See How They Fund

By David S. Bernstein, Boston Phoenix. Posted July 27, 2004.

One year ago, conventional political wisdom held that the Democratic presidential nominee would be in trouble right now. After spending all his cash in a tough primary battle, the thinking went, the candidate would have to spend April through June scrambling to raise money for the general campaign. In the meantime, Bush's team would be free to use that three-month window to define the Democrats' front-runner through attack ads the latter couldn't afford to counter.

Things turned out differently: the attack ads flung at Senator John Kerry have not gone unanswered. In fact, in addition to Kerry's own ads, more than $15 million of political advertising has run in the past three months, most of it bashing Bush, most of it in key battleground states–without costing the Kerry campaign a dime. The ads have been created and paid for by organizations known as "527s," named for the tax-code section that defines them. These groups do not fall under Federal Election Commission (FEC) regulations, as long as they limit their activities; most significantly, they cannot support a candidate directly or coordinate their efforts with a candidate's campaign.

They can, however, accept contributions of unlimited size, from anybody. Depending on your perspective, this is either an unsavory back-door maneuver around campaign-finance reform, or an exciting new outlet for political discourse.

Either way, it's probably a big reason why John Kerry entered July in a dead heat in the polls despite the tens of millions of dollars spent on negative advertising against him–and one of the reasons why Bush's favorability ratings are at an all-time low.

The best-known of these 527s is probably the MoveOn.org Voter Fund, formed last September by the progressive California-based MoveOn.org; its most recent television ad, running in Ohio, blames George W. Bush for losing American jobs to outsourcing. The most ambitious group, however, is an interrelated trio planning to spend more than $100 million on this election: Americans Coming Together (ACT), the Media Fund, and Joint Victory Campaign 2004, all operating out of Washington, DC. Its TV and radio ads include "No Oil Company Left Behind" and "Bush and Halliburton."

Another Washington group, New Democrat Network, is taking in and spending about a million dollars a month. Among its projects is an effort to recruit Hispanic voters into the Democratic Party. For the young and hip, there's Music for America and PunkVoter. Several well-known political-action committees, or "PACs," have started separate 527s (such as EMILY's List Non-Federal Fund, and Sierra Club Voter Education Fund). And there are issue-specific 527s, including one focused on labor (Voices for Working Families), one devoted to decriminalizing marijuana (Marijuana Policy Project Political Fund), and several committed to environmental issues (League of Conservation Voters, Environment 2004, State Conservation Voters Fund). In all, more than a hundred 527s filed a quarterly report with the IRS by the July 15 deadline.

The people funding these 527s, with millions of their own dollars, are arguably the Democrats' 2004 MVPs. Yet with the exception of financier George Soros, who has contributed a total of $12,481,250 in the past 18 months and who has been called to task in no uncertain terms by the GOP, they remain surprisingly unknown to the public and uncovered by the media.

The Phoenix has compiled a list of 12 donors (see below) who chipped in more than $1 million each during the first 18 months of the current campaign cycle–the start of 2003 through the end of June–to Democratic-leaning 527s. Collectively, this dozen has donated just over $50 million.

They include a range of people, from the business elite (George Soros, Lewis Cullman) to the glitterati (Stephen Bing, Susie Tompkins Buell), from the well-born (Anne Getty Earhart, Alida Rockefeller Messinger, Linda Pritzker) to the self-made (Andrew Rappaport, Marcy Carsey, Agnes Varis). There's even a drug-reformer billionaire (Peter Lewis)–and an environmentalist (John A. Harris).

Thanks largely to their largesse, 527s are, and will continue to be, major players in the 2004 campaign.

"The 527s are independent. I'm not familiar with what their plans are," says Democratic heavy-hitter Alan D. Solomont, of Boston, a major fundraiser for the Kerry campaign. "What they're doing, I think is terrific."

Congress created 527s 30 years ago, in the wake of Watergate. But only in the mid '90s did nonprofits (both liberal and conservative) begin to take advantage of them, according to Public Citizen, a public-interest watchdog group, and it took Congress until 2002 to require 527s to fully disclose their donors.

Today's 527 fever, which is predominantly liberal, is driven partly by anger with the Bush administration, but it's also been pushed by what former Massachusetts lieutenant-governor candidate Chris Gabrieli calls a "privatization of political activity." He's referring to the McCain-Feingold campaign-finance law that greatly reduced the amount of money individuals can give to party PACs–and what those PACs can do with the cash. Although 527s had existed previously, most large-money donors preferred to give directly to the party until that law passed in 2002.

David S. Bernstein can be reached at dbernstein@phx.com. Research assistance was provided by Phoenix intern Jocelyn Brick-Turin.

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