Are We Better Off: A Soft Money Glossary

News: The new soft-money route threads through a tangled mess of non-profit groups named after cryptic portions of the tax code. Here's a quick primer.

May 3, 2004

The Billion-Dollar Loophole By Michael Scherer The McCain-Feingold reform law didn't take soft money out of political campaigns; it simply redirected it to a new center of power. The Soft Money 100: Funding the 527's Everyone knows about George Soros, but the billionaire financier isn't alone in pouring millions into soft money groups. This Is Reform? By Charles Lewis The campaign finance rules have been rewritten, but candidates and their favorite special interests are out there raising more money than ever before. Welcome to Rangerville By Jodi Enda George W. Bush has built a fundraising machine like nothing ever seen in American politics -- thanks largely to the residents of super-wealthy suburbs like Indian Hill, Ohio. Bundles of Influence By Tim Shorrock and Michael Scherer The Bush campaign's Pioneers and Rangers are raising millions to re-elect the president. What do they expect in return? The Mojo 100: Breaking the Mold An explosion of soft money, higher limits on hard money. Welcome to the new more expensive, less transparent election. The Hard Money 100: Living Small The amounts are more modest, and some names are new, but big-name political contributors remain in the game. The Fundraisers: Different Game, Same Names No longer able to write huge soft money checks, longtime Republican donors have made the switch to bundling. Are We Better Off? Learn more about this special series. The 2000 Mother Jones 400 The 1998 Mother Jones 400 The 1997 Mother Jones 400 The 1996 Mother Jones 400 TOOLS E-mail article Print article BACKTALK E-mail the editor

MoJo 100 | Hard Money 100 | Soft Money 100

527 Groups These nonprofits are set up exclusively to influence the political process and are required to disclose their donations to the Internal Revenue Service. Reformers and Republican Party lawyers have asked the Federal Election Commission to severely restrict the ability of these groups to influence federal elections. A ruling is expected as early as May.

501(c)4 Groups These nonprofits are deemed ideological lobbying organizations under the IRS code. Like 527's, they can spend a significant portion of their funds on political communications though there may be stricter tax penalties. 501(c )4's that do not receive contributions from unions or corporations can claim a special status—often called the MCFL exemption— that allows the group to run issue advertising in the weeks immediately before an election, a tactic now banned for many groups under the new law. These groups file annual tax returns that must be made public, but are not required to disclose their donors.

501(c)3 Groups These nonprofits are generally founded for religious, educational or charitable purposes. They are not supposed to directly engage in any political activities, though some semi-political functions, including voter registration activities, are allowed. These groups make their tax return public, but are not required to disclose their donors.

Unions and Trade Organizations Organized under sections 501(c)5 and 501(c)6 of the law, these groups can spend a portion of their funds on direct political action, including issue advertising and voter registration. They are not required to disclose their donors.

Political Action Committees These are committees, often set up by unions and corporations, that can pool smaller, regulated donations from individual members or employees. They are often tied to the types of non-profits listed above, providing the organizations outside vehicles to directly contribute to a candidate or party. All contributions to PACs must be publicly reported to the Federal Election Commission.

Candidates and Parties Political parties and individual candidates can directly receive money from PACs and individuals, money which must be reported to the FEC. Campaign finance reform raised the limits on these donations for any single individual. Every American can now give $2,000 to each candidate for each election (including primaries) and up to $95,000 to candidates and political parties in any two-year election cycle.

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