Future Unclear For 527 Ads As 60-Day Window Arrives

Friday marked the beginning of the 60-day pre-election period, when a different set of Federal Election Commission rules kicks in for advertisers. And pundits say that, in this election cycle, the tone of ads to come could shift dramatically—if they air at all.

The difference this year involves the rise of 527 advertisers—so nicknamed for the IRS’s designation as nonprofit groups organized primarily for a political purpose—such as the polarizing MoveOn.org and Swift Boat Veterans for Truth, which are both running campaigns credited for swinging voters. 527s, which were ideally supposed to stick to issues and avoid naming names, rose out of loopholes in the McCain-Feingold campaign finance-reform law, allowing them to be repositories for “soft” money (i.e., all donations that are not direct contributions to a candidate or party from wealthy individuals, labor unions and corporations). The non-partisan Center for Responsive Politics (CRP) in Washington, D.C., reports that 527 groups have spent $42 million so far on ads—nearly 20 percent of the money they have raised.

Ads from 527 groups on both sides have been disproportionately persuasive, political analysts said. “Of course they have been more effective,” said Larry Sabato, director of the Center for Politics at the University of Virginia. “Ads by candidates and parties must be restrained, because the sponsors can be held accountable at the polls. This is a classic backfire of reformer fervor. It’s made the system more negative and failed to stop soft money, which has gone from the partly accountable parties to the unaccountable Wild West.”

But due to the 60-day window, all ads must now be financed using “hard” money and be subject to party- and candidate-ad rules, including claiming responsibility for the message in the creative—or face further restrictions. This could shy certain 527s away from attack ads.

It remains to be seen whether 527s will use creative accounting methods—apparently legally, experts say, under convoluted FEC rules—to appear to be financing ads by individuals, not soft-money sources, and continue attack ads that depart from issues and mention candidates by name. If they use soft money, “they’ll have to account for the ads running on television and radio and report the source of the financing immediately, within 24 hours,” said Steve Weiss, CRP communications director. That means that 527s such as MoveOn, financed with $2.6 million from George Soros alone (per IRS figures supplied by CRP), could conceivably report future ad buys as financed by Soros directly. (The top individual contributing to Swift Boats, for example, is Bob Perry at $200,000; three ad buys totaled only $1.7 million, per CRP.)

Another option is to run pro-candidate ads. But Bill Hillsman, president of North Woods Advertising in Minneapolis, a veteran campaign creative, said, “Candidate advertising has not been effective at all so far.” He said bland campaign ads—with the exception of a Bush ad showing weapons successively disappearing from a battlefield—aren’t working. He argues the creative is bad—constrained by the legal obligations—and an attitude adjustment has arisen in the wake of the 527 phenomenon. “Both sides think they don’t have to go negative because they can let the 527s carry their water.”

“This is not what people intended, but neither should it be a surprise,” said Howard Kaloogian, a former California state assemblyman whose pro-troops Move America Forward org incorporated as a 501(c)(4) because it had no intention of running partisan ads. “Every attempt at campaign-finance reform has had unintended consequences. You’ll never prevent people from speaking out, nor should you. It’s like damming a river: You can change the direction, but you can’t stop it.”