Posted on August 23, 2004

Federal Election Commission Passes Restrictions on 527 Committees

Backing away from tougher restrictions that it had considered earlier, the Federal Election Commission voted, four to two, to approve a compromise that will require some 527 committees, named for the section of the tax code that applies to them, to raise far more money in small contributions and rely less on larger unlimited donations known as soft money, the New York Times reports.

The new rules apply to organizations that operate both a 527 committee and a political action committee and change how they can spend money. Often, these groups pay for their activities with a mix of hard and soft money and the old rules allowed them to determine how much of each they spend, permitting them to use far more soft money, which can be raised in large contributions and is far easier to collect. The new rules will require far more hard money, which is raised in smaller amounts and is more difficult to raise. Some activities will require using 50 percent or more in hard money. The 527 committees usually spend their funds on activities such as voter mobilization, advertising, telephone and direct mail marketing, or on overhead.

The rules do not address the advocacy efforts of 501(c) charities. Responding to a draft of the commission's proposal released last week, Jan Witold Baran, a Republican election lawyer, told the Times, "The last go-around was a blunderbuss that would have struck everybody. For the vast majority of 501(c) groups, this will not be a problem. They tend to be in the business of lobbying and working on special issues."

The commission vote did draw criticism from people who seek to limit the role of money in politics. "The FEC had the opportunity today to meaningfully address the illegal use of soft money by the 527 groups in federal elections, and it refused to do so," Fred Wertheimer, president of Democracy 21, said.

Commission members who voted for the changes said the proposal was the only one with enough support to pass. The vice chairman of the FEC, Ellen L. Weintraub, a Democrat, told her colleagues in the debate, "I understand that it is not everything some folks would like to see us do, but it's doable. Something that is achievable is worth something."

The rulings did not produce active responses from the affected groups. "We've said repeatedly that should Congress or the FEC in the future change the rules and operating procedures for the 527s, we will, of course, abide by those changes," said Jim Jordan, a spokesman for America Coming Together, which operates one of the largest 527 committees.

Scott E. Thomas, a Democrat commissioner, said the rules would allow many 527 groups to change slightly how they do business and continue to operate with relative ease. "Maybe this is something that has to be handled by Congress," Thomas said. "If they don't like what is happening in the current election cycle, more power to them. Congress, it's your turn."