Politicians spend much of their time and energy raising money to fund ever-more-costly election campaigns. They say it is a necessary evil, though critics of current campaign finance laws say the rules allow widespread abuse and corrupt practices. Here’s a glossary of terms to explain what some of the organizations involved in fund-raising are and what candidates can do with the money they amass.
Political Action Committees (PACs) are fund-raising organizations not connected to a political party that are formed by corporations, unions or other groups. Contributions may be made by members, employees or others. Most PACs target congressional elections; they may contribute up to $5,000 to a candidate for each campaign (primary, runoff, and general election). PACs also may donate up to $15,000 annually to any national political party committee and $5,000 annually to another PAC.
Leadership PACs are formed and controlled by politicians to raise money independent of their own campaigns. Their funds can be used to pay for travel and other expenses, to make donations to other candidates’ campaign committees and to further the politician’s own career. Individuals may contribute up to $5,000 a year.
Campaign Committees are organizations officially affiliated with a political candidate and registered with the Federal Election Commission. Their purpose is to raise and spend money on primary, runoff, and general elections.
Political Party Committees are organizations officially affiliated with a political party and registered with the FEC. Their purpose is to raise money for campaigns. They are not subject to the same rules as PACs.
527 groups are nonprofit organizations formed under Section 527 of the Internal Revenue Code, which grants tax-exempt status to political committees at the national, state and local level. They seek to influence elections and policy debates at all levels of government, but are barred from advocating explicitly for the election or defeat of candidates. They are not regulated by the FEC or state elections commissions, and therefore are not subject to state or federal contribution limits.
Contribution Limits for 2005-2006 per Federal Election Commission Guidelines
To each candidate or candidate committee per election
To national party committee per calendar year
To any other political committee per calendar year 
Individual may give
National Party Committee may give
State, District & Local Party Committee may give
PAC (multicandidate)  may give
PAC (not multicandidate) may give
#These contribution limits are increased for inflation in odd-numbered years.
 — A contribution earmarked for a candidate through a political committee counts against the original contributor’s limit for that candidate. In certain circumstances, the contribution also may count against the contributor’s limit to the PAC.
 — A multicandidate committee is a political committee with more than 50 contributors that has been registered for at least six months and, with the exception of state party committees, has made contributions to five or more candidates for federal office.
 — A federal candidate’s authorized committee(s) can contribute no more than $2,000 per election to another federal candidate’s authorized committees.
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