What are 527's? | Who Donates? | Where does the money go?
Government Regulation | Ethics
What are 527's?
According to the IRS, a Section 527
organization is an organization that is created to receive and disburse
funds to influence or attempt to influence the nomination, election,
appointment or defeat of candidates for public office. A 527
organization does not fall under the regulation realm of the Federal
Election Commission and is not subject to the same limits as FEC
527's 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 only
required to file regular disclosure reports with the Federal Elections
Commission if they 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.
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.
While most 527's are used for issue advocacy such as the Florida
Leadership Council, Progressive Civic Fund, and Alask to America Energy
Fund, there are vast number of new 527's that appear during a
presidential election year and the money donated has grown exponentially between
election cycles, as seen in the graph below.
Examples of 527s that are directly affiliated with the presidential
election 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.
Because of the ability to collect funds from anywhere and in any
amount, 527's utilize the Internet to collect support and money for
their causes. With no income tax collected and very little cost to
start a 527 and a website, 527's have the power to mobilizing support
for an issue very quickly during election time.