April 10, 2007

"Soft Money in the 2006 Election and the Outlook for 2008: The Changing Nonprofits Landscape"

The Campaign Finance Institute has issued this important report. Conclusions listed in the accompanying press release:

    # Federally-oriented 527s raised $117 million and spent $143 million in the '06 election cycle, about as much as in the previous 2002 midterm elections, although well down from the level of 2004. Nine of the 14 largest 527s also had associated "hard money" PACs.

    # Nearly half of total 527 contributions came from $100,000+ donors; this was three times as much as large donors provided in '02. Nearly all these donors also gave "hard money" as part of their political strategy.

    # With the addition of an expensive, competitive, presidential campaign in '08, there is a strong possibility that 527 activities will increase substantially over the '06 level -- though it seems unlikely to approach the '04 high of $424 million.

    # Recent Federal Election Commission (FEC) regulatory moves have forced some prominent 527s out of business, but left considerable space for other kinds of 527, 501(c) advocacy groups and newer "taxable" nonprofits to expand their operations in the hot races of '08.

    # There was significant energy among the 501(c) advocacy groups and newer 'taxable" entities in '06. (These organizations' finances are largely undisclosed to the public.) Organizations assuming a new prominence included American Taxpayers Alliance, Common Sense Ohio, Focus on the Family Action, FreedomWorks, Catalist and Democracy Alliance. As regulatory pressure has increased on certain 527s, some leading organizations (notably the Club for Growth and the League of Conservation Voters) and donors have turned from 527s to these alternative groups. This trend should be considered if and when further restrictions on 527s are considered.

    # Another important development has been the rise of certain 501(c)s that undertake issue campaigns with strong electoral overtones. Among these groups were: Americans United for Change, Communities United to Strengthen America and Progress for America, all of which were closely associated with organizations directly involved in campaigns. These groups' efforts paralleled explicit campaign themes and were targeted to key "battleground" voters.

    # We predict, based on what we have seen in 2006 and afterwards, that an increasingly diverse roster of nonprofit soft money vehicles is likely to ratchet up activities in the elections of 2008.

    # Finally the report concludes that there needs to be a conversation among people with different perspectives on campaign finance issues concerning the meaning and policy implications of these developments. Any policy towards these nonprofit entities should be rooted in an understanding that 527s, 501 (c)s and "taxable" nonprofits, as well as traditional Political Action Committees, are not isolated ventures. They comprise a kind of political menu from which interest groups and individuals select their preferred election vehicles.

Posted by Rick Hasen at April 10, 2007 09:01 AM