Posted on December 29, 2004

2004: Year in Review - 527s and the 2004 Election

One of the most divisive presidential elections in recent memory was driven, in part, by a new development on the campaign finance scene: the rise of so-called 527 committees. Named for the section of the Internal Revenue Code that defines them, 527 committees were seized on early in the year by Democratic advocacy groups seeking to overcome the Republican Party's longstanding advantage in presidential campaign financing.

The Federal Election Committee began to look at groups such as Moveon.org and the Media Fund, both of which had made it clear that they intended to spend millions on political advertising to defeat the re-election bid of George W. Bush, as early as April. At the same time, the commission also indicated that it was considering whether to regulate thousands of 501(c) groups — charities, labor unions, and trade associations — prompting nonprofit advocates to complain that such an approach would stifle nonprofits' rights to free speech and compromise their fundraising efforts.

In May, however, those organizations were reassured when the FEC voted to delay any new regulations on 527s or 501(c)s for at least ninety days. And, in August, the commission passed a compromise measure that only marginally restricted the activities of 527s — restrictions that wouldn't take effect until after the November election — and did not extend to 501(c)s at all.

"Maybe this is something that has to be handled by Congress," said Scott E. Thomas, a Democratic member of the commission after the August decision. "If they don't like what is happening in the current election cycle, more power to them. Congress, it's your turn."

Federal Election Commission Likely to Delay Ruling on Nonprofit Advocacy (4/20/04)

Federal Election Commission Delays Nonprofit Advocacy Regulations (5/17/04)

Federal Election Commission Passes Restrictions on 527 Committees (8/23/04)