What Is the Difference Between Hard and Soft Money?

Soft money donations are made to political parties rather than specific candidates, and these funds are subject to a few campaign finance regulations. Learn the distinction between soft and hard money.

What Is Soft Money?

Soft money is money raised for political committees and parties that is not intended for specific party candidates. Theoretically, these non-federal funds are for more general expenditures and common causes, such as increasing voter registration or supporting local parties. Individuals and political action committees may give soft money to either the Democratic or Republican parties, but not as campaign contributions to a specific candidate. While soft money cannot be used directly to fund federal candidates' campaigns, there are some gray areas and loopholes in this type of fundraising that allow party treasuries to take advantage of the funds.

The History of Soft Money

Soft money contributions have always helped to fund nonprofits, party-building activities, and voter registration drives.

The Federal Election Campaign Act (FEC Act) of 1974 established contribution limits for individuals and political action committees donating hard money (money given to specific political candidates running for federal office). This regulation resulted in a significant increase in soft money donations.

The Bipartisan Campaign Reform Act, also known as the McCain-Feingold Act, was passed in 2002 and prohibited soft money donations. Supreme Court decisions in the years since have weakened that bill.

McCutcheon v. Federal Election Commission: The 2014 case McCutcheon v. FEC abolished aggregate donation limits. National political parties can solicit donations from wealthy individuals, giving them even more clout over election cycles.

What Is the Difference Between Hard and Soft Money?

In political fundraising, hard money refers to funds given directly to specific political campaigns, whereas soft money refers to funds for a political party in general. For example, hard money could be given to a candidate for the United States Senate, Congress, or President. Campaign finance laws limit the amount of money that individuals and interest groups can give to a single candidate.

Soft money, on the other hand, is used by political parties rather than individuals and is subject to fewer regulations. A donor may agree with a party's stances on, say, labor unions, and so give money to that party to enable more of those policy efforts, but the money cannot, at least theoretically, go toward an individual candidate.