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527s Mull New Role in ’06

As the huge soft-money groups that exploded onto the political scene in 2004 look to remain players in 2006 and beyond, the trend in the political community appears to be favoring smaller groups designed to influence a single race.

Targeted giving to more narrowly focused 527 organizations — so named for a section of the tax code — began to emerge last cycle, especially in Senate races in Colorado and Oklahoma.

In Oklahoma, two wealthy oilmen gave the D.C.-based Club for Growth $1 million to be spent in the final weeks of the campaign. The Republican, former Rep. Tom Coburn, defeated Rep. Brad Carson (D) for the seat of retiring Sen. Don Nickles (R).

The Colorado contest featured a 527 group formed by former Sen. Bill Armstrong (R) that ran ads questioning the conservative credentials of brewing magnate Pete Coors, who at the time was embroiled in a GOP primary fight with former Rep. Bob Schaffer. Armstrong was a close Schaffer ally.

Jon Lerner, a Republican consultant involved in both of those efforts, predicted that similar groups will proliferate.

“There will be pockets of interest that could be brought to bear on individual races,” said Lerner. “As a matter of influencing Senate or House races, it could have a substantial impact with fewer dollars.”

A Democratic consultant who has worked with 527s agrees. “I think more and more of these organizations will develop around specific races,” the source said.

Strategists in both parties acknowledge that large-dollar donors, who fueled 527 groups this year, will not give in 2006 at the rate they did in 2004 because there will be no equivalent to the marquee struggle between President Bush and Sen. John Kerry (D-Mass.).

“Defeating Bush was a tremendous motivator for many of these donors,” said Democratic consultant Howard Wolfson. “My hope would be that having become involved they will remain involved because the stakes remain high.”

Minnesota Sen. Norm Coleman (R) said he’s skeptical that progressive donors will give to nonpresidential races. “You have to question whether they’ll be a force without George Bush to kick around or a war to demagogue,” said Coleman in a C-SPAN forum last week.

A big question for outside interest groups is how much, if at all, their activities will be curtailed by Congress next year.

Sen. John McCain (R-Ariz.), one of the leading backers of campaign finance reform in Congress, plans to introduce legislation that forces 527s to register with the Federal Election Commission, which would keep them from accepting unlimited contributions. Currently, 527s register with the Internal Revenue Service and divulge donations quarterly.

But regardless of what happens in that legislative fight, New Democrat Network President Simon Rosenberg said that “large contribution-based advocacy … is with us to stay.”

Rosenberg, whose group raised $11 million last cycle, said 527s represent a “minor part of the spending on outside issue advocacy” — a universe that includes charities and nonprofits, which can do less direct political advocacy but are also less bound to divulge their donors.

Both Americans for Job Security — which ran ads attacking Democratic Senate nominees in Colorado, Alaska, North Carolina and South Carolina — and the U.S. Chamber of Commerce are 501(c)(6) business organizations that do not have to identify their donors.

A number of Democratic strategists said that the most important consequence of the emergence of a “shadow Democratic party” — which consists of such 527s as America Coming Together, the Media Fund and America Votes, among others — was to develop a working list of large-dollar donors who were willing to give strategically.

Other Democratic interest groups, including and former Vermont Gov. Howard Dean’s Democracy for America, also did substantial spadework via the Internet during the 2004 election cycle, leaving them with lists of rank-and-file Democratic activists who are willing to make donations large and small.

“Most people that give money want radical change in Washington,” said Democratic consultant Jenny Backus. Those contributors “understand that the road back to Democrats winning the presidential [election] lies primarily through governors’ races and secondarily through Senate races.”

Thirty-six governorships are up for grabs in 2006, including the four largest states in the country: California, Florida, New York and Texas. All four are controlled by Republicans.

On the Senate side, Democrats must defend 17 of their incumbents, while Republicans have 15 seats up for re-election.

Senate Democrats urgently need to keep Republicans from taking 60 seats, which would give the GOP a filibuster-proof majority. Neither party has had one since 1976, when Democrats controlled 62 seats.

Armed with that knowledge, Backus argued that “donors will be willing to invest in the Senate being the brakes on the wheel in 2006.”

One group, Citizens for a Strong Senate, began that effort during the 2004 cycle, raising approximately $3 million in roughly three months of existence.

Most of the money came from Herb and Marion Sandler, co-CEOs of Golden West Financial Corp. of Oakland, Calif. CSS ran ads attacking GOP Senate nominees in Alaska, Colorado, Oklahoma and South Carolina.

Jonathan Prince, former deputy campaign manager for the presidential effort of Sen. John Edwards (D-N.C.) and a founder of CSS, did not reply to e-mails seeking comment on the future of the group.

Though the momentum among donors appears to be moving in the direction of more targeted, “boutique” giving in a single race, soft-money titans will still have a role.

ACT President Ellen Malcolm emphasized that her organization “is much more than the presidential election.”

“I definitely think the donors will stick with this,” she said. “I expect we will be working in the Senate races and governors’ races and helping to take back state legislatures and helping to elect people to Congress.”

Malcolm did not answer when asked directly whether she would remain at the helm of ACT. ACT raised roughly $125 million for the 2004 election. The largest GOP 527, Progress For America, collected $38 million.

Over the summer, ACT established a committee headed by longtime party operative Gina Glantz charged with examining how it could keep itself active beyond 2004.

Despite that early start, Malcolm said ACT’s format for 2006 is up in the air. “We haven’t sorted through all of this,” she said.

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