Cash Flow: Political Nonprofits Rake in Donations at a Record Pace, from Left to Right, Says Center for Public Integrity

2/9/2004

From: Ann Pincus, 202 481-1234; Nathan Kommers, 202-481-1221, both of the Center for Public Integrity; web: http://www.publicintegrity.org/527

WASHINGTON, Feb. 9 -- Political nonprofits reported raising just over $93 million in 2003, about $10 million more than they did in 2001, the last year without federal elections, the Center for Public Integrity has found.

The increased fundraising in 2003 came despite a 2002 federal campaign finance law that banned federal candidates and national parties from using such fundraising vehicles, the nonprofits, known as 527 organizations.

The Republican Governors Association topped the list in 2003, raising $12,537,847, slightly more than the left leaning America Coming Together, a group opposed to the re-election of President George W. Bush. The RGA spent $11.5 million during 2003 supporting gubernatorial candidates in Mississippi, Louisiana, Kentucky and California. Republicans won three of the four elections.

Backed by $5 million from financier George Soros and $3 million from insurance executive Peter B. Lewis, ACT raised $12,515,000 in its first six months. ACT got $3 million of its money through the Joint Victory Campaign 2004, a fundraising group set up to split proceeds between ACT and the Media Fund. Movie producer Stephen Bing gave nearly $2 million to the Joint Victory Campaign 2004, which reported raising nearly $8 million.

Soros' $7 million in contributions to 527 organizations - he gave nearly $1.5 million to the MoveOn.org Voter Fund last year and smaller amounts to other groups prior to 2003 - rank as the second-most by an individual since disclosure began in August 2000. Only Jane Fonda, who gave nearly $13 million to abortion rights groups during the 2000 and 2002 elections, has given more than Soros. (Full disclosure: The Center for Public Integrity has received funding from Soros' Open Society Institute.)

The Federal Election Commission has scheduled a Feb. 18 hearing to discuss whether to regulate certain 527 activity related to November's presidential election.

The committees, which currently are regulated by the Internal Revenue Service, were required to file reports with the IRS covering financial activity during 2003 by Jan. 31.

The $93 million total is slightly inflated in that at least one of the committees exists solely to transfer its proceeds among affiliated groups. Several Democratic-supporting organizations have transferred some of the money they raised to other 527 committees, bolstering the fundraising totals of the recipients but not actually increasing the total amount raised by all 527s. At least $6.9 million has been transferred in this manner during 2003, which puts the actual amount raised at about $86 million.

Still, even that amount is more than the $83 million raised by such groups during 2001, the most recent non-election year, even though many of the groups active then were forced to shut down by the Bipartisan Campaign Reform Act of 2002, better known as McCain-Feingold.

Under federal law, 527 committees cannot contribute directly to federal candidates but can spend money on advertising, direct mail and telephone banks, with some restrictions, to influence elections at all levels. Many were active in state-level races during 2003.

Several of the most successful fundraising 527s were aligned with Democratic or liberal causes, including labor unions, environmental and abortion-rights groups. Seventeen committees reported raising at least $1 million during 2003.

State political parties, no longer able to receive non-federal transfers from national political party committees under federal campaign finance law, received hundreds of thousands of dollars from 527 organizations in 2003. The 527 committee of government employee union AFSCME gave $100,000 to the Missouri Democratic Party in December and made several other lesser contributions to state parties in Iowa, California and Louisiana.

AFSCME also gave $50,000 on Nov. 17 to the National Action Network, the nonprofit civil rights organization headed by Democratic presidential candidate Al Sharpton.

Other groups used their resources to help build and maintain a network of get-out-the-vote personnel. The labor-backed Partnership for America's Families showed multiple payments of less than $1,000 to individuals employed as canvassers in Ohio, Missouri and Iowa late last year.

The Center for Public Integrity is a nonpartisan, nonprofit organization that conducts investigative research and reporting on public policy issues. For more information on 527s and other campaign finance issues, click on http://www.publicintegrity.org/527. The Web site includes a searchable database.