Business
Political Action Committees, Explained for Builders Like Us
Feb
When we build a product, we learn fast: rules shape the market. Not just code rules. Money rules. Attention rules. And, in politics, campaign finance rules.
Political Action Committees, or PACs, sit right in the middle of that system. They are not magic. They are not “dark money” by default. They are a legal tool with clear paperwork, clear limits, and clear risks if you do it wrong.
If you are a founder, a maker, or a leader at a growing company, PACs matter for one big reason.
They are a way groups of people organize influence.
That can be good. It can also get messy. So let’s walk through PACs in plain language, with a builder’s mindset. We will focus on federal rules in the United States, because that is where the term “PAC” has the most precise meaning.
What a PAC is in plain English
A PAC is a political committee. It raises money and spends money to help elect candidates or support political goals.
That’s it.
The key detail is this: federal PACs are regulated by the Federal Election Commission (the FEC). That means registration, reporting, and rules about where money can come from and how it can be used.
So when people say “PAC,” they might mean a few different things. We need to name the types.
The PAC family tree
Think of PACs like product categories. Same general idea. Different rules under the hood.
1) Connected PACs (also called SSFs)
A connected PAC is tied to a “connected organization,” like a corporation, a labor union, or a membership group. In FEC language, many of these are “separate segregated funds,” or SSFs.
They can raise money from a limited group connected to that organization (like employees or members). They cannot just raise from the public like a street fundraiser.
This structure matters if you are building a company and want a compliant way to engage in politics without mixing corporate funds into regulated contributions.
2) Nonconnected PACs
A nonconnected PAC is not sponsored by a corporation or union. It can raise from individuals, within the rules, and then contribute to candidates or spend in other permitted ways.
The FEC has detailed compliance guidance for these because reporting, recordkeeping, and “what counts as a contribution” can get technical fast.
3) Leadership PACs
Leadership PACs are set up by federal candidates or officeholders (or closely tied people), but they are not the candidate’s official campaign committee.
In real life, they are often used to support other candidates and build alliances. Think of it like a “network fund” for political relationships.
4) Super PACs (independent expenditure-only committees)
Super PACs are the headline grabbers.
They can raise unlimited contributions from individuals and, under federal rules, can also accept money from corporations and labor organizations. The tradeoff is strict: they may only make independent expenditures. They cannot contribute directly to federal candidates.
And “independent” is not a vibe. It is a compliance standard. If a super PAC coordinates spending with a candidate, you can be in dangerous territory.
5) Hybrid PACs (Carey committees)
Hybrid PACs have two accounts: one that follows contribution limits for giving to candidates, and another that can accept unlimited funds for independent spending (like a super PAC side).
The rules are precise. You do not want to wing this with a spreadsheet and good intentions.
The core idea: contributions vs independent expenditures
This one difference drives almost everything.
Contributions (money given to candidates)
Contributions are capped and regulated. If a PAC gives directly to a candidate, that is a contribution. The amount is limited.
Independent expenditures (money spent independently)
Independent expenditures are spending for ads or messages that support or oppose a candidate without coordination with the candidate.
Independent expenditures are not capped the same way. The FEC explains that independent expenditures are not contributions and are not subject to limits.
So here is the builder’s translation:
- Contribution path: smaller checks, direct support, strict limits.
- Independent path: potentially huge spend, but you must keep distance from the campaign.
That distance is where many people get burned.
The numbers: what are the limits right now
We should talk in real numbers, because founders live in numbers.
The FEC updates federal contribution limits for the 2025–2026 cycle. For example, the individual limit to a federal candidate increased to $3,500 per election.
PAC limits depend on the type of committee and what it is doing. The FEC publishes a chart for the full 2025–2026 limits, including limits for PACs and party committees, and it notes that independent expenditure-only committees (super PACs) may accept unlimited contributions (including from corporations and labor organizations), with key restrictions like bans on foreign national contributions.
If you remember one thing, remember this:
Traditional PACs live in a world of limits. Super PACs live in a world of independence.
Why super PACs exist (and why people argue about them)
Super PACs did not appear out of nowhere. Two big legal moments shaped the modern era:
- Citizens United v. FEC (2010): The Supreme Court struck down restrictions on independent expenditures by corporations (and parts of earlier rulings tied to electioneering communications).
- SpeechNow.org v. FEC (2010): The D.C. Circuit held that limits on contributions to groups making only independent expenditures violated the First Amendment. This decision is widely tied to the rise of super PACs.
Some groups describe Citizens United as a major turning point that enabled unlimited outside spending by corporations and others, and it remains highly contested in public debate.
More recently, major outlets have highlighted that SpeechNow—less famous than Citizens United—may have been even more decisive in unleashing today’s super PAC system.
As builders, we should recognize the pattern:
When rules change, new “products” appear.
Super PACs are a product of legal design.
The compliance traps that can wreck you
PACs are regulated financial entities. If you treat them like a casual side project, you can create real legal risk.
Here are the big traps.
1) Coordination risk
If you run or fund a super PAC, the words “we did not coordinate” need to be true in practice.
Coordination rules are not just about one meeting. They can involve vendors, shared consultants, strategic conversations, timing, and nonpublic info. This is one reason serious groups build strong firewalls and documentation.
2) Source-of-funds risk
Federal law restricts certain sources. For example, super PACs may accept unlimited money from many sources, but they still may not accept funds from foreign nationals, and there are other prohibited sources described in FEC guidance.
If you are a company with global investors, global customers, or global employees, you must be extra careful. You do not want a compliance nightmare because you mixed in prohibited money.
3) Reporting and recordkeeping
PACs must report receipts and disbursements. Errors can lead to complaints, audits, and reputational damage.
The burden is not theoretical. It is operational. Like payroll and taxes, you need systems.
A founder’s view: PACs are infrastructure, not vibes
I think founders make a mistake when we see politics as “opinions” instead of “systems.”
PACs are systems.
They are infrastructure for collective action. They can amplify a cause, defend an industry, or push a local issue into the national spotlight.
But most of all, PACs create structured leverage.
And leverage is powerful. That means we have to talk about ethics, not just tactics.
The ethical line: influence vs integrity
Let’s say we are deciding whether to engage through a PAC.
We should ask ourselves a harder question than “can we?”
We should ask: what kind of market for power are we building?
Some people argue that the modern system lets a small number of ultra-wealthy donors dominate. Others argue that political spending is a form of speech and that limiting it limits participation.
Regardless of where we land, we can still choose higher standards.
Here are standards I like:
- Be transparent when you can. Even if the law does not force maximum clarity, we can still communicate our values plainly.
- Support policy outcomes, not personalities. When we tie our brand to a single person, we inherit all of their chaos.
- Avoid pay-to-play behavior. If the goal is “access,” we are already drifting.
Virtue matters because trust compounds.
And in politics, trust is scarce.
How PACs fit into a modern influence strategy
If we think like product people, political engagement has channels:
- Direct giving (individual donations, within limits)
- PAC contributions (regulated giving through a committee)
- Independent spending (super PAC style)
- Issue advocacy (policy messaging not tied to candidate advocacy)
- Grassroots and community work (local credibility, long runway)
PACs sit in channels 2 and 3.
They are not the only tool. They are not always the best tool. But they are one of the fastest ways to pool money and make a measurable impact.
That speed is why people use them.
What’s changing right now: pressure on the limits
Campaign finance is not static. It keeps getting tested in courts.
As of December 2025, major reporting describes a significant Supreme Court case that could further loosen rules around coordinated spending between party committees and candidates. A decision is expected by June, and the outcome could reshape how parties and candidates work together, potentially making party committees function more like super PACs in practice.
So if we are planning a long-term civic strategy, we should not assume the rules will stay the same.
We should design for change.
Practical guidance for doing this the right way
This is not legal advice. It is operator advice.
Step 1: Decide what “win” means
If we do not define success, we will drift into “more spending” as the default.
A good goal is specific:
- Protect a policy that keeps our supply chain stable
- Support candidates who back small business tax policy
- Push workforce training funding in our region
Step 2: Pick the structure that matches the goal
- Want to contribute directly to candidates? You are in traditional PAC territory.
- Want to spend big on ads independently? That is super PAC territory, with independence rules.
- Want both? Hybrid structures exist, but require careful compliance.
Step 3: Build real compliance ops
Founders respect systems that do not break at scale.
That means:
- A compliance pro who lives this world
- Clear approval workflows for spending
- Clean recordkeeping
- Vendor rules that reduce coordination risk
Step 4: Use tech like a grown-up
We can do better than messy PDFs and half-updated trackers.
We can treat this like financial operations:
- Automated intake checks for donor eligibility
- Audit trails for approvals
- Reconciliation workflows
- Alerts for reporting deadlines
- Separation of data access to support “independence” boundaries
If we are good at anything, it is building repeatable systems.
So let’s do that.
Step 5: Choose a public posture
Even when the law allows complexity, the public might not.
If our customers see us as sneaky, we lose.
So decide:
- Will we publicly explain why we engage?
- Will we publish a short values statement?
- Will we cap participation even when we could spend more?
Constraints can be a brand advantage.
The big takeaway for entrepreneurs
PACs are not just political trivia. They are part of the operating environment for any industry that touches regulation, labor, trade, taxes, energy, health, or technology.
In other words, almost every industry.
If we ignore the system, the system still shapes us.
So we should learn it. We should respect it. And if we use it, we should use it with discipline.
Because influence without integrity is a short game.
And we are not here for short games.
A Better Next Move
We can treat civic engagement like product design.
We can ship fast, but we can also ship clean.
We can take risks, but we can also build guardrails.
And we can push for policies we believe in while still honoring the public trust that makes markets work.
That balance is hard.
But hard is where builders live.
