Washington — In Washington, it is known as ''soft money,'' in recognition of its shadowy nature. It would be illegal if contributed directly to candidates for federal office, since it comes from corporate treasuries, union funds, and rich individuals who have already reached their donation limits. But this fall, millions of dollars of it will flow through legal loopholes into the presidential campaign and into congressional races all across the country.
''We see it as one of the top loopholes'' in campaign finance law, says Ellen Miller, director of the Center for Responsive Politics.
Simply put, soft money is a way of sidestepping federal restrictions on campaign funds by channeling money through state party organizations.
In presidential election years, state parties are allowed to spend as much as they want on the basic stuff of politics: phone banks, bumper stickers, get-out-the-vote drives.
The activities can't be targeted to individual candidates.
Bumper stickers, for instance, must be either generic (''Vote GOP,'' ''Vote Democratic'') or mention a wide selection of politicians.
But the spending of soft money clearly benefits those at the top of the ticket, say election-law experts and party officials.
It thus offers a way to augment the public grant that both presidential candidates receive to conduct their general election campaigns.
And soft money is a way around federal restrictions on who can give.
Many states have relatively loose laws on who can make political donations. In 33 states, for instance, corporations are allowed to give money to state parties, says Mark Braden, general counsel of the Republican National Committee (RNC).
Both national parties now see soft money as a way of supercharging their presidential campaigns. Both have active programs to collect cash and channel it through their state brethren.
The RNC raised and spent about $9 million in this manner during the 1980 presidential race, says Xandra Kayden of the Harvard campaign finance study group.
GOP officials do not go into great detail about their current soft-money effort. ''We do have a program,'' says Mr. Braden.
Most of the Republicans' soft money, he says, comes from individuals who have given as much directly to federal candidates as they can. Little of it, Braden says, comes from corporations.
''Whether it's legal or not, it's difficult to get corporations to give,'' he says.
Those corporations that do make political contributions are generally those with a strong ideological bent, say scholars of campaign finance.
Marriott Corp., for instance - headed by GOP activist J. W. Marriott Jr. - was involved in the Republicans' 1980 soft-money drive.
The Democrats have not moved as quickly into the world of soft money as have the Republicans. The Democratic National Committee (DNC), which had a hard time all around raising money in 1980, scraped together only a few hundred thousand in soft money that year, according to academic estimates.
This year, DNC officials have been making brave predictions about how much soft money they'll raise. One party executive says, ''There will be a strong (soft money) effort.''
Voter registration projects that help Democrats, for instance, are likely to receive DNC aid in the form of soft money.
But others caution that Democrats may yet decide to turn down the soft-money flow.
They point out that Walter Mondale, the probable Democratic nominee, is sensitive about unusual forms of campaign finance.
In April, Mr. Mondale was embroiled in a controversy over ''delegate committees,'' ostensibly independent groups set up to support Mondale delegate candidates.
The committees were criticized for taking political-action-committee money, and for signs that they may have worked too closely with Mondale's staff.
In general, scholars of campaign finance do not feel that soft money is, by its very nature, bad. They feel the purpose it is used for - general party-building politics - is worthwhile.
''It is a good thing to have money flowing through the parties,'' says Michael Malbin, resident fellow at the American Enterprise Institute.
The amounts involved in soft money, he points out, are far smaller than some controversial corporate contributions to President Nixon's reelection campaign in 1972.
But scholars do worry that soft money is very hard to track.
It must be reported only in the state where the cash is spent, complains Xandra Kayden of Harvard - not in the state where it is raised, or in Washington.