Sorting Through the 527s

The MoveOn.org Voter Fund and the Progress for America Voter Fund are quickly becoming household names. Frequently referred to as 527's by the politically savvy, issue advocacy groups such as these have, as of October 2004, produced over half a million political advertisements for the 2004 election. The 527's, organizations that have branched out from respective Political Action Committee's, hold great influence within the current presidential race. As a result of legislation added to the Internal Revenue Code (527 being the particular section added) in 1974, 527 groups, as long as they are registered with the IRS as political organizations, are exempt from both federal income tax and gift tax.

In creating section 527, Congress reasoned that campaigns, party committees, and PACs should not pay taxes on funds contributed to such political entities and used for political purposes.

Therefore, both PAC's and 527's enjoy tax breaks as long as they are registered. It is in their relationship, or lack thereof, with the Federal Election Commission that 527's enjoy financial freedoms far beyond the PAC's with which they are associated. 527's do not have to register with the Federal Election Committee, as PAC's must; so the donations that 527's receive are not limited in any way. While individual contributions to PAC's are restricted to $2,000, for example, such contributions to 527's are unlimited.
The MoveOn.org Voter Fund was formed in 1998 to protest the possible impeachment of President Clinton; it is a branch of the MoveOn PAC. One of the first Democratic 527 groups, MoveOn.org and other ideologically aligned groups, such as Real Voices, have enjoyed astonishing success over the past six years. Their progress did not go unnoticed by Republicans. The Progress for America Voter Fund, which formed just this year, took its cue from groups such as MoveOn. It formed in May, after Republicans failed to convince the Federal Election Committee that the many Democratic 527 groups in existence should face the same regulations as PACs and campaigns. So, unable to lick the Democrats, Republicans, in particular Progress for America, have decided to join 'em.
In recent months, 527's have been noticeably more active, as they are preparing for November's election with more TV ads each week. Though presidential candidates are not permitted to endorse 527s, groups like the MoveOn.org Voter Fund and the Progress for America Voter Fund are highly influential. 527's have spent millions of dollars in order to get their respective messages across, and their visibility will no doubt continue to increase as 2004 election draws near.