Political Action Committee (PAC)

The phrase "political action committee" (PAC) is not found in the law governing campaign finance, but PACs are a crucial element of political money. Officially, they are known as "separate segregated funds" (SSF) in FECA. PACs allow many groups to legally raise, contribute, and spend “political money”.

PACs are legally separate entities from their affiliate organization (if they have one). If a political candidate accepts a contribution from "General Electric PAC" it is incorrect to say the contribution is from "General Electric", although occasionally publications do not recognize this distinction. 
A corporation, like General Electric, may not directly contribute to a candidate from their general treasury. They must organize a PAC, collect voluntary contributions from individuals eligible to contribute to their PAC, and then contribute from the PAC to a candidate. This was not affected by the decision in Citizens United, which allowed corporations to fund independent expenditures with treasury funds.

Political Action Committee: A political committee makes contributions to political candidates or makes expenditures on behalf of political candidates or issues. PACs are often used by corporations, labor unions, and interest groups in order to receive contributions from stakeholders interested in advancing the PAC’s mission. Because a PAC is a legally separate entity and may only be funded by voluntary contributions, entities that cannot contribute directly to candidates often create PACs to do so.

Connected PACs: A connected PAC is a political committee that is affiliated with a corporation, labor union, trade group or health organization. The affiliated corporate entity is allowed to provide resources to the PAC such as office space, letterhead, or administrative expenses which would otherwise have been prohibited as a corporate contribution. 
This is advantageous because the PAC does not have to pay for these administrative expenses using regulated funds raised for the purposes of advancing the PAC’s mission. The regulated funds can be preserved in their entirety for contributions to candidates or electioneering expenditures. However, connected PACs are only able to solicit contributions from members of their “restricted class”. For corporations, the restricted class is typically executives and shareholders while for unions the restricted class is members of the union. 

Non-Connected PACs: A non-connected PAC is a political committee that is not affiliated with a corporate entity. Often these PACs have an ideological mission. Leadership PACs of members of Congress are non-connected PACs. Unlike connected PACs, non-connected PACs must cover all expenses with regulated funds. Any monetary support or thing of value given to a non-connected PAC is considered a contribution.

These PACs may solicit funds from any eligible individual (who isn't otherwise prohibited from making political contributions). Unlike a connected PAC, they are not limited to soliciting members, executives, and shareholders.

“Super PAC” or Independent Expenditure PACs: An independent expenditure PAC exclusively makes independent expenditures in support of or opposition to political candidates and issues. An IE PAC cannot make direct candidate contributions. Because of the Supreme Court’s ruling in Citizen’s United vs. FEC, IE PACs can accept unlimited contributions, including from corporation and union treasury funds. 

Trade Offs
There is a trade off associated with each type of PAC.

Connected PACs can devote 100% of their funds to making contributions to candidates. But they can only solicit (and accept) contributions from individuals with a "connection" to the PAC (executives, shareholders, members). But they are allowed to use funds from the connected organization to cover expenses such as legal fees, office space, and supplies- which would typically come from the PACs funds.

Non-connected PACs may accept funds from anyone (who isn't otherwise prohibited from contributing to political committees). However, they must pay for all expenses (including legal fees, office space, and supplies) from PAC funds. This effectively means that contributions to non-connected PACs do not go 100% to candidate contributions, some funds are used for operational expenses.

Super PACs (Independent Expenditure Only PACs) can accept unlimited contributions from individuals, corporations, and unions. But they may not contribute directly to political candidates; they may only fund Independent Expenditures.