According to a Campaign Finance Institute (CFI) press release, "federally oriented 527 and 501(c) groups have already collected or spent around $350 million and are on course to top $400 million." The CFI report goes on;

Based on limited 501(c) group official reporting, self-descriptions of activities completed or planned by the groups, and press coverage of their activities, it is reasonably clear that these organizations are on course to spend somewhere in the range of $200 million this cycle on activities that arguably fall under the IRS definition of campaign activity or are close enough (e.g. they are reported to the FEC as "electioneering communications") to influence elections. This estimate is based on evidence, discussed below, that the main groups alone (those with at least $2 million programs) have already spent around $165 million, and the spending cycle is not yet complete. Thus 501(c) s have emerged as vehicles of unlimited soft money spending in elections that are now comparable in size to 527s.

Many 501(c) s emphasize that their activities referring to candidates during elections are not intended to influence voting but are only a continuation of their "grass roots lobbying" to rouse constituencies around specific legislative issues. (This argument is sometimes weakened when a group's communications refer to a candidate's past votes rather than pending legislation).

However, if grassroots lobbying disclosure were enacted, we would be able to know who was behind such groups that "have been heavily engaged in important and pending legislative initiatives."

At an American Bar Association teleconference, Judy Kindell, senior technical adviser to the Internal Revenue Service (IRS) director of exempt organizations, commented on some important issues for charities. BNA Money and Politics ($$) reported on Kindell's comments. 501(c)(3) organizations are "prohibited from engaging in campaign activity, defined as any activity that favors or opposes candidates for public office. This can include endorsement of candidates, contributions to candidates or to political action committees, public statements for or against particular candidates, and distributing materials prepared by the organization or other organizations that favor or oppose candidates." 501(c)(4), (c)(5), and (c)(6) organizations can get involved in campaign activity as long as it is not their primary activity.

Kindell also commented on the Political Activity Compliance Initiative (PACI) that began in 2004. "IRS has only revoked the tax exemption of five organizations—one of them was not even for political activity—and has made its main goal to educate tax-exempts on the issues. Where necessary, IRS also issues letters telling them there is no change in their tax status but advising them not to engage in prohibited activities again." For more on the PACI program, see our IRS enforcement resource center.

Another important topic touched upon was lobbying and the notion that 501(c)(3) groups are not allowed to lobby, which is not true. "Eric Gorovitz, counsel with Adler & Colvin in San Francisco, focused on the lobbying rules, saying he hoped to dispel a widely held myth that lobbying is somehow inappropriate for charities. [. . .] 'Charities that work on issues where there is a community that is underserved, or where stories have been left out of policy debates, are expressly empowered to participate in those debates,' he said."

A federal judge in North Carolina has refused to grant an injunction blocking Federal Election Commission (FEC) rules for the Committee for Truth in Politics (CTP) in the case Koerber v. FEC. Earlier, the judge said he would not rule until after the election. The case challenges the constitutionality of disclosure requirements for electioneering communications and also challenges the FEC's policy regarding when a group becomes a "political committee."M

CTP sponsored television ads criticizing presidential candidate Senator Barack Obama (D-IL) for his position on abortion related legislation. The Judge found that the FEC's position is in line with the Supreme Court's decision in the Wisconsin Right to Life case.

A federal judge has blocked enforcement of a Florida "electioneering" law which according to the Associated Press, "requires groups to register with the state if they merely mention political issues or candidates in publications or other communications." We reported on the lawsuit filed earlier this month by the Broward Coalition of Condominiums, and a coalition of other groups. U.S. District Judge Stephan P. Mickle, in granting the preliminary injunction, wrote that "no court has ever upheld such a sweeping regulation of political speech."

The Institute for Justice, filed the lawsuit on the coalition's behalf and argued that Florida's law was the broadest regulation of political speech in the nation.

The Federal Election Commission (FEC) could not reach an agreement on either draft regarding two proposed radio ads sponsored by the National Right to Life Committee Inc. (NRLC) and whether or not they contained "express advocacy". The alternative ruling drafted by FEC Chairman Donald McGahn, which stated that both NRLC ads could air without funding restrictions failed on a 3-3 party-line vote. According to BNA Money and Politics ($$), this indecision "raised new uncertainties about the rules for independent groups sponsoring political ads." As a result, the Office of the General Counsel was asked to prepare and circulate an additional draft.

Attorney James Bopp requested the advisory opinion on behalf of the NRLC. "Bopp said in an e-mail to BNA that the commission meeting demonstrated 'that the FEC's regulations on express advocacy and exceptions to the electioneering communication ban are hopelessly vague and confusing,' The regulations 'give no clear guidance to citizens who must comply with them and it is obvious that even the FEC itself has no idea what the regulations mean and require,' he added."

Meanwhile, the FEC approved 5-1 on the advisory opinion from VoterVoter.com. VoterVoter allows individuals to pay directly for ads backing a candidate while avoiding FEC limits on campaign contributions.

The Federal Election Commission (FEC) issued a draft advisory opinion (AO 2008-15) with a ruling on radio ads sponsored by the National Right to Life Committee (NRLC). NRLC sought out how the FEC would view the ads under the FEC's "electioneering communications" rules. The FEC draft deals with two, nearly identical ads.

Both NRLC ads end by calling on Obama to apologize; "Will Obama now apologize for calling us liars when we were the ones telling the truth?" The second commercial then adds a last line saying, "Barack Obama: a candidate whose word you can't believe in."

The draft concludes that the first proposed ad does not contain express advocacy while, the second ad does. Therefore, with the second ad, the NRLC may not use general treasury funds to finance it. The draft said both ads contain "some indicia of express advocacy by raising questions about Senator Obama's character." The first ad however, "could reasonably be interpreted as an appeal for Obama to apologize to the NRLC rather than an appeal to vote against Senator Obama."

The last line of the second ad crossed the line into express advocacy. The draft states that because the second ad references Obama as a candidate, it "significantly alters the tone of the advertisement, focusing it as much on Senator Obama's bid for the presidency as his actions as a State legislator. Additionally, the advertisement manipulates Senator Obama's campaign slogan — 'Change we can believe in' - to attack his character and call into question his trustworthiness as 'a candidate whose word you can't believe in.'"

The advisory opinion will be considered at the FEC's next meeting on Oct. 23, along with the advisory opinion for VoterVoter.com. The votes of at least four commissioners are needed to approve a final ruling.

Update: A second draft was released which states that neither of the ads constitute impermissible electioneering.

According to BNA Money and Politics, ($$) a federal judge in North Carolina has indicated that there will not be a ruling in Koerber v. FEC until after the Nov. 4 election. The case challenges the constitutionality of disclosure requirements for electioneering communications and also challenges the Federal Election Commission's (FEC) policy regarding when a group becomes a "political committee." The FEC rules require disclosure of those paying for electioneering communications (ads referring to a federal candidate that air right before an election) and restrict funding with messages that clearly advocate for or against a candidate.

The group, the Committee for Truth in Politics Inc. (CTP) bases its challenge on the Wisconsin Right to Life Supreme Court decision (WRTL II). However, as noted in an amicus brief filed by the Campaign Legal Center and Democracy 21, "CTP's challenge to disclosure has no merit. The WRTL II Court said nothing about the disclosure of electioneering communications; the Court examined only the funding restriction for such ads."

A similar case was just decided by a federal district judge in West Virginia involving state electioneering communication rules similar to the FEC rules. The judge consolidated a case on behalf of West Virginians for Life (WVFL), with a similar case initiated by the Center for Individual Freedom (CFIF). Judge Johnston blocked enforcement of the state's laws regulating the financing of political ads, ruling as unconstitutionally vague the state law defining express advocacy, messages that a "reasonable person" would view as supporting or opposing a candidate. The judge ruled against the group in its request to block enforcement of a state law defining "political action committees."

The Institute for Justice (IFJ) has filed a lawsuit challenging a Florida state law that they charge violates free speech rights by forcing groups that mention political issues or candidates to register with the state. The suit was filed on behalf of the Broward Coalition of Condominium, Homeowners and Community Organizations, the National Taxpayers Union and the University of Florida's College Libertarians. They are challenging the state's 2004 electioneering law that requires groups to register and submit financial reports if they spend or collect more than 500 dollars for "electioneering," which according to the Associated Press, the state law "includes referring to an issue or candidate in a newsletter or other communication without taking a position." IFJ is also asking the court to prevent enforcement of the law before the November election.

The suit acknowledges the law makes exceptions for election-related statements in newsletters distributed only to members of groups in existence before candidates qualify or issues are put on the ballot.

[Robert Gall, an attorney for IFJ] "said that might seem to exempt his clients because electioneering isn't their only activity, but he cited an advisory opinion issued in June by the Department of State. It says the Institute for Justice, based in Arlington, Va., must register as an electioneering organization or create a separate organization that would have to do so in order to distribute material in Florida about a proposed state constitutional amendment.

The IFJ press release warns; "As Election Day nears, anyone planning to merely mention, let alone express an opinion about, an issue or candidate on the ballot in Florida must remember to get permission from the state government first."

Democracy 21 filed a complaint with the Federal Election Commission (FEC) calling for an investigation into two groups, American Issues Project (AIP) and American Leadership Project (ALP), charging that the groups have violated campaign finance laws. A Democracy 21 press release states; "The complaint also urges the FEC, if it finds that violations have occurred, to determine whether the organizers, managers and leaders of AIP and ALP, including major donors who played such a role, also violated the laws." The complaint suggested that the groups should be considered regulated "political committees," and subject to contribution restrictions, including a $5,000 annual limit on money received from each contributor.

AIP is a 501(c)(4) nonprofit, classified as a "qualified nonprofit corporation," (QNC) and ALP is a 527 organization. Democracy 21 also wrote to the Internal Revenue Service and called for an investigation to determine whether AIP violated IRS rules. As a 501(c)(4), campaign activity can not be the group's primary purpose.

"The FEC complaint we filed today is intended to help ensure that the FEC continues to take enforcement action against any illegal activities by outside spending groups that may occur in the 2008 election," Wertheimer stated.

In April, we reported about a new website called VoterVoter.com. According to BNA Money and Politics ($$), the Federal Election Commission (FEC) is likely to support the VoterVoter.com proposal that would allow individuals to pay directly for television ads supporting a candidate while avoiding FEC limits on campaign contributions. During an open meeting FEC commissioners indicated some approval for the advisory opinion (AO 2008-10) for the VoterVoter.com request, but a final vote was put off.

The new model would allow individuals to fund messages on their own without a contribution limit. [. . .] An individual could use VoterVoter.com to pay for placing a favorite video on television as a paid advertisement. VoterVoter.com would make arrangements with television stations to place an ad, in line with the wishes of the person paying for the air time. If this activity is not coordinated with a candidate, it may be considered an "independent expenditure" not subject to any spending limit. The ads funded also would not have to avoid any so-called magic words but could expressly advocate the election or defeat of a candidate.

Brad Smith, a former FEC commissioner, submitted comments on the draft advisory opinions, concerned that a person wishing to create or pay for a campaign ad may be subject to regulation as part of a "political committee."

"For example, Smith objected to the draft's suggestion that coordination between a creator and funder of an ad could bring the FEC political committee rules into play."

The Alliance for Justice has released a new fact sheet for 501(c)(3) organizations on how to interact with political campaigns and parties. To read Permissible Nonpartisan 501(c)(3) and Partisan Campaign Contact on Voter Engagement/Protection Efforts, click here. The fact sheet is focused on voter protection issues, and when 501(c)(3) voter-protection groups can talk with political candidates or parties.

A new 501(c)(4) group called the Committee for Truth in Politics Inc. (CTP) announced it has filed a lawsuit challenging Federal Election Commission (FEC) rules. CTP has been sponsoring television ads in Wisconsin, Pennsylvania, and North Carolina criticizing Senator Barack Obama (D-IL) for his position on abortion related legislation. This lawsuit is similar to others filed recently by the group's lead attorney James Bopp challenging FEC rules that could restrict funding or require disclosure of those funding similar ads.

They filed the lawsuit to seek protection against any future FEC investigation and enforcement action. CTP is requesting an injunction to allow them to run an ad titled "Basic Rights," which criticizes Obama's position on partial-birth abortion legislation. According to BNA Money and Politics ($$), the lawsuit also has a script for another ad, called "Tragic But True." Both ads ask viewers to call Obama and tell him to change his position on the issue. The lawsuit also challenges the FEC's policy of determining whether or not a group should be treated as a political action committee.

The new lawsuit said the CTP ads may not be regulated because the Supreme Court held in the WRTL case that broadcast ads are constitutionally protected if they may reasonably be interpreted as something other than as "an appeal to vote for or against a specific candidate." The CTP ads contain no such appeal to vote; instead, they are grass roots lobbying ads on a public issue addressed to an incumbent public official, the lawsuit argued. Bopp also argued that, under WRTL's constitutional analysis, compelled disclosure of those funding this type of political message is unconstitutional.

According to a report released Sept. 30 by the Government Accountability Office (GAO), "lobbyists could provide accurate supporting information—in either written or verbal form—on income or expenses for at least 95 percent of all first quarter reports filed that required this information." This was based on a random sampling of 100 clients chosen from the first-quarter reports. The report, Observations on Lobbyists' Compliance with New Disclosure Requirements," was required by the Honest Leadership and Open Government Act.

Particularly interesting was the finding that since 2004 the U.S. Attorney's Office "has received more than 4,000 referrals from the Secretary of the Senate and Clerk of the House. Because of a lack of consistent records in past years, the Office was unable to provide complete and accurate data for each reporting period prior to 2006 to indicate the number of letters it sent to lobbyists asking them to comply with the Act, and the number of lobbyists who complied after the referral was received." And, five staff people in the D.C. U.S. Attorney's Office spend part of their time working on LDA compliance matters.

RollCall ($$) reported that GAO's "approach drew some criticism from watchdog activists that had expected the GAO to scrutinize more thoroughly whether firms were accurately reporting their information to Congress. 'I was expecting a more formal audit,' said Craig Holman of Public Citizen. Ethics lawyers had also anticipated more scrutiny of lobbyists' records along the lines of an Internal Revenue Service audit."

The GAO also asked lobbyists about the challenges of complying with the law. While "a number" of lobbyists felt existing guidance was sufficient, others believed more clarification on how to report certain information about their lobbying activity was needed, according to the report. The agency recommended that the U.S. district attorney "develop a structured approach" in order to target lobbyists who continually fail to comply with the lobbying law.