Running for president of the United States is an expensive proposition. In the 2008 presidential campaign, winning candidate Obama spent about $750 million. This year it is estimated by knowledgeable sources that Obama will raise and spend almost $1 billion, although White House officials say that dollar figure is not accurate and the amount spent will be less.

American citizens of every political persuasion may justifiably wonder where all that money comes from and how it's spent.

According to the Federal Election Commission and reports from the candidates and media, the money comes from a variety of sources including large donors, small donors and organizational donations. As of late September, a joint fundraising effort by Mr. Romney and the Republican National Committee has raised about $660 million, with some of that raised by the presidential hopeful himself; Romney's primary Super PAC "Restore Out Future" raised over $111 million. Assuming a maximum donation amount of $2,500, approximately 22% of Romney'sraised fundshave been from small donors, contributing under $200 each.

On the other end of the political aisle, President Barack Obama and the Democratic National Committee reaped over $780 million, less than 30% of which was derived from the DNC's efforts. The Democratic "Priorities USA" has brought in close to $51 million, so far, and about 55% of candidate donations for the POTUS have come from donations under $200, again assuming a maximum candidate donation limit of $2,500.

Super PAC
Although small donations from individuals add up substantially, a major source of campaign financing is the Super PAC, the special political action committees.

A Supreme Court decision in the case of Citizens United v. Federal Election Commission allowed these organizations to spend unlimited amounts of money on their preferred candidate, they are not required to fully disclose the names of their contributors, and they are prohibited by the law from coordinating their political activities with their candidate of choice. The money spent by Super PACs is part of a presidential campaign, although it does not represent money spent by the candidate. In September, the most notable donations to these Super PACs have come from major movers and players in finance. Restore Our Future received a donation of $1 million dollars from Tiger Management founder, Julian Robertson, and another $1 million from hedge fund manager John Kleinheinz, while Priorities USA saw a $1.5 million donation from billionaire mathematician and hedge fund manager, James Simon.

How Its Being Spent
According to, a recent release of data by the Federal Election Commission shows that 48.9% (or $354.8 million) of donations go toward media advertisements, with administrative costs coming in second at 24.6%. Campaign expenses such as consulting, events and surveys make up 12.8 and 11.8% toward fundraising for donations. Less than 2% of expenditures are dedicated to loan payments, contribution refunds, parties and miscellaneous costs. Excluding party committees, the Obama campaign has spent $459 million toward these expenditures, while Romney saw $277 million used to cover these costs.

The Bottom Line
To provide the necessary $1 billion required to run for president, candidates draw funding from donors large and small and rely on Super PACs to join the effort through advertising and other political activities. The bulk of the campaign funds collected are spent on media - print, broadcast and Internet advertising. But having a lot of money is no guarantee of a successful run for the presidency, either in the primary races or after the party candidates have been nominated. Multi-millionaires Steve Forbes, Jon Huntsman, Donald Trump and Ross Perot have all taken a shot at running, some more seriously than others, and none of their efforts were successful.

Detailed monthly data on campaign spending is filed by both candidates with the Federal Election Commission. A comprehensive report on campaign spending, current to October 21, is available online at FEC.

Related Articles
  1. Investing

    How Much Money Will It Take to Become President in 2016?

    Learn why the 2016 presidential election is likely to be the most expensive race ever, and estimate how much it is going to take the eventual winner to prevail.
  2. Economics

    Benefits of China Changing It's One Child Policy

    China's one-child policy is changing, and investors are looking for ways to cash in. The reform might not have the effects that many anticipate, however.
  3. Entrepreneurship

    START-UP NY: How a Tax-Free Zone Would Work

    START-UP NY is an initiative designed to attract companies to New York State by giving them 10 years of tax breaks. Sounds good, but is it a success?
  4. Economics

    Explaining Economic Integration

    Economic integration reduces or eliminates trade barriers among nations, and coordinates monetary and fiscal policies.
  5. Investing

    Will Donald Trump Be Able to Fund His Entire Campaign?

    Discover why Donald Trump's extravagant wealth and vast net worth may still not be sufficient to self-finance a successful presidential campaign in 2016.
  6. Investing

    Hybrid Business: Rise of Nonprofits in Private Sector

    Businesses are embracing a mutually beneficial partnership wherein the ideals of the nonprofit sector are coupled with profit motive and capacity to scale.
  7. Economics

    The 3 Top Things to Know About Donald Trump's Economic Views

    Learn how Donald Trump's economic views are big on confidence but short on specifics. Identify the candidate's top three areas of focus.
  8. Investing News

    A CEO as U.S. President: What's the Disconnect?

    Can business leaders effectively lead the country's highest office? Next year may mark the first time that we'll find out.
  9. Economics

    What's a Price Ceiling?

    A price ceiling is the maximum amount a seller can charge for a product or service.
  10. Economics

    What Happened at the Fiscal Cliff?

    The fiscal cliff refers to a scenario on December 31, 2012, in which the Bush-era tax cuts were set to expire.
  1. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>
  2. Where are the Social Security administration headquarters?

    The U.S. Social Security Administration, or SSA, is headquartered in Woodlawn, Maryland, a suburb just outside of Baltimore. ... Read Full Answer >>
  3. Is the Social Security administration a government corporation?

    The U.S. Social Security Administration (SSA) is a government agency, not a government corporation. President Franklin Roosevelt ... Read Full Answer >>
  4. How does the role of Medicare/Medicaid affect the drugs sector in the U.S.?

    Medicare and Medicaid have enormous influence on the pharmaceutical, or drugs, sector in the United States. For instance, ... Read Full Answer >>
  5. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  6. What do I do if I think an accountant is in violation of the Generally Accepted Accounting ...

    The Financial Accounting Standards Board (FASB) promulgates generally accepted accounting principles (GAAP) in the United ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!