What Is a PAC? A Simple Guide to Political Action Committees

If you're in government affairs, you need to be visible to legislators. One of the most effective ways to do that is through a political action committee, or PAC. These organizations offer a way to support candidates who align with your mission and build lasting relationships through strategic, transparent contributions. 

“Let’s say you would like to have a relationship with a member that represents the geographic area where you have an operation,” says Robin Kolodny, a professor of political science at Temple University. With a PAC donation, “you are saying to the world: ‘This candidate is consistent with our policy interests.’”

What is a PAC?

So, what is a PAC? A political action committee (PAC) is a tax-exempt 527 organization that pools contributions from donors to fund campaigns for or against candidates, ballot initiatives, or proposed legislation. 

To understand the full PAC meaning, it helps to know the history. Their story starts in 1907, when Congress adopted the Tillman Act, restricting corporate contributions to political campaigns. The 1943 Smith-Connally Act extended that prohibition to labor unions.

That same year, a new way to finance political campaigns emerged when the Congress of Industrial Organizations (CIO) formed a political action committee to raise money for President Franklin D. Roosevelt’s reelection.

PACs became a significant component in campaign financing with the Federal Election Campaign Act (FECA) of 1971 and its 1974 amendments. Today, there are more than 4,600 registered PACs across the U.S.

What Do PACs Do? 

You might be wondering: What do PACs do? When people have a shared view around an issue or a political agenda, PACs collect their donations and distribute the funds to candidates or campaigns that align with their values.

The Federal Election Commission (FEC) sets limits on contributions. In general, traditional PACs, for example, can take in up to $5,000 per individual and contribute up to $5,000 per candidate per election cycle. They can also donate $15,000 annually to national political parties and $5,000 annually to other PACs.

What is a Super PAC? 

One key variation is the Super PAC, or Super Political Action Committee. So what is a Super PAC, and how does it differ from a traditional PAC? 

“A Super PAC is a modern-day creation as a result of the Citizens United Supreme Court decision,” says Tom Buneo, vice president at 720 Strategies, a D.C. public affairs firm. “Super PACs are these mysterious, unaccountable organizations that can spend hundreds of millions of dollars without ever telling you where a penny comes from, where it’s going, or who’s in charge of the funds.”

Unlike traditional PACs, Super PACs are not subject to contribution limits. However, they must operate independently of the candidates they support, and they often come under scrutiny for their lack of transparency.

In contrast, corporate and association PACs are highly regulated, Buneo notes. “Every single penny that comes in and out of those PACs is publicly disclosed. They have contribution limits — incoming from contributors, as well as outgoing to candidates and candidate committees.”

Types of PACs: Connected vs. Nonconnected

Another important distinction in any political action committee definition is the type of PAC:

• Connected PACs are tied to a corporation, trade association, or union. They can only solicit donations from individuals affiliated with the sponsoring organization (like employees or members).
• Nonconnected PACs are unaffiliated and can solicit contributions from the general public. These are typically set up by advocacy groups or ideologically motivated organizations.

“A connected PAC is one that is spun off by a parent organization. That can make setting up the PAC very easy. You don’t have to get a separate office space for it, you don’t have to fundraise to pay for a computer,” Kolodny says.

As a non-connected PAC, “you would have to go establish yourselves: Are we incorporated or nonprofit? What’s our tax status? You have to do all of that independently,” she says.

With a connected PAC, an organization “is signaling its approval of a candidate, and its interest in continuing a relationship with that person,” she says. For government affairs professionals, “you almost always want the connected PAC, because a non-connected PAC sends a more diffuse signal.”

How to Start and Manage a PAC

If you’re looking into how to start a PAC, it’s important to understand the compliance landscape. State and federal rules vary, so it’s crucial to maintain visibility into every contribution and expenditure.

State-level compliance can make it challenging to launch and manage a PAC. Because each state has different laws around this, “you need a 360-degree view on what you can do and where,” Buneo says.

“Technology can play a vital role in making sure that you are aware of what you should and should not be doing,” he says. “With technology, there’s always another set of eyes looking over your shoulder and raising alarms when you’re about to do something that may be wrong or may violate a contribution limit.”

Compliance means keeping track of donations, managing contacts, building reports, and staying in line with FEC requirements. FiscalNote’s PACbuilder brings all these functionalities together in one tool, simplifying and streamlining the PAC management and reporting process.

PACbuilder’s disclosure center guides you through the steps to correctly fill out all forms and files them directly to federal and state ethics committees. System alerts allow you to address potential issues in a timely way.

The sporadic nature of PAC activity makes technology a must-have. “You might activate a PAC two months before the general election. Maybe you’re going to take one employee off the regular payroll and put them on the PAC payroll for six weeks while they do the PAC work,” Kolodny says.

Under these conditions, you’re not going to want to ramp up the record-keeping from scratch. With the right technology in place, you’ll be able to hit the ground running.

Best Practices for PAC Management

A few best practices can help you manage a PAC effectively.

Payroll deduction strengthens donor retention and growth, with automatic deductions making PAC giving easy and predictable. Reach out to eligible new hires in their first six months, when they may be eager to build their connection to your organization.

Spread the money around. The point here isn’t necessarily to win the election, but to build ties with whomever wins. Rather than fund just one candidate, “it’s more about identifying a number of friends, and for corporate interests that’s a fairly bipartisan list,” Kolodny says. 

Tap into your network. “If you’re new to PACs and compliance, there’s definitely a wider community that has a lot of experience under its belt, in D.C. and the state capitals,” Buneo says. “Reach out, join those professional organizations, and go to conferences. That really helps you map out what you should be paying attention to and why.”

Whether you're advocating for your industry, your employees, or a cause you believe in, PACs and Super PACs offer a structured, transparent way to engage in the political process. With the right strategy and the right tools, political action committees can be a powerful part of any government affairs program.