Recent media attention has focused on "soft money", which is funneled through advocacy organizations. The Swift Boat Veterans for Truth (SBV) ads have raised the awareness of and reporting on political advocacy groups called "527s." Progressive 527s have raised more money ($126,849,747) this election cycle than conservative ones ($17,224,036). President Bush has called for an end to all 527 advertising.
BackgroundThere are four types of advocacy groups that fund political campaigns. Political parties are the oldest. Their role in campaign finance was curtailed by a 2002 law and US Supreme Court ruling. Political Action Committees (PACs) are the next best-known group and began in 1944. They raise "hard" money for the express purpose of defeating or electing candidates. There are limits on how much money an individual can contribute to a PAC and on how much a PAC can contribute to a candidate or a party. PACs must register with the Federal Election Commission.
Two types of political advocacy groups solicit "soft money" which is used for voter mobilization and "issue ads" that do not expressly call for the election or defeat of a candidate. There is no limit on individual soft money contributions.
The spotlight is on groups organized under section 527 of the tax code. Congress created them 30 years ago in Watergate-era election reforms. What is new is how this tax code defined political organization is being used.
In 2002 Congress passed campaign finance reform (Bipartisan Campaign Reform Act) which banned soft money contributions to political parties; it was upheld by the US Supreme Court. Soft money has now shifted to 527s; ads cannot mention a candidate. And, like PACs, 527s must fully disclose donors.
The more established nonprofit is organized under section 501(c) of the tax code. Familiar 501(c) organizations include the National Rifle Association and AARP. Others are staffed with political veterans and focused exclusively on campaign politics, like Progress for America and American Taxpayer Alliance.
These 501(c)s are not required to report their spending until after elections. They are not required to disclose donor information. A Washington Monthly investigation shows that three pro-GOP groups spent $40 million during the off-season 2002 election cycle.