Changes in the Way Corporations Can Finance Campaigns

Tillman Act

Congress

Prohibits corporations and national banks from contributing money to federal campaigns. President Theodore Roosevelt helped secure the law's passage at a time of growing concern about the ability of railroads and other big companies to buy influence in the political process.

Hatch Act amendment

Congress

Prohibits individuals and businesses working for the federal government from contributing money to federal campaigns.

Smith-Connally Act

Congress

Prohibits labor unions from contributing money to federal campaigns. Campaign contributions from organized labor had been on the rise since the 1936 elections.

Taft-Hartley Labor Act

Congress

Prohibits unions, corporations and national banks from making any "contribution or expenditure" to federal campaigns. Extends the prohibition to include primaries as well as general elections.

Federal Election Campaign Act (FECA)

Congress

Upholds the ban on direct contributions by corporations and unions but allows them to use their general funds to set up separate political action committees, financed by the voluntary contributions from employees and stockholders and subject to detailed public disclosure requirements. Limits spending on media advertisements.

According to the Federal Election Commission, the campaign finance laws enacted before FECA. "were largely ignored," "because none provided an institutional framework to administer their provisions effectively." FECA made fundamental changes in the way campaigns were financed, requiring extensive record-keeping and full disclosure of donations and spending.

Amendments to FECA

Congress

Limits PAC contributions to $5,000 for a candidate and independent expenditures on behalf of a candidate to $1,000. Relaxes earlier ban on contributions from federal government contractors, allowing corporations and unions with federal contracts to establish and operate PACs. Abolishes limits on media advertising.

Congress made the changes in response to Watergate and its disclosures of illegal fund-raising by President Richard M. Nixon.

Buckley v. Valeo

Supreme Court

Upholds limits on campaign contributions placed by FECA. but strikes down the law's limits on expenditures by or on behalf of candidates on the ground that political spending was an aspect of free speech protected by the First Amendment.

Amendments to FECA

Congress

Puts significant restrictions on solicitations by political action committees, specifying who could be solicited and how solicitations would be conducted. Adopts a single contribution limit for all PACs established by the same union or corporation.

Amendments to FECA

Congress

Allows large, unlimited "soft money" contributions and expenditures by corporations, unions and individuals to political party committees, avoiding restrictions that apply to donations given directly to individual candidates.

Federal Election Commission v. Massachusetts Citizens for Life Inc.

Supreme Court

Draws a distinction among corporations in ruling that nonprofit corporations whose purpose was advocacy on issues had a First Amendment right to make independent expenditures. The court said that Massachusetts Citizens for Life Inc., a small, nonprofit anti-abortion group, could not be barred from spending its money in a political campaign or required to set up a political action committee before doing so.

Austin v. Michigan Chamber of Commerce

Supreme Court

Upholds the power of both the federal and state governments to restrict corporate involvement in political campaigns, ruling that corporations may be prohibited from spending money from their treasuries to support or oppose political candidates.

Bipartisan Campaign Reform Act (McCain-Feingold law)

Congress

Prohibits national political parties and their committees from accepting or spending "soft money." Allows state and local party committees to accept up to $10,000 each year per individual for get-out-the-vote and voter-registration efforts in federal elections.

Prohibits unions, corporations and nonprofit groups from paying for broadcast, cable or satellite transmission of "electioneering communications," if the ads refer to a specific candidate and run within 60 days of a general election or 30 days before a primary. Such ads could be paid for only with regulated hard money through political action committees.

McConnell v. Federal Election Commission

Supreme Court

Upholds the central provisions of the McCain-Feingold law. The new restrictions are amply justified by the political system's recent experience, the court says, adding that the restriction on "electioneering communications" is not unconstitutional "on its face."

Federal Election Commission v. Wisconsin Right to Life

Supreme Court

Eases the McCain-Feingold ban on “electioneering communications” financed by corporations and unions. The court says the restrictions amount to censorship of core political speech unless the communications explicitly urge a vote for or against a particular candidate.

Citizens United v. Federal Election Commission

Supreme Court

Rules that corporations may spend freely to support or oppose candidates for president and Congress. The court overturns Austin v. Michigan Chamber of Commerce, saying that “the expenditure ban invalidated" in Buckley v. Valeo applies to corporations and unions, not just individuals. The ruling does not affect prohibition on direct contributions to candidates from corporations and unions or the McCain-Feingold restrictions on soft money.