501c ORGANIZATIONS-A THREAT TO DEMOCRACY?-Andrew Stelzer

09/20/04

This election year, the emergence of so called “527� groups which spend millions of dollars on ads criticizing political candidates, has caused some to say that the McCain Feingold campaign finance reform law has been ineffective in getting big companies out of politics. But a new report by Public citizen, a DC based public interest organization, says that 501c3 non-profit organizations are perhaps a bigger threat to transparent and fair political campaigns, and are calling for an IRS investigation. WMNFs Andrew Stelzer has the story.

ACT "The problem with the non-disclosure of donors s these are the groups that would evade campaign finance laws......

Taylor Lincoln is the primary author of a new report called “stealth PACs�

ACT for instance, everyone agrees...NRA, ...these groups have one or a few donors, and if these groups were required to disclose their donors. Its hard to pretend you are Americans if you are a few rich donors."

The new report put out by public citizen lists 30 non-profit organizations, 18 which generally support republican candidates, and 12 which support democrats. These 30 groups have spent 91 million dollars on advertising since 2000. The report charges that these non-profit groups with 501(c) tax status are exploiting loose regulations and lax oversight to spend millions of dollars influencing elections while keeping secret the identities of their donors. Legally, 501c3s can engage in electioneering activities, but it must take up less than 50% of their activities, but Frank Clemente, director of public citizens congress watch, says that many of these groups are stretching or breaking the laws, and are front organizations for their funders.

ACT "501-c3s are like the 527s were 4 years ago...how they find themselves, how they participate in elections"

The 501c3 groups include the AFL-CIO, the united seniors association, and the US chamber of commerce. Americans for job security is the biggest one of the 30 groups; their organizations stated mission is to educate the public on economic issues with a pro-market, pro-paycheck message. Public citizens claims that groups like AJS take advantage of different policies on what is political activity—the IRS’s definition is very broad in its definition of political expenditures, while the federal elections commission uses the so-called “magic word� standard, which says that unless words like “vote� or “elect�—words that directly advocate for someone to take political action, are used, its not political advocacy. Again Taylor Lincoln

ACT 'There’s a great deal of confusion..you've got the magic word standard, and then the IRS standards. most of these groups appear to be using the FEC not the IRS. Groups like Americans for job security ran ads against gore, and they reported zero activity." ACT I talked to chair of AJS, he said no we are not doing political activity.

Records are hard to find, most 501c3s dont file their financial reports until a year after the November elections, and some of their information is not public. The IRS also doesn’t release information about what groups it is investigating. The biggest example of an unproved big-money political manipulator is the pharmaceutical research and manufacturers of America, or PHARMA. PhARMA's lobbies on behalf of the prescription drug industry. PHARMA funded

ACT "We know the connection between the groups, we know PHARMA donated money to the groups, and we know they ran ad campaigns."

ACT "Budget jumped from 1 to 12 million dollars...also common misspelling"

Clemente says that organizations like PHARMA are controlling what happens Washington DC.

ACT--Clemente "Its an example of how one industry can invest 40 million intro those groups.. it gets their people elected into office, those people played ale in getting drug bill passed, and now they are advertising in 17 races in this election."

The report also shows the shifting landscape of how the two major parties are using different tax-exempt organizations to put money into political advertising.

ACT 'Everyone knows its democratic 527s, but 501c3s and republican, look at 2000, compared from 2002, 2 to 1, now 3 to 1.

The tremendous number of ads taken out by 527 groups this election year has some calling the 2001 campaign finance law, which banned unlimited soft money contributions to campaigns a failure. WMNF asked Public citizens’ Craig Holman if big industries and corporations will be able to find other ways to influence political campaigns even if the IRS monitors 501c3s and enforces the law.

ACT "I think this is the last soft money loophole in the campaign finance laws...the McCain finance law has worked. the 501c3s and 527s have continued to be a nuisance. they’ve spent 156 this year...."

But even if the 501c3 are regulated in the amount of money they can use to fund TV and radio ads, Frank Clemente says the public should be prepared for what is already becoming a bigger industry—direct contact with the voter.

ACT-Clemente 'We think they are going to be a lot more active on telephone and direct mailing front, because of limits on TV and radio."

To view the reports, go to www.steathpacs.org

For WMNF news, I’m Andrew Stelzer

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