What is a connected PAC?
A connected PAC, or separate segregated fund, has a sponsoring organization, usually a corporation, trade association, or labor union. It is called a separate segregated fund because it must be separate from its sponsoring organization; the fund must be segregated from its sponsor's treasury, and must consist of voluntary contributions. The sponsoring organization can use its funds to create and administer its PAC, and can even use its own officers to manage it. But those officers can solicit contributions only from people who are in some way part of the sponsoring organization, such as union members or corporate managers and shareholders.
This is the way the CIO set up the first PAC in 1943. Over the next twenty-five years, individual unions used this model to form their own PACs. The legality of the PAC form was challenged in 1968, when a federal grand jury in St. Louis indicted the officers of a pipefitters union local, charging that the local's PAC was simply a means to make union contributions that were illegal under the Taft-Hartley Act.
The case ended up in the Supreme Court, which voted 6-2 in favor of the union. It did not matter, the court said, that the union had used its own funds to create the PAC and the people who ran the PAC were the same people who ran the union: "A legitimate political fund must be separate from the sponsoring union only in the sense that there must be a strict segregation of its monies from union dues and assessments."15 Union officers could also solicit contributions from members, as long as the members understood that the contributions were voluntary and would be used for political purposes.
Once the PAC form was held to be legal, and available to corporations and other organizations in addition to unions, it became more widely adopted. The FEC classifies connected PACs under five categories of sponsors: corporations, labor unions, trade/membership/ health organizations, cooperatives, and corporations without stock.