Nonprofits Wield Some Serious Campaign Cash

March 8, 2009, Congressional Quarterly — Fueled by anonymous, unlimited contributions, nonprofit organizations have emerged as the latest weapon of choice in political advertising, rivaling congressional campaign committees in the last election cycle.

Nonprofits from the conservative Freedom’s Watch to the liberal Planned Parenthood Action Fund spent a total of nearly $200 million in the 2008 campaign cycle, according to a study by the Campaign Finance Institute, an academic research group affiliated with George Washington University.

Spending by these nonprofits, known as 501(c)4s and 501(c)6s for the sections of the IRS code under which they organize, topped the $176 million spent by the Democratic Congressional Campaign Committee in the last election cycle. The total tripled the amount those types of groups spent in the 2004 presidential campaign cycle, according to the institute study.

The groups’ influence in federal elections is only expected to grow in the 2010 election cycle. The emergence of these new entities follows the decline of another breed of politically active groups: those organized under Section 527 of the IRS code, which were popular during the 2004 presidential campaign.

The Federal Election Commission cracked down with six-figure fines on a dozen prominent 527 groups for spending their money too much like political action committees that, unlike 527s, have to conform with contribution and spending limits. Among them were Swift Boat Vets, POWs for Truth and the League of Conservation Voters.

Repeating a long-established pattern in campaign finance overhauls, the decline of one group gives birth to another: The new groups quickly filled the void and even carved out an advantage that had eluded 527s and PACs: keeping their contributors confidential. Federal law only requires the new nonprofit groups to spend half of their revenue on a “major purpose,” such as advocacy of social welfare for 501(c)4 groups or business interests for 501(c)6 groups.