Hard and soft money can also refer to how clients pay their brokers or financial services providers. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Hard money and soft money are terms often used to describe currency and also refer to political contributions in the United States.
What are soft money arrangements in the financial industry?
Soft money arrangements in the financial industry are common but are not usually disclosed to stakeholders and regulators. Money contributed directly to a specific candidate is known as hard money, while indirect contributions to political parties and political action committees are soft money.
When did soft money become more popular?
Soft money became more prominent after the Federal Election Campaign Act (1974) restricted the amount of hard money individuals and political action committees could donate. Donations to individual candidates are often referred to as "hard money," which faces firm restrictions and is highly regulated.
