A group of people, such as a business, labor union, or ideological group, may create a PAC to raise and disburse voluntary donations directly to a political party or a political candidate’ s campaign. For example, PACs have been created by many corporations, unions, and special interest groups, such as the National Association of Realtors, AT&T, ExxonMobil, Sierra Club, Transport Workers Union, National Rifle Association, and Washington Women for Choice.
In 1944, the Congress of Industrial Organizations established the first PAC in response to the Smith-Connally Act of 1943 which disallowed contributions to federal political campaigns from union treasuries. The Federal Election Campaign Act Amendments (1974) set limits on donations to federal PACs, as well as spending limits which were later repealed (Buckley v. Valeo, 1976). Since the 1970s, campaign finance law has continued to evolve.
PACs are one of four sources of funds for candidates seeking federal office (the other three sources are individual donors, political parties, and the candidate’s own money). However, a federal PAC can give only limited amounts to a candidate’s campaign, national political party, or another PAC. For example, a federal multicandidate PAC can give a maximum of $15,000/year to a national political party, $5000 to a candidate’s campaign for the primary, another $5000 for the general election, and $5000/year to another PAC. A federal PAC may receive up to $5000 from any one individual, PAC, or national political party per year. A Super PAC and a 501(c)4 group cannot give any money to a national political party or candidate’s campaign.
Super PACs came into existence shortly after the Supreme Court’s Citizens United decision and the SpeechNow.org decision by the D.C. Circuit Court of Appeals, both decisions in early 2010. Because of these and other court rulings, the government can no longer restrict the amount of money that unions, corporations, associations, or individuals give to groups making independent political expenditures nor can the government limit independent political spending by these groups. Super PACs are referred to as independent-expenditure only PACs. Unlike traditional PACs which cannot accept funds from corporate and union treasuries, Super PACs can accept unlimited funds from them (thanks to the Citizens United and SpeechNow.org decisions).
A Super PAC can raise and spend unlimited sums of money to overtly advocate for or against political candidates or parties, as long as there is no coordination with a candidate or party. Like PACs, Super PACs also must make timely disclosures to the Federal Election Commission (FEC) concerning donations and spending. Because Super PACs must report their donors to the FEC, some Super PACs created affiliated 501(c)4 groups to get around this disclosure requirement to encourage big donors to give large sums of money without their identities or donation amounts being publicly revealed. Since the primary purpose of groups that claim 501(c)4 non-profit status is supposed to be “social welfare”, they are not required to report donations. Social welfare groups promote the common good and general welfare of the people, primarily for the purposes of civic betterment and social improvements. Many 501(c)4 groups do this in the form of public “education” and lobbying. However, it seems evident to most that those 501(c)4 groups associated with Super PACs are not true social welfare groups. The IRS has started investigating some of them.
Even though there are no limits on how much is raised or spent by an entity that spends independently in an election, there are certain FEC disclosure rules concerning the source of the funds and how they are spent that may apply depending on the type of entity and whether the entity is engaging in “independent expenditures”, “electioneering communications”, or “issue ads” as defined by federal campaign laws. For more details, click the link below: http://www.opensecrets.org/outsidespending/rules.php
According to OpenSecrets.org, 1122 Super PACs have reported total receipts of $661,715,165 and total independent expenditures of $680,355,202 in the 2012 election cycle as of 11/24/12. In the 2010 election, the first election year in which there were Super PACs, a total of 83 Super PACs reported total receipts of $81,702,382 and total independent expenditures of $62,258,813.