In American Politics, what is a 527 Group?

Since many nonprofit organizations labeled 501c3s by the US Tax Code have severe restrictions on engaging in any political activities, the Internal Revenue Service (IRS) offered a different designation for not for profit groups that wanted to specifically involve themselves in political actions. A 527 group is the IRS designation for a nonprofit group that mostly helps elucidate the issues surrounding an individual’s candidacy, or that may lobby for specific laws or reforms. 527s can also be political action committees (PACs), though these are subject to more stringent rules in terms of donations.

These organizations are often a way around some of the campaign financial reform that now limits the donations a politician can take to run for office. The 527 group that is not a PAC is independent of the candidate running for office. In recent history, some of these organizations have included Swift Boat Veterans for Truth and MoveOn.

Though the candidate running for office can have nothing to do with raising money for a 527 group, such an organization can be particularly effective in either influencing voter opinion. Yet since it is independent of the politician, he or she really doesn’t have any control over what the 527 group does. This can consequently lead to some fairly dirty political practices. In fact Swift Boat Veterans for Truth was considered so effective at disseminating possibly dubious information about Senator John Kerry’s take on the Vietnam War, that “swiftboating” has become a term used to describe dirty and negative ads that may not be entirely truthful and can destroy a politician’s candidacy.

There are some very fine lines as to what a 527 group can and cannot do. For instance both MoveOn and Swift Boat Veterans were fined by the Federal Election Committee (FEC) for actions committed during the 2004 Presidential Campaign. The FEC concluded both organizations had actually attacked the candidates rather than the issues, and thus influenced voting for specific candidates. In strictest terms, a 527 must focus on the issues, and not attack or defend a candidate. It is not supposed to support a candidate, and if it is found to have advocated for the election or the non-election of a candidate, it is in violation of 527 rules.

As mentioned, the line is very fine, especially in heated political contests between candidates. A 527 group that is devoted to specific issues is often supporting the candidacy of likeminded people. This type of organization may do as much as it can — within limits — to suggest that one candidate is better than another, or that one candidate is inferior to another. In fact, the practice of 527s springing up around certain candidacies has led the US Congress to consider changing the laws governing them. As yet, no law banning 527s or restructuring them has been passed.