FEC Looks Into Regulating 527s

The Federal Election Commission last week issued an advisory opinion that said any ads which promote, support or attack a specific candidate must be paid for with hard money. The move could threaten the ability of political interest groups known as 527s to use soft money to campaign against President Bush.

The opinion is not a law, but the FEC is expected to issue a formal rule-making on the issue by mid-May.

The opinion is the first-step in determining how 527s—co-called because of their tax standing with the IRS—can raise and spend money under McCain-Feingold. Laws regulating soft money would limit contributions to such groups from individuals and political action committees to $5,000 per year.

Groups such as MoveOn.org, America Coming Together and the Media Fund are expected to play a prominent role in the election. Philanthropist George Soros has contributed several million dollars to both ACT and MoveOn. If the FEC rules in May that these groups must adhere to campaign finance limits, it would prevent a single person like Soros from contributing millions to one group.

Meanwhile, the Media Fund has been talking to shops such as Berlin Cameron/Red Cell in New York, Goodby, Silverstein & Partners in San Francisco and Wieden + Kennedy in Portland, Ore., about preparing issues ads aimed at defeating Bush in November, sources said. It is believed some agencies, including Goodby, met last week with Media Fund officials. A Wieden rep said the agency did not make presentations and has chosen “not to participate.”

Media Fund rep Jim Jordan said his group planned to announce its ad “team” this week. As for the FEC, Jordan said, “There is certainly a chance the rules we are operating under may change this spring, but that doesn’t affect our planning.”