What is the difference between "hard money" and "soft money"?

By Ayton MacEachern AAA
A:

Hard money and soft money are terms that are often used to describe coin money and paper money, respectively. However, these terms are also used to refer to p

olitical contributions in the United States, which can be made directly to a specific candidate (hard money) or indirectly to parties and committees (soft money). The rules governing the two types of contributions differ, and it may be prudent to check these rules in detail before making a contribution. More information on these rules can be found on the Federal Election Commission (FEC) website.

Hard Money
When cash is contributed directly to a political candidate, it is known as a "hard money" contribution. These contributions may only come from an individual or a political action committee, and must follow the strict limits set forth by the FEC. For example, in 2012, the maximum amount that an individual can contribute to a presidential candidate or committee is:

To each candidate or candidate committee per election To national party committee per calendar year To state, district & local party committee per calendar year To any other political committee per calendar year
$2,500 $30,800 $10,000
(combined limit)
$5,000

Soft Money
When cash is contributed to a political party with no limits attached to the amount that can be received, this is known as a "soft money" contribution. The funds can come from individuals and political action committees as with "hard money", but they can also come from any other source, such as corporations. The law says that this money can only be used for "party-building activities" such as advocating the passage of a law and voter registration, and not for advocating a particular candidate in an election.

Generosity may be its own reward, but some charitable giving also provides personal tax benefits, find out more in Deducting Your Donations.

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