Difference between Hard and Soft Money

April 10, 2017 by Editorial Team

Hard and soft money mean several things. Both are used to refer simply to paper money or coin money. They also refer to contributions all politicians welcome with open arms during an election cycle. This article covers the differences between hard and soft money in relation to political candidates and the election period.

Definitions

Hard vs Soft Money

Hard money refers to monetary donations made to political candidates, including money given to political parties in support for a candidate. These donations are strictly monitored by the Federal Election Commission and are used to finance a candidate’s (presidential, congressional, and senatorial) campaign in federal elections. The Federal Election Commission is an independent federal agency which monitors, regulates, and enforces laws to limit the amounts of money donated to political personalities running for federal office.

The signing of the Federal Election Act gave power to the FEC in 1974 and gave this agency a number of duties, and one of the crucial ones is to determine the source of the donations. In this case, hard money can only be received by a political candidate directly from a sponsor. Moreover, the FEC also requires that contributions can only come from small individual contributors, large individual contributors, political action committees, and from the candidate as well. Each contributor is classified according to the amount they are allowed to donate.

Campaign financing at the state and local levels are regulated by their respective local and state laws.

Soft money refers to money donated to political parties to be used for any purpose except for the support of a political candidate during an electoral period. The FEC does not impose limits on the donation amount. In addition to individuals and political action committees, soft money can also be donated by large corporations, labor unions, and even churches.

Although soft money cannot be used to back a candidate in a federal election, it can be intended for activities that support “party-building” efforts. These include promoting voter registration or advocating the passage of a law. It can also include ads that inform voters about issues, provided that the ads do not tell the voters who to vote. For instance, an ad may say “Candidate X is a horrible person. If he wins, the country’s economy will collapse in a matter of weeks. Come out and vote on election day!” This example “educates” voters about a particular issue and does not explicitly endorse any political candidate. This may be considered party building, which is lawful to be paid for by soft money.

Hard vs Soft Money

So what’s the difference between hard and soft money? Hard money comes from monetary donations in support of a political candidate. These donations are heavily regulated and monitored by the Federal Election Commission. Soft money, on the other hand, is donated to political parties for purposes not intended for the support of political candidates running for federal office.Unlike hard money, soft money is unregulated, which means there are no limitations to how much individuals can donate to political parties. Corporations and labor unions are allowed to donate to political parties.

Comparison Chart

Hard MoneySoft Money
Monetary donations in support of a federal candidateDonations to political parties not intended for the support of a federal candidate
Regulated; donations are limited to a certain amountUnregulated; no limit to how much money can be donated
Donors can only be private individualsDonors may include corporations, labor unions, and private individuals

Video

Here’s an election analyst talking about hard and soft money in campaign finance.