527s Thrived In 2003

Posted January 30, 2004 at 6:19pm

America Coming Together, one of the major fundraising entities formed last year by Democratic operatives to harvest soft-money contributions, raised almost $13 million in the last six months of 2003, according to reports filed with the Internal Revenue Service and the Federal Election Commission on Friday.

A second new Democratic fundraising organization, America Votes, took in $1.2 million.

“ACT opened its doors less than five months ago with an ambitious goal to re-engage and energize people to register to vote around critical issues, to beat George Bush and elect progressive candidates up and down the ticket in 17-targeted states,” said Ellen Malcolm, president of ACT and EMILY’s List.

The fundraising totals were made public even as the Federal Election Commission is scheduled to consider recommendations Thursday to severely curtail the activities of both groups.

These figures provide the first extended glimpse into attempts by both parties to raise hundreds of millions of soft dollars that had previously been allocated to party committees before the Bipartisan Campaign Reform Act forbade them from accepting such contributions.

Democratic groups have been much more active than their Republican counterparts in the pursuit of soft money, with no less than eight organizations devoted entirely or primarily to soliciting these contributions springing up in 2003 alone.

These groups are all governed by Section 527 of the IRS tax code. They are allowed to collect unlimited soft-money contributions but must document their financial activities with the IRS twice yearly.

The only major Republican 527 actively soliciting contributions is the Leadership Forum, which is led by former New York Rep. Bill Paxon and Susan Hirschmann, a former top aide to House Majority Leader Tom DeLay (Texas). The Leadership Forum had not filed its report with the IRS at press time.

ACT, which is the lead organization in the effort to mobilize Democratic voters in 17 targeted states this November, has said it will raise between $75 million and $80 million. Malcolm said Friday that organizations are already in place in seven states.

An ACT official indicated that the group had secured an additional $40 million in “hard pledges” that did not show up on the year-end report.

The vast majority of the $3.4 million ACT spent in the period was in the form of transfers to its federal political action committee. ACT ended the period with $9.3 million on hand.

ACT will operate in conjunction with the Media Fund, a group founded by former Clinton administration official Harold Ickes, which has proposed to spend $80 million on television ads across the country. The Media Fund’s 527 report was not available at press time.

ACT and the Media Fund have also formed a joint fundraising committee known as Victory Campaign 2004 that allows them to raise money for both groups at a single event and then split the profits and costs.

Victory Campaign 2004 contributed $3 million to ACT from July to December.

America Votes, which is operating on a much smaller budget, is aimed at ensuring that the various groups are not overlapping their efforts. Cecile Richards, a former top aide to House Minority Leader Nancy Pelosi (D-Calif.), is heading up that effort.

America Votes “is a coordination operation,” said Jim Jordan, spokesman for ACT, Media Fund and America Votes. “Its budgetary requirements are much more modest than for ACT or the Media Fund.”

Much of ACT’s funding came from several extremely wealthy donors, led by billionaire financier George Soros, who gave $5 million to the group during the period.

Peter Lewis, chairman of the Progressive Corporation, chipped in another $3 million to the effort.

Several individuals donated to both ACT and America Votes in the last six months of 2003.

RealNetworks CEO Robert Glaser contributed $745,000 to ACT and an additional $250,000 to America Votes.

Rob McKay, the owner of an investment company in San Francisco, gave $250,000 to America Votes and $245,000 to ACT.

Interestingly, neither Haim Saban nor Steve Bing — the two leading Democratic soft-money donors in the 2002 election — gave to either group.

Aside from Glaser and McKay, only two other individuals contributed to America Votes from July to December.

Debra Efroymson, a development specialist for PATH Canada, gave $15,000; homemaker Nancy Kurtz of South Dartmouth, Mass., donated $6,036.

The remainder of America Votes’ contributions came from liberal interest groups that have formed the core of Democratic Party soft-dollar donations in past cycles.

The group collected $50,000 each from the League of Conservation Voters, AFL-CIO, Sierra Club, Association of Trial Lawyers of America, American Federation of Teachers, Service Employees International Union, EMILY’s List, MoveOn.org and the National Education Association in what amounts to membership dues.

It also received $50,000 from Moving America Forward, the 527 of New Mexico Gov. Bill Richardson (D), and $50,000 from ACT.

All of this fundraising activity may be for naught, however, if the draft advisory released late last week by the FEC’s general counsel office is agreed to at the commission’s regular meeting Thursday.

The judgment will come in response to a request from Americans for a Better Country, a Republican 527 group, to look into what these organizations can and cannot do to influence the 2004 elections.

The “blue sheet” (as the advisory opinion is referred to within the FEC) from the general counsel’s office recommends treating these 527 groups in much the same way other political committees are governed. If the commission agrees, it would severely curtail 527s’ ability to raise and spend money on the elections.

Jordan called the advisory opinion a “truly radical reinterpretation” of election law, and expressed confidence that the commissioners would drastically alter it on Thursday.

“There is a long history at the FEC of staff drafts being shot down by the commissioners,” he said.