Revamped 527 Site Gets Positive Reviews

Posted July 15, 2003 at 6:51pm

So-called “Section 527” political organizations spent more than $430 million during the past three years to influence elections and policy debates across the country, according to an analysis released this week by the Center for Public Integrity, but following the flow of all that money remains no easy task.

The Internal Revenue Service, which is responsible for tracking the financial activity of such groups, recently unveiled a new and — they hope— improved online searchable database. But the system is receiving generally positive reviews from campaign finance experts who say that although the site is better than before, it still has shortcomings.

“This site now includes advanced search features by contributor name and by range of contributions, and the database may be downloaded by the public into other database programs,” said Frank Clemente, director of Public Citizen’s Congress Watch. “Still, improvements could be made.”

Until the summer of 2000, Section 527 committees occupied a sort of no man’s land in the campaign finance arena. While claiming tax-exempt status under Section 527 of the Internal Revenue Code, these political organizations were not bound by any of the prohibitions contained in federal campaign finance law, but could still run issue ads, fund voter drives and conduct polling.

This made such groups attractive alternative fundraising vehicles for Members of Congress and their financial backers, allowing labor unions, corporations and wealthy individuals to write big checks to their favorite politicians in nearly complete obscurity.

In 2000, Congress passed legislation requiring such groups to disclose their donor information and expenditures to the IRS, but the IRS’ initial Web-based disclosure system was fraught with problems — not all of them the fault of the IRS.

“Congress had neglected to ask for certain critical information including the dates of contributions and expenditures, the purposes of spending, and updates on changes in organizational structure,” the Campaign Finance Institute’s Steve Weissman stated in a release this week on the topic.

Moreover, Weissman noted that the IRS Web site required users to know the exact names of the organizations they were seeking information on, and there was no requirement that 527 groups file their information electronically, which would have made such information more readily available and searchable.

Last fall, Congress passed another bill prescribing several fixes to the system, including a better search engine, mandated electronic filing for those groups raising or spending at least $50,000 and key information about dates of contributions, expenditures and any organizational changes.

“Thus far, the IRS has not only met the above requirements: it has exceeded them,” Weissman stated in his analysis of the site, which debuted in its new form July 1. “Notably, the Web site is searchable by even more categories than Congress specified and the IRS has made the organizations’ annual information returns (Form 990) available on the web site as well.”

Now, anyone who wants can search for contributions and expenditures of 527 groups by the group’s name, donors’ names, recipients names, as well as by state, ZIP code, employer, occupation and several other criteria.

But others were more mixed in their assessments of the IRS’s revamped site.

“I think it is an improvement,” said Tony Raymond, vice president of TRKC Inc. and co-founder of FECInfo, a nonpartisan Web site that takes raw Federal Election Commission data and puts it into an easy to use Web-based format to track fundraising activity. “It’s a little more complicated, but once you know your way around, things sort of make sense.”

Nonetheless, Raymond notes that the site “hasn’t been up long enough” for users to see if it “suffers from the same problems the other site did” — problems that included filings appearing on the site, and then going missing for days at a time before reappearing.

Raymond’s business partner, Kent Cooper, complained that while public access to information will be improved by newly-filed electronic reports, it does nothing about the thousands of reports previously filed in a less user-friendly format.

“They’re sort of forgetting the past and saying, ‘We’ll do it better from now on with electronic filings,’” Cooper said.

But there may not be as much information filed with the IRS down the road, particularly as it relates to Members of Congress.

Many federal lawmakers have abandoned or dissolved their 527 groups because of new restrictions on soft-money fundraising contained in the Bipartisan Campaign Reform Act.

Craig Holman, legislative representative at Public Citizen’s Congress Watch, agreed that scanned-in paper reports from years past have been problematic.

“This means that the public will not be able to search the database between 2000 and the end of 2002 by contributor or other important search criteria,” said Holman. “That seriously hampers efforts to spot trends and see just what a group is doing.”

But Holman said that “despite the drawbacks” his group is “pleasantly surprised by what the IRS has done.”

“Although most existing 527 data is not searchable or downloadable, the IRS has moved into the 21st century when it comes to electronic filing and disclosure of new Section 527 reports,” Holman said. “Next, the agency should do the same for disclosure of the financial activity reports of electioneering 501(c) non-profit groups, which are likely to become the new ‘Stealth PACs’ in politics but which are not covered by the Section 527 disclosure law.”