Outside Soft Money Groups Spend Near $400 Million

Outside interest groups are once again spending big and doing so with limited disclosure. How is this going to affect policy and legislation?


A new review by the Campaign Finance Institute has found that outside interest groups–many of them operating with minimal disclosure laws–have spent nearly $400 million in this election.

According to their research, federally oriented 527 groups–which gained considerable attention in the 2004 election–have spent less than in 2004 ($185 million compared to $328 million), but that decrease has been made up for by an increase in spending by 501 groups. The Campaign Finance Institute writes:

“Beyond 527s, the big story about outside groups in this election is the large scale of activity by 501(c) (4) advocacy groups and 501(c) (6) business leagues, a big step up from the last two elections. Under the law, 501(c) s can do everything 527cs can in elections as long as “partisan campaign activity,” defined by IRS rulings, does not become their “primary” function. And unlike 527s they can expressly advocate for the election or defeat of a candidate provided no corporate or union money is involved. In contrast to 527s, the 501(c) s are required to report only a limited portion of their political expenditures to the IRS and FEC. Most important, they generally do not have to reveal specific information about their contributions and those making them.

Based on limited 501(c) group official reporting, self-descriptions of activities completed or planned by the groups, and press coverage of their activities, it is reasonably clear that these organizations are on course to spend somewhere in the range of $200 million this cycle on activities that arguably fall under the IRS definition of campaign activity or are close enough (e.g. they are reported to the FEC as “electioneering communications”) to influence elections. This estimate is based on evidence, discussed below, that the main groups alone (those with at least $2 million programs) have already spent around $165 million, and the spending cycle is not yet complete. Thus 501(c) s have emerged as vehicles of unlimited soft money spending in elections that are now comparable in size to 527s.”

The funding for 501 groups is largely unknown due to limits of campaign finance records. However, for 527 spending, most of the money has come from labor unions and individual donors giving over $5,000. Like in 2004, 527 spending has been dominated by Democratic-oriented groups.

It remains to be seen how the spending will impact the policy and agenda of the next administration.

Author: mediamouse

Grand Rapids independent media // mediamouse.org