Common Cause letter to non-profits in support of 527 reform legislation

To the Nonprofit Community:

Last year, when the Federal Elections Commission advanced proposals to regulate 527 political committees, Common Cause had significant concerns that some of the regulations being considered by the FEC could harm nonprofit advocacy.

For this reason, Common Cause carefully analyzed the problem, listened to nonprofit groups, and worked painstakingly on Capitol Hill to find a better approach to 527s and the potential problems they posed.

That better approach is synthesized in S. 271 and H.R.513, the 527 Reform Act of 2005. This legislation does not take a scattershot approach to regulation. Rather, it is carefully drafted to place some limits on the source and amounts of contributions to 527 groups, limits that are in line with federal election laws that have been on the books for decades. The legislation also takes great care to avoid regulating 501c groups. It was developed in careful consultation with many leaders of the non-profit advocacy community.

In short, this legislation would require political committees described in Section 527 of the Internal Revenue Code that are influencing federal elections to register as political committees with the Federal Election Commission, and, as a consequence, be subject to the disclosure requirements, contribution limits and source prohibitions of federal election law. It has no effect on 501c organizations.

This is not a draconian measure and conforms to longstanding campaign finance law. Since 1907 federal law has banned corporations from using their treasury funds to influence federal elections. The 527 legislation would ban 527 groups influencing federal elections from taking direct corporate funds. Likewise, laws passed in 1947 prohibit unions from using their membership funds to directly influence federal elections. The 527 legislation would prohibit 527 groups influencing federal elections from accepting contributions from union treasury funds. Individuals would be required to limit their giving to $5,000 per year to the federal account of a 527 that qualifies as a political committee, although individuals could also contribute an additional $25,000 per year to the nonfederal account of the same committee.

These are reasonable restrictions, and they will not shut down 527 activity, much of which has been fueled by relatively small contributions from individuals of average to above average means. The only class of citizens inconvenienced by this restriction is the elite, who alone can afford individual contributions greater than $25,000 annually.

The law decisively and clearly excludes all other nonprofits from these restrictions. And it will help, rather than hinder, the participation of small donors in the political process. These restrictions also will ensure that special interests do not in future election cycles hijack 527s and use them as indirect routes for buying access and influence at the federal level, with the encouragement of key federal policymakers, who may not coordinate with these groups in overt ways, but who make their desires known.

In 2004, confusion about the law restrained some special interests from investing heavily in 527 groups, but research and history both tell us that in the coming years, without legislative action, 527s could become the vehicle of choice for special interests now unable to give large, unlimited soft money donations to national political parties. As the Campaign Finance Institute pointed out recently, “[I]f the legal status of 527s and the relation of some of them to parties becomes institutionalized, or particular lobbying issues arise, at least some trade associations and corporations might be persuaded to overcome their current reluctance to provide soft money donations without direct political pressure from candidates.” The Institute goes on to point out that a drug industry-supported 527, Citizens for Better Medicare, spent an estimated $65 million in the 2000 election cycle.

For all these reasons, Common Cause strongly supports this legislation. We believe that if you carefully review this proposal, you’ll be able to support it also.

Chellie Pingree

President and CEO