Soft money is a loophole that has developed in recent years to provide candidates, contributors and political parties a means to evade federal contribution limits. Federal law prohibits corporations and labor unions from contributing any money to federal campaigns. To evade these restrictions, soft money contributions are given by individuals, corporations, unions or others directly to designated non-federal accounts of the national political parties. The national party committees then transfer the money from these accounts to the state parties. This means the soft money contributions are laundered through the political parties in a way that allows federally illegal money to nonetheless be used to influence federal elections.
Soft money is a scandal.
This loophole has given a rebirth to the kinds of huge individual and corporate contributions in the political process that have not been seen since Watergate. Soft money has thus become not only big business for the political parties, but a primary means special interest can now use to buy access and influence. They ban it. Very simply, the bills require that any money solicited or received by the national political parties must comply with federal law. And any money raised by a federal candidate or federal officeholder must comply with federal law.