtually no PACs at all. In addition, state and local party committees tend to support only candidates within their geographic area, 

whereas PACs often support candidates throughout the country. 

The Commission’s regulations concerning 

“soft money”3

 have also drawn fire from some critics. They argue that the Commission’s complex 

“soft money” allocation rules have discouraged 

grassroots party organizations from engaging in 

federal election activities—contributing to party 

decline. (Price, p. 245) 

CHART 4-1 

Sources of Campaign Receipts

House Candidates 

Millions 

$500 

$400 

$300 

$200 

$100 

$0 

Other *

Candidate 

Party 

PACs 

Individuals 

1978 1980 1982 1984 1986 1988 1990 1992 1994 

Senate Candidates 

Millions 

$400 

$350 

$300 

$250 

$200 

$150 

$100 

$50 

$0 

*The “Other” category includes dividend or interest income, refunds 

or rebates from vendors and other miscellaneous receipts. 

Other *

Candidate 

Party 

PACs 

Individuals 

1978 1980 1982 1984 1986 1988 1990 9192 1994 

30 

1

A party’s national committee and Senate campaign committee share 

a special limit for Senate candidates: $17,500 per candidate for the 

entire campaign period. 

2

Party committees are the only privately financed entities that are 

subject to expenditure limits. (Committees that participate in the 

Presidential public funding program may voluntarily agree to limit 

their spending in exchange for public funds.) Unlike PACs and 

individuals, parties cannot make unlimited “independent 

expenditures” to support or oppose particular candidates. The party 

committees are presumed to be acting in coordination with their 

nominees. 

3

As noted in Chapter 3, the term “soft money” refers to funds raised 

and/or spent outside the limitations, prohibitions and disclosure 

requirements of the Federal Election Campaign Act. These funds are 

used to support state and local candidates, and to pay the nonfederal 

portion of certain expenses that benefit both federal and nonfederal 

candidates. 
Many, however, find the critics’ evidence of 

party decline inconclusive. They discount, for example, the significance of PAC/party contribution 

comparisons, noting that—despite the PACs’ apparent dominance—the amounts raised and spent 

by parties generally indicate growth, rather than 

decline. Further, they point out, the true importance of parties cannot be measured by contributions and expenditures alone. Parties produce generic materials and engage in other activities that 

also benefit federal candidates. For example, as a 

result of the 1979 amendments to the FECA, state 

and local party committees may produce and distribute slate cards and sample ballots, as well as 

yard signs, bumper stickers and other campaign 

materials that aid federal candidates, but are not 

considered contributions or coordinated party expenditures. As another example, parties may engage in generic voter identification and get-outthe-vote drives which have a significant impact on 

elections. Yet these activities are not considered 

contributions or expenditures. (See Chart 4-2.) 

Regardless of their stance on the strength or 

weakness of the parties, virtually all observers 

agree that parties are essential to American politics. The parties provide stability, unity and accountability in policymaking, and they increase 

electoral competition by funding challengers more 

often than PACs or individuals do. (Magleby/ 

Nelson, The Money Chase: Congressional Campaign 

Finance Reform, p. 121) 

These facts have led some to push for statutory changes that would strengthen the parties: 

“Given parties’ vital centrality in the American system, they should be accorded special, preferential 

treatment in the statutes that limit and regulate 

campaign finance.” (Sabato, p. 50) Some, for example, advocate increasing the amount parties 

may contribute to candidates. They argue that such 

an increase would not risk the “fat cat” or special 

interest concerns inherent in increasing the individual or PAC limits, and that it might aid 

policymaking by holding legislators more accountable to the party. (Cantor, CRS Issue Brief: Campaign 

Financing, p. 6) Others, however, warn that unless 

soft money donations to party committees are 

reigned in, any increased role for parties in the 

funding process may only undermine the efforts 

made to reduce the deleterious effect of large special interest contributions. 

CHART 4-2 

Federal Spending by PACs and Parties* 

Millions 

$500 

$400 

$300 

$200 

$100 

$0 

Parties 

PACs 

1978 1980 1982 1984 1986 1988 1990 1992 1994 

*Parties must use their own funds to pay administrative and 

solicitation expenses. By contrast, a separate segregated fund's 

connected corporation or labor union may pay its administrative and 

soliciation expenses. 

Others believe that the election laws already 

favor parties, and the candidates they support, in 

relation to independent candidates (i.e., those not 

affiliated with any political party). Independents, 

they note, enjoy none of the financial advantages 

that come with party affiliation: party contributions, coordinated party expenditures, generic support, etc. 

The Role of PACs 

Background 

The term “political action committee” (PAC) 

actually refers to two distinct types of political 

committees—separate segregated funds (SSFs) and 

nonconnected committees. SSFs are PACs sponsored by corporations, labor organizations, trade 

associations and other incorporated groups. The 

sponsoring organization may pay the costs associated with operating its SSF. Nonconnected committees, on the other hand, are not sponsored by a 

31 
corporate or labor entity. They must pay their own 

administrative expenses. Both types of PACs may 

contribute up to $5,000 per election to a federal 

candidate—assuming the PAC qualifies as a 

multicandidate committee.4

 (Chart 4-3 tracks the 

number of PACs registered with the FEC over the 

last 20 years.) 

The Case Against PACs 

In recent years, many have warned of the deleterious effect that PACs, and the “special interests” they represent, have on elections and legislation. Some PACs, critics note, have sufficient resources to dominate the financing of campaigns. 

(See Chart 4-1, p.26.) Many find the discrepancy 

between the contribution limit for individuals 

($1,000 per election) and the limit for 

multicandidate PACs ($5,000 per election) particularly troubling. 

PAC critics also cite instances of sizable contributions that appear to sway the votes of particular members of Congress. During 1994, for example, several studies linked contributions from 

insurance and health industry PACs to the demise 

of health reform legislation in the 103d Congress. 

Implicit in these studies, and others like them, is 

the notion that “special interest” PACs subvert the 

“public interest” by making large campaign contributions. 

The critics argue that PACs, in serving their 

own “special interests,” are more likely than individuals to contribute to incumbents instead of challengers. (Magleby/Nelson, p. 54) In recent years, 

more than 70 percent of all PAC contributions have 

gone to incumbent candidates. (See Chart 4-4.) Further, they note, if a PAC supports an incumbent 

who loses, the PAC will sometimes make post-election, debt-retirement contributions to the winning 

challenger to ensure the committee’s continued access to the legislative process. (Magleby/Nelson, p. 

54) In particularly close races, critics cite instances 

of PACs contributing to both candidates. In short, 

critics believe, “PACs exist for one purpose: to buy 

influence with members of Congress.” (Fritz/ 

Morris, p. 172) 

The Case for PACs 

PAC supporters contend that critics have exaggerated PACs’ negative effects on elections and 

legislation. In fact, they say, “PACs are both natural and inevitable in a free, pluralistic democracy... 

[T]he vibrancy and health of a democracy depend 

in good part on the flourishing of interest groups 

and associations among its citizenry.” (Sabato, p. 4) 

In fact, some have suggested that PACs are at 

least partially responsible for the increased number 

of minorities elected to Congress. They note that 

minority candidates are seldom wealthy, and often 

represent predominantly poor districts where most 

individuals cannot afford to contribute: “If your 

district is poor, you’re not wealthy and you’re excluded from affluent circles, it’s hard to raise 

money.” (Rep. Eva Clayton (D-NC), as quoted in 

Congressional Quarterly, Sept. 25, 1993.) White candidates, they argue, are more likely to be wealthy 

and/or have access to wealth. Without PAC funding, some say minority candidates could not amass 

sufficient funds to communicate effectively with 

the electorate. 

PAC supporters also dispute the critics’ contention that a PAC’s success in furthering its “special interest” necessarily subverts the “public interest.” Instead, they note that PACs represent a variety of individual interests that, when combined, 

create the “public interest.” 

Supporters also question the extent to which 

PAC contributions actually influence legislation: 

“It is naive to contend that PAC money 

never influences decisions, but it is unjustifiably cynical to believe that PACs always, or even usually, push the voting 

buttons in Congress.” (Sabato, p. 15) 

Rather, they argue, PACs influence only those 

narrow issues of little significance to other influence seekers (constituents, parties, etc.). In fact, research has shown that constituency concerns, party 

loyalty and the personal beliefs of officeholders affect Congressional voting much more than PAC 

contributions do. (Sorauf, pp. 163-174) 

PAC defenders also dispute the critics’ studies 

linking large PAC contributions to legislative actions. They say that the studies often “establish 

correlation, not cause,” and that they tend to focus 

only on PACs’ “success” in legislative battles, ignoring the fact that other PACs were on the “los4

To qualify as a multicandidate committee, a PAC must receive 

contributions from more than 50 contributors, be registered with the 

FEC at least six months and contribute to at least five federal 

candidates. 11 CFR 100.5(e)(3). 

32 
CHART 4-3 

Number of PACs Registered with FEC 

Corporate Trade/Membership/Health

Labor Cooperative

Nonconnected Corporation w/o Stock 

Number Contributing to Federal Candidates 

2,000

1,500 

1,000 

500 

0 80 82 84 86 88 90 92 94 

Total Registered as of 12/31 

2,000 

1,500 

1,000 

500 

0 

74 76 78 80 82 84 86 88 90 92 94 

CHART 4-4 

PAC Contributions by Type of Campaign 

Incumbents

Challengers

Open Seats 

% of all PAC Contributions 

0 

10 

20 

30 

40 

50 

60 

70 

80 

90 

100 

1978 1980 1982 1984 1986 1988 1990 1992 1994 

33 
70 

ing” side. (Sorauf, p. 165) Others contend that 

PACs do not make contributions to influence future votes on legislation at all. Instead, they contribute to demonstrate their agreement with past 

legislative actions. (Cantor, p. 3) 

Supporters also fault the critics for lumping 

all PACs into the same undesirable category. Few 

PACs, for example, actually contribute large 

amounts of money: “PACs are like the opera; a few 

heavyweights get to sing the arias and there are a 

lot of spear carriers mulling around at the back of 

the stage.” (Zuckerman, Political Finance & Lobby 

Reporter, Oct. 12, 1994) (See Chart 4-5.) 

PAC Reform 

In response to the critics’ concerns, Congress 

has considered several proposals to reduce the influence of PACs. Among them were President 

Bush’s recommendation to ban corporate/labor 

PACs and President Clinton’s proposal to reduce 

PACs’ contribution limit and to cap candidates’ total PAC receipts. (Chart 4-6 projects the effects of 

one of the proposed reforms.) 

PAC supporters warn that a ban on PAC 

money would raise constitutional questions regarding free speech and association. (Cantor, p. 5) 

Supporters also fear that reducing or eliminating 

PAC contributions would prove counterproductive 

because it would reduce the overall amount of 

money available for campaigns, making each contribution worth more to the recipient candidate. 

(Sorauf, p. 200) Others believe that reduced limits 

or a total ban on PAC contributions would encourage other types of spending, such as soft money 

and independent expenditures, which are more 

difficult to track. Similarly, if individuals replaced 

their PAC donations with personal contributions to 

candidates, some argue that disclosure would suffer. The occupation and employer of an individual 

contributor (reported by the recipient committee) 

might not convey the contributor’s political motivation, whereas the political interest behind a PAC 

contribution is self evident. An individual might, 

for example, work for a corporation, belong to a labor union and support certain social causes. The 

reported occupation and employer information 

would not account for the individual’s union membership or interest in social causes as possible motivations for the contribution. 

34 

CHART 4-5 

Contributions by the 50 Largest Committees - 1994 

Type of PAC/Number Contributing 

Corporate 

1,457 

Labor 

254 

Nonconnected 

493 

Trade/Membership/ 

Health 

628 

Other 

161 

$ Contributed by All PACs 

$ Contributed by 50 Largest PACs 

0 10 20 30 40 50 60

Millions of Dollars 
CHART 4-6 Actual 1992 Contributions ($5,000 Limit)

Possible Effect of $2,000 PAC Limit in 1992 1992 Contributions Adjusted for $2,000 Limit

Senate Democrats Senate Republicans 

Millions Millions 

$30 

$25 

$20 

$15 

$30 

$25 

$20 

$15 

$10 $10 

$5 $5 

$0 $0 Corporate Labor Non-

Trade Other 

connected 

Corporate Labor Non-Trade Other connected 

House Democrats House Republicans 

Millions Millions 

$0 $0 Corporate Labor Non-

Trade Other Corporate Labor Non-Trade Other 

connected connected 

$5 

$10 

$15 

$20 

$25 

$30 

$5 

$10 

$15 

$20 

$25 

$30 

35 
The Cost of Campaigns 

In its landmark Buckley v. Valeo decision, the 

Supreme Court concluded that “[t]he First Amendment denies government the power to determine 

that spending to promote one’s political views is 

wasteful, excessive or unwise.” As a result, the 

Court declared the FECA’s limits on congressional 

campaign spending unconstitutional. (The Court 

upheld only those spending limits that apply to 

Presidential candidates who voluntarily choose to 

accept public funding.) 

In the wake of the Court’s decision, congressional campaign spending has increased from 

$194.8 million in 1978 to $761.6 million in 1994, an 

increase of 291 percent. Adjusted for inflation, 

spending increased 48 percent over the period. (See 

Chart 4-7.) 

Spending Limits 

Some political observers believe that campaigns are too expensive, arguing that the high 

“price of admission” to Congress excludes all but 

the wealthy and those who are willing and able to 

raise large sums of money. (Magleby/Nelson, p. 

45) Voters are left to wonder “who... represents 

their interests—the millionaires who finance their 

own races or the millionaires who finance the others.” (Ellen Miller, “The Influence Game,” from The 

Hill, Oct. 26, 1994) The solution, they believe, is 

spending limits. 

Ironically, some supporters of spending limits 

contend that the Act’s contribution limits—which 

have not been adjusted for inflation—exacerbate 

the problem by forcing candidates to spend more 

time raising funds. The $1,000 per election limit on 

individual contributions to candidates, established 

in 1974, is worth less than half that amount today. 

As a result, they say, candidates spend more time 

raising money, and tend to focus their fundraising 

efforts on the sources that can contribute the most. 

Unfortunately, from their perspective, those 

sources are special-interest PACs (discussed above) 

and influential fundraisers who bundle together 

many individual contributions and deliver them to 

the campaign. They say these “bundlers” pose a 

particular threat because they represent the very 

type of “fat cat” influence-seekers that the Act 

sought to eliminate. (Fritz/Morris, p. 157) 

Among backers of spending limits, many are 

also concerned that the constant demand of 

CHART 4-7 

Congressional Campaign Activity 

Millions 

$1,000 

$800 

$600 

$400 

$200 

$0 

Congressional Campaign Activity 

Adjusted for Inflation* 

1978 1980 1982 1984 1986 1988 1990 1992 1994 

*Activity is expressed in 1994 dollars. This means the values in earlier 

years have been increased to account for inflation between that year 

and 1994. 

fundraising discourages qualified challengers from 

running, and prevents incumbents from devoting 

as much time as they should to their legislative duties. In a survey conducted by the Center for Responsive Politics, 52 percent of the senators surveyed said fundraising significantly reduced their 

legislative time. Another 12 percent thought the 

demands of fundraising had at least some negative 

impact. (Magleby/Nelson, p. 44) 

Others contend that incumbents raise and 

spend more than they actually need to get reelected. They say that incumbent fundraising and 

spending is “driven by the urge to build a political 

empire, not by the seriousness of the opposition.” 

(Fritz/Morris, p. 3) They note that in 1990, for example, incumbents spent less than 40 percent of 

their campaign funds to communicate with voters. 

Most of their money went to create what one critic 

calls a “gold-plated permanent political machine”—a well-funded campaign organization 

used to discourage challengers from entering the 

race. (Fritz/Morris, p. 27) Supporters of spending 

limits say that, without a legislative change, the 

36 
amounts raised and spent by these incumbents will 

continue to grow in direct relation to the availability of campaign contributions. (Fritz/Morris, p. 2) 

Those who favor spending limits in congressional campaigns recognize that such a reform 

would have to comply with the restrictions of the 

Buckley decision. The limits would have to be voluntary. Many advocate a system similar to that 

used for Presidential elections—candidates would 

agree to limit spending in exchange for public 

funding. (Chart 4-8 compares Congressional and 

Presidential spending.) Several legislative proposals have incorporated this approach, including the 

separate bills passed by the House and Senate in 

1994. 

Opposition to Spending Limits 

Some, however, are concerned that spending 

limits would create as many problems as they 

solve. They argue, for example, that spending limits would reduce electoral competition because 

challengers need to raise and spend a considerable 

amount of money to offset the incumbents’ inherent advantages. (Teixeira, “Beyond Spending Limits: An Alternative Approach to Campaign Reform,” p. 3) 

Instead of limiting spending, some scholars 

advocate “floors without ceilings”—offering public 

funds to provide campaigns a financial base without limiting campaign communications by capping 

spending. Under this approach, public funds 

would be given to both challengers and incumbents. Even though incumbents would likely raise 

much more than challengers in private funds, the 

public funding base would enable the challenger to 

mount a competitive campaign. Several studies 

have demonstrated that challengers gain more per 

dollar spent than incumbents do. In fact, where 

challengers have had a sufficient financial base, 

there is some evidence that increases in incumbent 

spending yield diminishing returns. (Sorauf, p. 

178) 

Others, however, object to both spending limits and “floors without ceilings,” in part because 

they oppose the public funding provisions inherent 

in each. They view public funding as wasteful government spending, and say that the public does not 

want tax money spent to finance elections. Instead, 

these observers favor a system based solely on 

CHART 4-8 

Comparison of Presidential Congressional 

and Congressional Spending Presidential

Millions 

$800 

$700 

$600 

$500 

$400 

$300 

$200 

$100 

$0 

1978 1980 1982 1984 1986 1988 1990 1992 1994 

public disclosure, without any contribution or expenditure limits. 

Underlying these suggested solutions is a firm 

belief that campaign spending is not out of control. 

Some suggest that, when adjusted for inflation, 

spending is relatively flat. (See Chart 4-7, p. 32.)In 

fact, these political observers maintain that campaign spending is comparatively low: “Americans 

spend more on chewing gum than they do on elective politics....” (Alexander, “Election Reform and 

Reality,” p. 4) 

There are many in this camp who argue that 

the spending increases decried by the critics 

largely reflect the increased importance of media in 

campaigns and inflationary pressure. The high cost 

of television advertising and the expense of raising 

enough inflationarily-devalued contributions to 

pay for it have created a costly electoral process. 

(Cantor, p. 2) 

Finally, there are many who adhere to the 

Buckley view that a restriction on spending is a restriction on free speech. In their view, continued 

37 
protection of First Amendment rights precludes 

the imposition of limits on campaign spending. 

Regardless of their opinion on the cost of campaigns, however, most observers agree that too 

many voters cast their ballots without adequate information about the candidates running. Perhaps, 

as one observer suggested, candidates raise too 

much but spend too little. (Sorauf, p. 189) 

38 
CONCLUSION 

For two decades, the Federal Election Commission has administered and enforced the Federal 

Election Campaign Act—balancing the governmental interest in ensuring the integrity of our 

electoral process against the protection of the constitutional rights to free speech and association. 

Achieving that balance has become an increasingly arduous task, given the complex legal issues 

that have come before the agency in recent years. 

Nevertheless, the Commission has made significant strides in a number of areas. During the last 

several years, the agency has, for example: 

• Promulgated regulations to curb the alleged 

improper use of soft money and to improve 

its disclosure; 

• Sought to define the parameters of the “express advocacy” standard and its application 

to the ban on corporate and union expenditures and other provisions of the Act; 

• Worked to ensure that foreign-owned U.S. 

corporations cannot become vehicles for prohibited foreign contributions or expenditures; 

• Improved disclosure by adopting more 

stringent “best efforts” regulations; and 

• Defined what constitutes an unlawful conversion of campaign funds to personal use. 

The Commission also takes pride in its 20 year 

commitment to customer service. As part of that 

commitment, the agency has devoted substantial 

resources to: 

• Ensuring easy public access to campaign 

finance data; 

• Applying modern information technology 

to enhance disclosure; 

• Helping reporters, academicians and the 

general public utilize and understand the 

data; and 

• Helping candidates and committees understand and comply with the law. 

Finally, in recent years, the agency has significantly improved the way it processes its work. The 

innovations include: 

• Prioritizing enforcement matters to ensure 

that the agency devotes its limited resources 

to the most significant enforcement cases; 

• Assessing much higher civil penalties for 

violations of the law as a way of deterring 

future violations; and 

• Streamlining audit procedures to expedite 

the conclusion of Presidential audits. 

On its 20th birthday, the Federal Election 

Commission has much to celebrate. Not only is the 

agency fulfilling its mission, it is—in the process— 

helping to define the proper role of government 

and the reach of constitutional protections. 

39 
APPENDIX 1 

FEC COMMISSIONERS AND OFFICERS 1975-1995 

Commissioners 

Joan D. Aikens April 1975 - April 1995 (reappointed May 1976, December 1981, August 

1983 and October 1989). 

Thomas B. Curtis April 1975 - May 1976. 

Thomas E. Harris April 1975 - October 1986 (reappointed May 1976 and June 1979). 

Neil O. Staebler April 1975 - September 1978 (reappointed May 1976). 

Vernon W. Thomson April 1975 - June 1979; January 1981 - December 1981 (reappointed 

May 1976). 

Robert O. Tiernan April 1975 - November 1981 (reappointed May 1976). 

William L. Springer May 1976 - January 1979. 

John Warren McGarry October 1978 - April 1995 (reappointed July 1983 and October 1989). 

Max L. Friedersdorf March 1979 - December 1980. 

Frank P. Reiche July 1979 - August 1985. 

Lee Ann Elliott December 1981 - April 1999 (reappointed July 1987 and July 1994). 

Danny L. McDonald December 1981 - April 1999 (reappointed July 1987 and July 1994). 

Thomas J. Josefiak August 1985 - December 1991. 

Scott E. Thomas October 1986 - April 1997 (reappointed November 1991). 

Trevor Potter November 1991 - April 1997. 

40 
Ex Officio Commissioners 

Clerk of the House 

W. Pat Jennings April 1975 - November 1975. 

Edmund L. Henshaw, Jr. December 1975 - January 1983. 

Benjamin J. Guthrie January 1983 - January 1987. 

Donnald K. Anderson January 1987 - October 1993.* 

Secretary of the Senate 

Francis R. Valeo April 1975 - March 1977. 

Joseph Stanley Kimmitt April 1977 - January 1981. 

William F. Hildenbrand January 1981 - January 1985. 

Jo-Anne L. Coe January 1985 - January 1987. 

Walter J. Stewart January 1987 - October 1993.* 

Statutory Officers 

Staff Director 

Orlando B. Potter May 1975 - July 1980. 

B. Allen Clutter, III September 1980 - May 1983. 

John C. Surina July 1983 - . 

General Counsel 

John G. Murphy, Jr. May 1975 - December 1976. 

William C. Oldaker February 1977 - October 1979. 

Charles N. Steele December 1979 - March 1987. 

Lawrence M. Noble October 1987 - . 

Inspector General 

Lynne A. McFarland February 1990 - . 

* In 1993, an appeals court ruled that the presence of nonvoting Congressionally appointed ex officio members on the 

Commission violated the Constitution’s separation of powers. The Supreme Court dismissed the Commission’s 

appeal for lack of jurisdiction. FEC v. NRA Political Victory Fund. Subsequent to the appeals court decision, the 

Commission reconstituted itself as a six-member body. 

41 
APPENDIX 2 

FEC BUDGET AND STAFFING HISTORY 

Millions FTE † 

$35 350 

Staffing 

Actual Funding 

Funding Adjusted for Inflation * 

$30 300

$25 250

$20 200

$15 150

$10 100

$5 50

$0 0 

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 

*Activity is expressed in 1994 dollars. This means the values in earlier 

years have been increased to account for inflation between that year 

and 1994. 

†

Full-time equivalent employees. 

42 
APPENDIX 3 

FEC ORGANIZATION CHART 

General Counsel 

Public Funding 

Ethics and 

Special Projects 

Deputy Staff Director 

for Management 

Data Systems 

Development 

Planning and 

Management 

Administration 

Equal Employment 

Opportunity 

Commission 

Secretary 

Public 

Disclosure 

Reports 

Analysis 

Clearinghouse 

Audit 

Inspector General Staff Director 

Information 

Congressional 

Affairs 

Personnel 

Labor/Management 

Press Office 

Litigation 

Enforcement 

Policy 

(regulations, advisory

opinions, legal review

and administrative 

law) 

Commissioners 

43