Factsheet
on 527 Reform Act Senators McCain,
Feingold and Lott have introduced the 527 Reform Act to close
the 527 loophole. The 527 Reform Act is designed to clarify
and reaffirm that such 527 groups are required to comply with
federal campaign finance laws.
Background
The failure of the FEC to regulate
527 groups has resulted in huge contributions from wealthy individuals,
unions and corporations being funneled into 527s. If 527s wanted
to spend money to influence federal elections by promoting or
attacking federal candidates in television or radio ads, their
right to do so is protected under the First Amendment. But they
should have to play by the same rules as everyone else, becoming
federal political committees and abiding by the same contribution
limits that apply to other groups that seek to influence federal
elections.
What the 527 Reform Act Does:
The Act requires 527 groups to register
as political committees with the FEC and comply with federal
campaign finance laws if they raise and spend money in connections
with federal elections (exempting 527s with less than $25,000
in annual receipts and 527s that are exclusively involved
in trying to influence state elections). Such groups must
use federal hard money contributions to finance ads that promote
or attack federal candidates.
The Act also provides that when a 527 group
registered as a federal political committee makes expenditures
for voter mobilization activities or public communications
that affect both federal and non-federal elections, at least
50 percent of the costs of such activities would have to be
paid for with federal hard money contributions. In addition,
the non-federal share of such expenditures must come from
individual contributions in amounts no more than $25,000 per
year per individual donor (the same limit that applies to
individual contributions to national political parties).
What the 527 Reform Act Does Not
Do:
The 527 Bill Is Not a "Trojan
Horse" For Any Other Political Agenda:
The sponsors of this bill will resist
any efforts to use this bill as a vehicle to roll back campaign
finance reform. There were a number of amendments attached
to the bill in the Senate Rules Committee that the bill's
sponsors oppose, including amendments to raise the PAC contribution
limit, create a blanket exemption for spending on the Internet,
lift restrictions on PAC solicitation of employees, and exempt
527s that engage exclusively in voter drive activities. These
amendments and any others that would undermine the improvements
enacted in 2002 cannot become law.
The 527 Bill Is Not Aimed at Shuttling
Down Get Out The Vote (GOTV) Efforts:
The 527 bill does not prevent GOTV efforts.
It simply ensures that such efforts are paid for with hard
money when they affect federal elections. Efforts to exempt
GOTV efforts in this bill would undermine the very purpose
of the 527 Reform Act - to stop soft money from flowing into
federal elections.
The 527 Bill In No Way Affects
501(c) Groups:
The 527 Reform Act applies only to 527
groups. Nothing in the Act will have any effect whatsoever
on determining whether 501(c) groups are subject to federal
campaign finance laws. 527s are political organizations. It
is appropriate to treat them differently than 501(c) advocacy
organizations.
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