Describe 527 and 501(c)4 organizations.

Question

What will be an ideal response?

Answer 1

Answers will vary. The Bipartisan Campaign Reform Act of 2002 banned unlimited donations to campaigns and political parties, called soft money. In subsequent years, interest groups that had previously given soft money to parties set up new groups called "527s" (after the provision of the tax code that covers them). The 527s engaged in such practices as voter registration, but they also began making large expenditures on issue ads-which were legal so long as the 527s did not coordinate their activities with candidates' campaigns.In the run-up to the 2008 presidential elections, clever campaign finance lawyers hit upon a new type of group, the 501(c)4 organization, also named after a section of the tax code. Groups such as the Sierra Club and Citizens Against Government Waste have set up special 501(c)4 organizations.Lawyers argued that a 501(c)4 group could spend some of its funds on direct campaign contributions as long as most of the group's spending was on issue advocacy. Further, a 501(c)4 group could conceal the identity of its contributors. Federal agencies and the courts have not yet determined the legality of these claims.