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Shadowy 527 Groups Continue Soft Money Grab As 2002 Election Approaches

Groups Collect Nearly $108 Million During 2002 Election Cycle

Click Here for a PDF Version of the Full Report
Click Here for the Press Release

New disclosure reports filed by "527" organizations just weeks before the November 5 election show a continued race for unlimited "soft money" contributions that are used to pay for issue ads, direct mail, campaign organizers and other electioneering activities. Though only a limited number of the most recent third quarter filings are available, Public Citizen’s analysis of 527 groups’ fundraising shows that some of the most active groups have raised at least $107.7 million during the 2002 election cycle.

527 groups get their name from the section of the Internal Revenue Service (IRS) code that governs them. They can accept unlimited amounts of "soft money" directly from corporations, unions and individuals. The groups are chartered to influence elections and can be broken down into two types: those controlled by members of Congress, "politician 527s," and organizations created to promote specific special interest goals or ideological principles, "non-politician 527s." While only a handful of the most recent reports are available on the IRS online disclosure system, Public Citizen collected scores of reports by going directly to groups’ offices and requesting copies of the filings for public inspection [as is allowed under 26 USC 6104(d)].

An analysis of these new reports and past filings show:

• During the 2002 election cycle so far, 170 of the largest 527 groups identified by Public Citizen as active in federal elections have raised at least $107.7 million and spent $109.1 million. (See Table 1) However, the recent third quarter 2002 disclosure reports covering July 1 to September 30, 2002 are only available for 74 of the 170 groups as of October 23, 2002, which means the total raised will likely be much higher.

• 25 of the top 527 groups during the 2002 election cycle have raised at least $76 million and spent $76.4 million. The total is likely higher as third quarter reports were unavailable for six of these groups. (See Table 1) Included in the list of the top 527 groups during the 2002 election cycle are 15 Democratic/liberal and 10 Republican/conservative organizations. Twenty-two groups have collected more than $1 million during the 2002 cycle.

• Third quarter reports covering July 1 to September 30 show that the top 25 groups collected $19.9 million and spent $19.2 million. During the second quarter, the top 25 groups raised $14.4 million and spent $10.5 million.

• Since disclosure of 527 groups’ finances was first required in July 2000, 527 organizations active in federal elections and identified by Public Citizen have taken in $187.8 million and spent $213.8 million.

• The biggest donors during the third quarter include the Pharmaceutical Research and Manufacturers of America ($315,000); Republican Leadership Coalition ($300,000); Hollywood producer Steve Bing ($300,000); investor S. Robert Levine ($250,000) Democratic National Committee ($200,000); philanthropist and investor John Hunting ($150,000); Democratic Senatorial Campaign Committee ($124,600); and financial holding company manager Ian M. Cumming ($105,000). Six donors gave $100,000 and include plaintiffs’ attorneys Ronald Motley and Wayne Reaud; plaintiffs’ law firms Nix, Patterson & Roach and the Law Offices of Shernoff, Bidart & Darras; Rep. Martin Frost’s (D-Texas) Lone Star Fund and Jacqueline Mars, an heir to the Mars candy fortune.

• The industries/interest groups that contributed the most money during the third quarter include public sector unions ($5,166,851) lawyers/law firms ($1,700,000); securities & investments ($862,500); Pharmaceuticals/Health Products ($545,000) party committees ($490,747); TV/movies/music ($400,000); air transportation ($205,000); and telephone utilities ($146,560).

The most active 527 groups during the third quarter include two unions, liberal and conservative advocacy groups and several congressmembers’ soft money leadership accounts (known as politician 527s). Some of the most active 527 groups during the third quarter include:

• The American Federation of State, County and Municipal Employees maintained two 527 groups (AFSCME Special Account and AFSCME People), making it the largest 527 group in the second quarter with $6.1 million in receipts and $5.6 million in expenditures. The union group, which includes 1.3 million public service and health care workers, collected all its contributions directly from the union. Other unions with large fundraising hauls during the third quarter include the AFL-CIO ($2.4 million) and Communication Workers of America ($1.3 millions)

• The Sierra Club Voter Education Fund received a $1.7 million transfer from the organization’s parent account to use for voter mobilization and issue ads. The group is the oldest national environmental organization and has 700,000 members in local chapters around the U.S. and Canada.

• Sen. Edwards’ 527, New American Optimists, took in $1.3 million from July to September – the most money raised by any politician 527 group during the quarter. Wealthy individuals, primarily plaintiffs’ lawyers from all over the country, account for the large donations to Edwards’ group. Entertainer Steven Bing was the largest contributor with a $300,000 donation. Three other donors gave $100,000 and include Ronald Motley, Wayne Reaud and the Law Offices of Shernoff, Bidart & Darras.

• The New Democrat Network (NDN), a "moderate," business-friendly party faction, raised $507,250 during the third quarter. Two donors – Intuit and the plaintiffs’-oriented Williams Bailey Law Firm – gave $50,000 to the organization. NDN, which represents 74 House members and 20 Senators, offers training sessions, helps with campaign fundraising and develops election and legislative strategies.

• EMILY’s List, which aides Democratic, pro-choice women candidates, raised $1.2 million and spent $1.5 million during the third quarter. The group uses issue ads and a hard money bundling operation to help its preferred candidates.

• IMPAC 2000 remained among leaders in contributions received as the Democratic redistricting group continued to fund a legal operation in states where congressional boundaries are being redrawn. The group raised $470,597 with the help of $225,000 from national Democratic committees.

• The Republican Leadership Council raised $456,500 and spent $337,463 in the last quarter. The organization supports socially moderate candidates through issue ads and direct mail. Two investors were the group’s top donors during this last quarter: S. Robert Levine, an executive with Armstrong Investments, gave $250,000 and Stephen Distler, a partner at EM Warburg Pincus, contributed $95,000.

• GOPAC, a group that trains Republican campaign staff, raised $451,237 and spent $426,943. The organization employs political operatives who teach seminars on fundraising, attracting Hispanic voters and communication techniques. The Republican Leadership Coalition, an organization seeking to bring Hispanic voters into the GOP fold by promoting health-care savings accounts, contributed $300,000 to GOPAC in the third quarter.

Click Here for a PDF Version of the Full Report - Includes Table

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