Sunday, March 8, 2009

Nonprofit "soft money" campaign spending tripled in 2008 over 2004; overall campaign nonprofit spending decreased

A new study by the nonprofit Campaign Finance Institute finds that 501(c)(4), (5) and (6) organizations and 527 organizations spent more than $400 million in soft money contributions during the 2008 presidential election campaign. (More background on soft money).  Here is a brief excerpt from the report:

Fueled by unlimited “soft money” donations, Section 501(c) nonprofit groups and Section 527 political organizations spent more than $400 million in the 2008 federal elections. This figure is largely based on CFI’s analysis of Federal Election Commission (FEC) and Internal Revenue Service (IRS) reports. Since public disclosure of 501(c)s’ partisan activities is incomplete, we also analyzed group public statements, press reports, and past spending patterns, and interviewed a number of group representatives.

Our $400 million estimate represents a modest drop from 2004 when federal 527s alone disbursed $426 million and 501(c)s probably spent less than $60 million according to previous CFI research. In an unusual election where the Democratic presidential candidate raised astounding amounts of money, both major candidates discouraged soft money support, and the gathering recession discouraged some prospective wealthy individual donors, outside soft money still made a big impression -- particularly in close Senate and House races.

What has changed dramatically since 2004 has been the balance between the two main categories of outside group soft money. Influenced by regulatory changes as well as political circumstances, federal 527s spent $200 million, only half of what they did in 2004, but 501 (c) (4) social welfare groups, (c) (5) labor unions and (c) (6) business leagues disbursed at least three times as much as in 2004 or 2006. (501 (c) educational, religious and charitable groups are prohibited from engaging in partisan campaign intervention)

Nothing illustrates this development more clearly than the advent of Freedom’s Watch, the $30 million 501(c) (4) group that was the second largest pro-Republican soft money group. Its finances fell midway between those of the two top 527s supporting George W. Bush in the previous election, Progress for America Voters Fund and Swift Boats Vets and POWs for Truth. Some groups that had utilized 527s in recent elections -- such as Pharmaceutical Research and Manufacturers of America (PHARMA, the prescription drug industry association,) which financed America’s Agenda: Health Care for Kids, and the U.S. Chamber of Commerce -- now carried out similar programs through their 501(c)s. Others, including League of Conservation Voters, Planned Parenthood and Sierra Club, continued to utilize both major vehicles but rebalanced their efforts towards their 501(c)s.

This is a well-done, well footnoted report, complete with links to empirical data and supporting research.  It should be required reading for anyone interested in the influence of nonprofit spending in political campaigns. 

dkj

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