Campaign finance reform led to birth of "527" groups

Seattle Times staff and wire services

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Political fund-raising groups operating apart from political parties are taking in unprecedented amounts of money this year, which is a major boon for Democrats and John Kerry.

The groups, with names such as America Coming Together and MoveOn.org, sprang up last year partly as a response to campaign-finance reform.

The McCain-Feingold bill, which was passed by Congress in 2002, banned unlimited donations to political parties for grassroots organizing and get-out-the-vote efforts. The so-called "soft money" soon found a new home in the new groups, known as "527s" for the section of federal tax law that regulates them.

Donations to political parties are limited to $25,000 per individual. There is no limit on contributions to 527 groups — as long as those groups do not coordinate their activities with the parties.

Democrats, worried about Republicans' traditional money advantage, organized several large 527s and began collecting huge sums of money before the Democratic Party had even settled on a nominee to face President Bush.

Republicans tried to organize their own 527s but couldn't keep pace. One of the issues was business leaders' reluctance to make huge political donations in the wake of the Enron, Tyco and other corporate scandals.

Of the $240 million raised so far by 527s, more than $200 million has gone to Democrat-leaning 527s, according to PoliticalMoneyLine.com, a nonpartisan campaign-finance tracking service.

When GOP operatives were unable to build their own network of independent groups this spring, the Republican National Committee and the Bush-Cheney '04 Committee sought to have the activities of the pro-Democratic 527s declared illegal by the Federal Election Commission.

That effort failed in May when the FEC declared it would not try to regulate 527s during the current election cycle.

Since May 13, the GOP has reversed field, and the leaders of GOP 527s have tried to build enthusiasm among soft-money donors.
 
The Washington Post contributed to this report.