The Center for Public Integrity

So-called 527 committees entered the public realm last year as a tool of campaigns and consultants to win elections. But in Alaska, one such group has found a new function: lobbying to open up the Arctic National Wildlife Refuge for oil and gas development.

The Alaska to America Energy Initiative, a non-profit group exempt from taxes as a political organization under section 527 of the Internal Revenue Code, reimbursed travel expenses of more than $2,500 last year for Kris Knauss, Gov. Frank Murkowski's policy director. On the group's dime, Knauss attended the Republican Governors Association November 2004 annual meeting, held in New Orleans, and passed around a resolution for other governors to sign that supported Alaska's push to develop ANWR's oil and gas resources.

"He was pursuing some ANWR advocacy, which is clearly a priority of this governor and of this state," Becky Hultberg, Gov. Murkowski's press secretary, told the Center for Public Integrity. According to the governor's staff, the resolution did not pass.

Many of the group's contributors have lobbied the Alaskan legislature on behalf of energy companies that wish to develop the Refuge. Murkowski, too, has been a steady champion of harvesting ANWR's resources.

ANWR's fate remains a contentious issue in Washington, D.C. Unlike the House of Representatives, the Senate has not included development of ANWR in its energy bill. To avoid a Senate filibuster, Republican congressional leaders reportedly plan to include ANWR development authorization in a budget bill.

Regulated by the IRS, 527 groups operate outside the reach of both federal and state campaign finance laws. In turn, the political non-profits can accept unlimited contributions from almost any source.

The Center profiled the top consultants hired by state political party and caucus committees in 2003 and 2004.

Feather Larson Synhorst (formerly known as Feather Hodges Larson & Synhorst) 
Web site: www.fls-dci.com

People:  Tony Feather, partner—political director for the Bush-Cheney 2000 Campaign; Jeff Larson, partner—regional director for the Bush-Quayle 1992 Campaign; Tom Synhorst, partner—advisor to the Bush-Cheney 2000 Campaign and Dole 1988 Campaign

Places: FLS, a telemarketing and fundraising firm based in St. Paul, Minn., and Phoenix, Ariz., has worked for hundreds of Republican candidates and party committees in all 50 states, according to its Web site. In addition, the firm has helped win several governors' races for such clients as Florida's Jeb Bush and California's Arnold Schwarzenegger. The firm has also worked for state legislative committees in Ohio, Pennsylvania, and Minnesota among others.

Politics: In 2004, FLS was contracted by the president's reelection campaign as well as a number of Republican members of Congress such as Sen. Kit Bond (R-Mo.). Through one of its partners, Tom Synhorst, FLS is linked to the DCI Group, a Washington, D.C., lobbying group that runs Progress for America—one of the more successful 527 groups that supported the president in 2004 and now advocates for Social Security reform. FLS has conducted a number of issue campaigns as well, including surveying Minnesotans on a new baseball stadium and advocating for casino-style slot machines in south Florida.

AMS Response 
Web site: www.amsresponse.com

Campaign finance reform took a bite out of the bottom line for state parties in 2004 as overall fundraising dipped to slightly more than $735 million for the cycle, with an even split between Democrats and Republicans.

That is $65 million less than state parties pulled in during the 2000 presidential election and an $85 million decline from the 2002 mid-term elections, a Center for Public Integrity analysis of state and federal campaign finance reports shows.

The downturn is largely attributable to the Bipartisan Campaign Reform Act, also known as McCain-Feingold, which outlawed "soft money"—the unlimited, mostly unregulated campaign cash donated to national party committees by individuals, corporations and unions.

In elections before the reforms were enacted, large transfers from the "big six" Democratic and Republican national committees—most of it soft money—accounted for about 40 percent of all the money coming into state party coffers. Much of that money was funneled into broadcast advertisements. In 2004, with the law in place, the national parties transferred no soft money to their state counterparts.

Consequently, state parties on both sides of the aisle reported spending far less on television and radio advertising than before the law took effect in November 2002, according to the Center's six-year study. Also, state parties retooled their operations to focus more on direct voter contact.

Missouri became a hotbed of activity for 527s—the political groups that had an outsized impact on the 2004 election season by funding controversial advertisements and organizing voters outside of the traditional party system. The Missouri Democratic Party, which bills itself as the "oldest political party west of the Mississippi," took in $3 million from the Democratic Governors' Association in 2003 and 2004.

Missouri is one of 13 states that allow unlimited contributions from all sources. Joe Carroll, the campaign finance director at the Missouri Ethics Commission, was not fazed by the influx of money.

"This election, we had an open seat for governor, lieutenant governor, secretary of state, and state treasurer," Carroll said. He mentioned that two of Missouri's seats in Congress were also open. "Those were in the largest metropolitan areas in the state. Those are expensive media buys there."

To support expensive media buys on their side of the aisle, the Republican Governors Association shifted $1.8 million to the Missouri Republican Party for the 2004 cycle.

That money turned out to be well spent. In a fiercely contested race, Republican Matt Blunt was elected governor over Democrat Claire McCaskill, Missouri's state auditor.

To operate outside the limitations set up by campaign finance regulations, these state-oriented groups—the DGA and the RGA—severed affiliations with their respective national party committees and organized as 527s. As a result, these two groups can accept the kind of soft money contributions that are no longer permitted at the federal level. Those types of donations cannot be given to federal candidates or political parties.

The Center profiled the top organizations—companies or groups—giving to state political party and caucus committees in 2003 and 2004.

In determining major donors, the Center grouped individual contributors together with the organizations they reported as employers. Where no employer and occupation information was provided, or where an individual reported being self-employed, the Center identified donors through their affiliations with organizations. For example, a donor listed as "XYZ Company" could include contributions directly from the company and from individuals who list XYZ as an employer, along with those individuals' spouses.

Kerry for President 
Web site: www.johnkerry.com

By far, the biggest organizational donor to state parties in 2003-2004 was Democratic presidential candidate Sen. John Kerry's primary election campaign committee. The committee showered contributions on the crucial states of Florida, Pennsylvania, Michigan, New Hampshire and Iowa, outspending all other donors in all of these states except Michigan. Nonetheless, Kerry ended his unsuccessful presidential bid with more than $14 million still left in his primary election campaign account, a fact that drew a fair amount of criticism from his disappointed supporters. However, there is widespread speculation that Kerry will attempt another presidential run in 2008.

Democratic Governors' Association 
Web site: www.democraticgovernors.org

People: Bill Richardson, chair—governor of New Mexico; past chairs include Bill Clinton, Michael Dukakis and Howard Dean

The Center profiled select industries giving to state political party and caucus committees that are not directly related to the two major parties to better explain their support of certain policies and politicians at the state level in 2003 and 2004.

Attorneys and Law Firms

People: Jon Haber, chief executive officer, Association of Trial Lawyers of America—former chief of staff to Sen. Dianne Feinstein, former special counsel to the Overseas Private Investment Corporation; Wayne Hogan, partner; Terrell Hogan—2002 candidate for the U.S. House of Representatives (D-Fla.)

Places: Among trial lawyers, Hogan is the largest individual contributor to state parties and has mostly supported Democratic candidates, such as former Sen. John Edwards. Many prominent trial lawyers are Republicans, though their organization tends toward Democrats. Sometimes ATLA finds it tough to choose between the two parties: the U.S. Senate race in Pennsylvania featured two candidates favored by trial lawyers, Republican incumbent Arlen Specter and Democratic challenger Joseph Hoeffel.

Politics: ATLA, the world's largest trial advocacy bar with more than 56,000 attorneys, has fought to protect plaintiffs' access to the justice system, especially in regard to personal injury and medical malpractice. The trial lawyer group is a significant lobbying force in Washington, D.C.—spending at least $27 million since 1998—in battling Congress' efforts to restrict tort plaintiffs' access to the courts. Tort reform was a prominent issue around the country during the 2004 election season, with many Republicans on the campaign against "frivolous lawsuits."

Interest groups that spent millions through their 527 committees in Election 2004 are now turning their sights on a different target: Social Security.

In recent weeks, a half-dozen organizations have begun fundraising, television and print campaigns to promote or oppose President Bush's plans to revamp the Social Security system.

How these groups—some of which were among the most active 527s in the 2003-2004 election—intend to fund their campaigns is unclear. All told, 527s raised and spent $550 million during the two-year cycle, according to an updated Center for Public Integrity analysis of disclosure forms filed with the Internal Revenue Service.

One group—Progress for America, which raised $45 million in the 2004 election through its 527—has already begun raising money for the effort. Others told the Center they have no plans as yet to use their 527s or have begun campaigning on the issue through other channels, such as their 501(c)(4) non-profit affiliates. Such 501(c)(4) groups are "social welfare" organizations which can lobby, as long as the lobbying fulfills their tax-exempt function.

By definition, 527s, named after the section of the tax code for political organizations, cannot directly contribute or coordinate with federal candidates. Yet many groups were still able to promote their choice for the White House this past election through myriad ways, such as advertising, direct mail and voter mobilization efforts.

As outlined in his State of the Union address, President Bush considers reforming Social Security a priority for his ambitious second-term agenda. Bush's focus on private accounts has become a contentious point between both sides of the political spectrum.

Section 527 organizations supporting President Bush spent nearly $30 million on broadcast ads in the final three weeks of the election — from Oct. 13 through Election Day — triple the amount spent by similar groups supporting Sen. John Kerry.

This late surge in advertising was led by two anti-Kerry or pro-Bush groups — Swift Boat Vets and POWs for Truth and Progress for America Voter Fund — which together spent $23 million. Much of their money went to key battleground states including Ohio, which received at least $6.6 million in advertising expenditures and ultimately won Bush the election.

In addition to Ohio, these Republican-based 527s spent significant sums in Florida, Pennsylvania and Wisconsin.

Progress for America Voter Fund was the largest of these groups, spending $16.7 million during the last three weeks of the election — $6.5 million more on advertising than all the Democratic 527s put together.

These figures only represent funds spent directly on broadcast advertising, and do not include money used for other election-related activities. The totals are derived from filings with the Federal Election Commission. The FEC requires 527 groups to submit detailed accounting of television and radio ads during the final 60 days before a general election when those ads mention a federal candidate.