Soft Money

Soft money refers to contributions made to political parties that were not subject to the federal contribution limits and source restrictions of the Federal Election Campaign Act. Before the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold), individuals, corporations, and unions could donate unlimited sums to national party committees for "party-building" activities such as voter registration, get-out-the-vote efforts, and generic party advertising. In practice, soft money was widely used to fund issue ads that were functionally equivalent to campaign ads, as long as they avoided explicit words of advocacy like "vote for" or "defeat." By the 2000 election cycle, national parties were raising hundreds of millions of dollars in soft money, much of it from corporations, unions, and wealthy individuals who were also active in lobbying. The BCRA banned national parties from raising or spending soft money, and prohibited state and local parties from using soft money for federal election activities.

The Supreme Court upheld the soft money ban in McConnell v. FEC (2003). While the soft money ban remains in effect, critics argue that the money simply shifted to other channels -- particularly 527 organizations, 501(c)(4)s, and later Super PACs -- rather than being eliminated from politics. The term "soft money" is now primarily of historical significance, but understanding it is essential for tracing the evolution of money in American politics and the regulatory responses that shaped today's campaign finance landscape.