527 organization

Bipartisan Campaign Reform Act

The Bipartisan Campaign Reform Act of 2002 (BCRA, McCain–Feingold Act, ) is United States federal law that amended the Federal Election Campaign Act of 1971, which regulates the financing of political campaigns. Its chief sponsors were Senators Russell Feingold (D-WI) and John McCain (R-AZ). The law became effective on 6 November 2002, and the new legal limits became effective on 1 January 2003.

As noted in McConnell v. Federal Election Commission, a United States Supreme Court ruling on the BCRA, the Act was designed to address two issues:

  • The increased role of soft money in campaign financing, by prohibiting national political party committees from raising or spending any funds not subject to federal limits, even for state and local races or issue discussion;
  • The proliferation of issue ads, by defining as "electioneering communications" broadcast ads that name a federal candidate within 30 days of a primary or caucus or 60 days of a general election, and prohibiting any such ad paid for by a corporation (including non-profit issue organizations such as Right to Life or the Environmental Defense Fund) or paid for by an unincorporated entity using any corporate or union funds.

Legal disputes

Provisions of the legislation were challenged as unconstitutional by a group of plaintiffs led by then-Senate Majority Whip Mitch McConnell, a long-time opponent of the bill. In December 2003, the Supreme Court upheld most of the legislation in McConnell v. FEC.

Subsequently, Republicans and "watchdog" organizations have filed complaints with the FEC concerning the raising and spending of soft money by so-called "527 organizations" — organizations claiming tax-exemption as "political organizations" under Section 527 of the Internal Revenue Code but refusing to register as "political committees" subject to campaign finance law contribution limits, source prohibitions and disclosure requirements. These organizations have been established on both sides of the political aisle, for example, Media Fund and the Swift Boat Veterans for Truth. 527s are financed in large part by wealthy individuals, labor unions, and businesses. In May 2004, the FEC voted to not write new rules clarifying the application of federal campaign finance laws to 527 organizations, thus leaving unsettled the legality of the organizations' activities in connection with federal elections. Although the FEC did promulgate a new rule in the fall of 2004 requiring some 527s participating in federal campaigns to use at least 50% "hard money" (contributions regulated by the Federal Election Campaign Act) to pay their expenses, the FEC left unanswered the fundamental question of when a 527 organization must register as a federal "political committee"-prompting Representatives Shays and Meehan to file a federal court lawsuit against the FEC for the Commission's failure to adopt a 527 rule. In September, 2007, a Federal District Court ruled in favor of the FEC, against Congressmen Shays and Meehan.

In December 2006, however, the FEC did enter settlements with three 527 groups the Commission found to have violated federal law by failing to register as "political committees" and abide by contribution limits, source prohibitions and disclosure requirements during the 2004 election cycle. Swift Boat Veterans for Truth was fined $299,500; the League of Conservation Voters was fined $180,000; MoveOn.org was fined $150,000. Then, in February 2007, the 527 organization Progress for America Voter Fund was likewise fined $750,000 for its failure to abide by federal campaign finance laws during the 2004 election cycle.

In June 2007 the U.S. Supreme Court held, in Federal Election Commission v. Wisconsin Right to Life, Inc., that BCRA's limitations on corporate and labor union funding of broadcast ads mentioning a candidate within 30 days of a primary or caucus or 60 days of a general election are unconstitutional as applied to ads susceptible of a reasonable interpretation other than as an appeal to vote for or against a specific candidate. Some election law experts believe the new exception will render BCRA's "electioneering communication" provisions meaningless, while others believe the new exception is quite narrow. The Federal Election Commission's interpretation and application of the new exception during the 2008 election cycle will determine the true scope and impact of the Court's decision.

In June, 2008, the section of the act known as the "millionaire's amendment" was overturned by the Supreme Court in Davis v. Federal Election Commission


The impact of BCRA first started being felt nationally with the 2004 elections. One immediately recognizable impact was that, as a result of the so-called "stand by your ad" provision, all campaign advertisements included a verbal statement to the effect of "I'm [insert candidate's name] and I approve this message."


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