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FEC Regulation of 527 Groups

The Federal Election Commission is in the process of developing regulations for 527 groups and other non-profits. There is a real concern that these groups, which are currently not covered by the strictest campaign finance regulations, could be used to circumvent such landmark campaign finance reforms as the Bipartisan Campaign Reform Act of 2002.

New Developments: (5/7/04) Public Citizen applauds new FEC regulation to restrict "soft money" spending by Section 527 groups.

(4/7/04) Public Citizen submits new comments to the FEC on the regulation of 527s and other non-profits.

On February 18th the Federal Election Commission decided in a 4-2 opinion (the "ABC opinion") that 527 groups, non-profit political organizations created to bypass the Bipartisan Campaign Reform Act and funnel soft money into electioneering communications, will be subject to campaign regulations. The battle over 527s will recommence before the FEC in March 2004.

• Public Citizen's full analysis of the ABC opinion. (2/20/04)
• Comments submitted to the FEC by Public Citizen prior to the ABC opinion. (2/4/04)
• Coverage of the ABC opinion by Public Citizen's www.WhiteHouseForSale.org project. (2/19/04)
• The full FEC ABC advisory opinion. (2/19/04)
• Public Citizen's recommendations to the IRS for improved disclosure from
  non-profit 501(c) political groups. (1/29/03)

Summary Analysis:
The FEC ruled that “political committees” registered with the agency must use “hard money” for communications and voter mobilization efforts that “promote, support, attack or oppose” federal candidates at any time. PACs may use “soft money” – funds from corporate or union treasuries or in excess of the contribution limits – to pay for non-federal activities, such as nonpartisan voter mobilization drives that do not support or oppose federal candidates or communications affecting state or local candidates.

Public Citizen has long argued that Section 527s constitute a loophole in the campaign finance law and should be regulated. While we applaud redefining 527s as “political committees” subject to contribution limits and disclosure requirements, the FEC should also end their use of soft money to pay for any federal political activity.

At the same time, Public Citizen remains very protective of legitimate advocacy work by 501(c) non-profit groups and we stand by the right of advocacy groups to praise or criticize candidates and officeholders without being subject to campaign finance laws. However, because it is reasonable to expect that that some shadow electioneering groups will register as 501(c) groups to avoid the new 527 regulations, Public Citizen endorses additional disclosure requirements for 501(c) groups' political activities.

• Public Citizen's full analysis of the opinion.

4/08/04

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