THE FINANCING OF electoral campaigns in the US happens at the federal, state and local levels. It has various components that ensure transparency. Sources of funding include individual contributors (max $2,800), political action committees (max $5,000) and super public action committees (no limit but they cannot deal directly with candidates).

The Republican National Committee and Democratic National Committee are primarily responsible for raising and spending money for political campaigns. Both the RNC and DNC are registered with the Federal Election Commission, which is an independent agency that monitors campaign finance. Candidates can also organise fundraising events where attendees have to donate money. That apart, online fundraising happens through social media. There are even merchandise sales. Apparently, Trump merch sales were burgeoning following an assassination attempt on him.

The contribution rules in the US clearly state that a campaign donor has to be a US citizen or lawfully admitted permanent resident. The campaign “does not accept contributions from corporations… unions, federal government contractors, national banks, those registered as federal lobbyists or… foreign nationals….”

The Federal Election Commission, created in 1975, ensures that candidates and party committees disclose sources, amounts of contributions and how they are spent. The FEC has six commissioners appointed by the president and confirmed by the senate. Only three commissioners can be from the same political party and all resolutions require at least four votes in agreement.

Before the FEC was formed, campaign contributions were mostly done covertly. Candidates, back then, used to depend on large donations to fund their campaigns. In the early 1970s the Watergate scandal shook American politics. President Richard Nixon was accused of letting five men break into the Democratic Party headquarters to steal documents. It led to his resignation and paved the way for the FEC Act, which marked a major shift in campaign finance.

In the last few years, the Democrats and the Republicans brought in campaign finance bills, but none of them became law. In 2010, the Supreme Court lifted a ban on corporate and union expenditures for the election or defeat of candidates. Interestingly, the court ruling also brought in super PACs, which are criticised for not having any limit on contributions and for lack of transparency.

“On an individual level, the campaign finance system in the US is very effective,” Sree Sreenivasan, former professor at Columbia University Graduate School of Journalism and former chief digital officer of Metropolitan Museum of Art, New York, told THE WEEK. “The problem is, the Supreme Court has made it very difficult to go after what is called dark money, which is generated and raised by companies, corporations and special interests. Those make a big difference in the success of candidates big and small.”

Sreenivasan said even though there is excitement over Harris raising $200 million in a short time, “it is a drop in the bucket to how much money they will need. There are unlimited pockets on both sides. Corporations and special interests are much bigger, and better organised and more powerful on the Republican side.”

According to the research group Open Secrets, the top donor for Trump in 2024 is Timothy Mellon of the Pittsburgh banking family who lives in Connecticut. He has donated $75 million for Trump in this cycle. SpaceX CEO Elon Musk, it is said, has privately gathered support for Trump. His money could come in handy in the swing states.

Harris, on the other hand, has personal rapport with many tech leaders at Amazon, Alphabet, Microsoft and Apple. She also has the support of philanthropist Melinda French Gates, Netflix co-founder Reed Hastings, Reid Hoffman of Linkedin, and former Facebook COO Sheryl Sandberg. “She has smashed record over record. The majority in her case are first-time and small donors,” Manu Bhagavan, a historian based in New York, told THE WEEK. “I believe she will continue to draw in money to her campaign because it is being excellently run.”

It remains to be seen whether there is donor fatigue, especially in the case of Trump admirers. His legal fund, which pays his lawyers battling out cases against him across the country, is getting millions from his campaign’s biggest donors. So that may prevent small donors from donating for Trump, as they fear their money will be used for his cases. “I don’t think there is any donor fatigue. Both candidates will raise a lot of money in the days to come,” said Ashok Kumar Mago, a Texas based businessman who is a Padma Shri recipient.

Some billionaires have become more vocal for Trump after the assassination attempt, but that kind of fervour is not reflected in their donations. “The assassination attempt had a huge impact the following days,” said Sreenivasan. “It looked as if Trump would easily win against Biden. But he is no longer against Biden. With a new candidate, the entire race has changed. The 100-plus days that are left is an indication on how fast things can move. Huge roller-coaster and seismic changes are going to come.”

Noting that Harris could raise over $200 million within a day, Kevin Olickal, Democratic representative in the 16th district of the Illinois house of representatives, said to THE WEEK, “This renewed optimism and energy in the party is exactly what was missing. The fundraising and volunteer mobilisation sparked by Harris has a psychological effect, and has forced the Republicans into defence. They now have to change their campaign strategy to focus on a candidate who is younger.”

“Going forward, money will not likely be the issue that determines this race,” he said. “Both candidates will have the financial resources necessary to run a competitive campaign. The platform and messaging of each candidate will determine who is the next president.”