Function

The purpose of limits on "hard money" contributions is to prevent a handful of wealthy donors from dominating the financing of political campaigns and "buying" favored candidates. Hard money limits force candidates to seek funding from a broader cross section of contributors. During Watergate, it was revealed President Nixon had received secret campaign contributions, including $2 million from a single donor.

Limits

The 2002 campaign finance reform law raised the limit on individual political contributions from $1,000 to $2,000. Organizations can give a maximum of $5,000. The law also allowed the maximum individual contribution to be adjusted every election cycle for inflation. In 2009-2010, individual contributions to a political candidate were capped at $2,400.

Loopholes

Although limits on hard money contributions exist, various loopholes in campaign finance law have the effect of allowing donors to give more. The limits apply to each election, meaning a donor can give the maximum amount during a primary campaign and again during the general campaign. In addition, while individual donors can give the maximum amount, their spouses and their children can do so, as well.

Bundling

Organizations can get around the limit on contributions through a practice known as "bundling." An organization will bundle its contribution with a collection of individual contributions from individual members of the organization.

Requirements

Federal campaign finance laws require candidates to report the names of most campaign contributors. The Federal Election Commission regulates federal elections. The FEC requires candidates itemize all campaign contributions and expenditures of $200 or more.