The federal campaign finance reform law, commonly referred to as BCRA, banned the unlimited non-federal or "soft money" contributions that individuals, corporations, and unions could give to national political party committees.
Prior to the enactment of BCRA in November 2002, the six national party committees could raise two types of money:
- Federal, or so-called "hard" money, subject to strict contribution limits and allowed to be used to directly influence federal elections.
- Non-federal, or so-called "soft" money, raised in unlimited amounts by the national party committees but only allowed to be spent on partybuilding activities, such as voter registration drives, get-out-the-vote efforts and broadcast issue ads that tout or criticize a candidate's position on issues without explicitly telling voters to vote for or against the candidate.
State party committees can still raise both types of money: hard money, governed by federal limits and reporting regulations and raised to fund activities related to federal elections; and soft money, raised for their state election activities and regulated by state laws. According to the National Conference of State Legislatures, 23 states limit contributions to party committees from most or all sources, 14 states limit how much corporations and unions may give directly from their treasuries, and 13 states place no limits on how much can be given to state party committees.
The federal soft-money ban turned off a main spigot of funds not only for the national parties, but also for state party committees, which had grown accustomed to receiving large sums of soft money from the national party committees. During the 2000 and 2002 election cycles, for example, state party committees received $454 million from the national party committees, nearly half of the $1 billion in soft money they raised.
In the post-BCRA world, state party committees either have to replace the millions of dollars previously passed down to them, or simply operate on much smaller budgets.
To determine how the state parties fared in the first mid-term elections since BCRA, the Institute analyzed the money raised and spent during the 2006 election cycle and compared it to their finances during the 2002 mid-term election cycle, before BCRA was in effect.