527 Group

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A 527 group, or 527s are tax-exempt, special interest organizations named after a section of the United States tax code. They are a tax-exempt organizations that is created primarily to influence the nomination, election, appointment or defeat of candidates for public office. Although political action committees are also created under Section 527 of the Internal Revenue Code, the term is used to refer to political organizations which are not regulated by the Federal Election Commission (FEC) and not subject to the same contribution limits as PACs. 527s have gained notoriety after the McCain-Feingold bill was passed and especially in the 2004 presidential election

527 groups are not restricted by the hard money spending limits of PACs. In return, they must not explictly support one candidate over another in advertising, and they must not coordinate in any way with political campaigns. Political candidates, for example, are not invited to events hosted by 527 groups, and a 527 may not discuss advertising strategy with a political campaign.

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Overview

A 527 group is permitted to accept contributions in any amount from any source. They are exempt from federal income tax on contributions received but they are required to report their funding and expenditures to the Internal Revenue Service. These unregulated contributions are frequently referred to as soft money. Because 527 organizations are not regulated by the Federal Elections Commission, they may not make expenditures to directly advocate the election or defeat of any candidate for federal elective office. They also may not coordinate their activities with any candidate's campaign. 527s are permitted to undertake non-prohibited political activities such as voter mobilization efforts and issue advocacy.

Many 527s are run by special interest groups and used to raise unlimited amounts of money to spend on issue advocacy and voter mobilization. The line between issue advocacy and candidate advocacy is the source of heated debate and litigation.

Examples of 527s include Swift Boat Veterans for Truth, Texans for Truth, The Media Fund, America Coming Together, the Moveon.org Voter Fund, the Progress for America Voter Fund, and the November Fund.

During April of 2004, the FEC held hearings to determine whether or not 527s should be regulated under campaign finance rules. In May, they decided to delay any ruling for an additional 90 days, pushing it to past the 2004 presidential election.

2004 election controversy

Under federal election law, coordination between an election campaign and a 527 group is not allowed. The heavy spending of key 527 groups to attack presidential candidates brought complaints to the Federal Elections Commission of illegal coordination between the groups and rival political campaigns. These formal complaints included:

Several people who are involved with both organizations have removed themselves to avoid the appearance of conflict. GOP attorney and legal advicsor to the Bush camapign Benjamin Ginsberg, who was also a member of the group claimed that it was not uncommon or illegal for lawyers to represent campaigns or political parties while also representing 527 groups.

Liberal Issue 527s

Conservative Issue 527s

Top 20 527 groups, 2004 election cycle

Some of these listings identify a parent organization that has created a 527 group but that also engages in many nonpolitical activities.

Rank Name 2004 Fundraising 2004 Expenditures
1 Joint Victory Campaign $41,685,706 $35,780,404
2 The Media Fund $28,127,488 $27,208,905
3 America Coming Together $26,905,450 $24,196,532
4 Service Employees International Union $16,652,296 $8,808,017
5 American Federation of State, County and Municipal Employees $13,658,207 $13,274,331
6 MoveOn.org Voter Fund $9,086,102 $17,435,782
7 New Democrat Network $7,172,693 $6,970,070
8 Club for Growth $5,288,847 $6,755,054
9 EMILY's List $4,162,226 $4,070,369
10 AFL-CIO $4,029,703 $3,942,734
11 Voices For Working Families $3,668,280 $2,396,272
12 College Republican National Committee $3,647,093 $4,789,820
13 Democratic Legislative Campaign Committee $3,544,667 $3,205,115
14 Sierra Club $3,440,782 $830,871
15 Partnership for America's Families $3,071,211 $2,855,110
16 League of Conservation Voters $2,804,000 $541,882
17 Progress For America $2,266,810 $689,560
18 Communications Workers of America $2,263,913 $1,926,066
19 Laborers Union $2,163,448 $2,459,716
20 America Votes $1,937,036 $1,176,590
As of August 23, 2004. Source: [1]

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