Running for president of the United States is an expensive proposition. In the 2012 presidential campaign, incumbent Barack Obama and challenger Mitt Romney each spent over $1 billion, in what was the most expensive presidential election ever at the time, with Obama winning a second term. In 2016, the overall cost of the White House race—spending by all the candidates—totaled under $2.4 billion that year (versus 2012’s total spending of $2.6 billion). However, the 2020 election blew all previous spending records away. In total, the election cost an unprecedented $14 billion, making it twice as expensive as the previous presidential election cycle.

American citizens of every political persuasion may justifiably wonder where all that money comes from and how it’s spent. Let’s have a look.

Key Takeaways

  • One major source of funding for candidates is the super PAC, a political action committee that can spend unlimited amounts of anonymously donated funds for their favorite.
  • Candidates can also directly raise funds from donors large and small.
  • Almost half the money raised goes to media advertising; the second largest chunk is for campaign administrative costs.

Super PACs

A major source of campaign financing is the super PAC, short for special political action committee.

A Supreme Court decision in the 2010 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 technically does not represent money spent by the candidate.

As of May 17, 2021, 2,276 groups organized as super PACs have reported total receipts of $3,427,543,995 and total independent expenditures of $2,128,047,603 in the 2019–2020 cycle.

Fundraising

According to the Federal Election Commission (FEC) and reports from the candidates and media, money comes from a variety of sources, including large donors, small donors, and organizational donations.

During the springtime primaries leading up to the 2016 election, Democratic front-runner Hillary Clinton raised about $160 million and the super PAC Priorities USA Action raised over $55 million for her. Assuming a maximum donation amount of $2,700, approximately 73% of Clinton’s raised funds were large individual contributions. Bernie Sanders, who refused the support of super PACs, raised close to $140 million, and 67% of it had come from small individual contributions, which averaged $27.

On the other end of the political aisle, Republican Ted Cruz raised $66 million himself and $52 million was donated to super PACs that supported him. During the primaries for the 2016 election, Donald Trump was largely self-funded, with 70% of his campaign funds coming from loans he had taken out; the super PACs in his favor raised a relatively paltry $2 million.

Trump began raising money for his 2020 campaign shortly after he was elected. While some experts predicted that it would be impossible for any candidate to out-raise him, Joe Biden’s campaign beat fundraising records and ended up surpassing the Trump campaign’s fundraising haul during the final months of the election cycle.

In 2020, Biden raised approximately $1,044,187,828 in candidate committee money and $580,113,800 in outside money in getting elected, while Trump raised approximately $773,954,550 in candidate committee money and $313,954,719 in outside money in defeat. (During the 2016 presidential campaign, Trump is said to have received free media attention valued at about $5 billion.)

How Money Is Spent

According to OpenSecrets.org, a release of data by the FEC showed 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% goes toward fundraising for donations. Less than 2% of expenditures are dedicated to loan payments, contribution refunds, parties, and miscellaneous costs.

The Bottom Line

To provide the necessary millions 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. 

Detailed monthly data on campaign spending is filed by both major-party candidates with the FEC. Its comprehensive reports on campaign spending are available online to the public.