The McCain-Feingold campaign finance law, passed in 2002, banned corporations, unions and individuals from making unlimited donations to political parties. That was supposed to stop the influence of soft money in elections. But during this race, extremely wealthy individual donors are pouring money into 527s, the groups named for the section of the tax code defining them. Six of the top ten donors to 527 groups are billionaires.

Even so, campaign finance reform groups insist that McCain-Feingold has improved the democratic process by limiting corporate and union influence. “McCain-Feingold has clearly made a significant positive difference,” said Adam Morse, an attorney with the Brennan Center for Justice at New York University School of Law who litigates campaign finance cases.

“It has greatly improved the campaign finance situation, but there are still further improvements that need to be made,’’ he said. “The big thing McCain did was break the connection between soft money and political parties and political office holders.”

The tax-exempt 527 groups can accept unlimited donations from anyone. Donations are not tax deductible. The most famous donor is New York-based financier George Soros, who has donated $23 million to numerous anti-Bush 527 groups in the current election cycle, according to the Center for Public Integrity, a Washington based group that tracks campaign money.

In California, where John Kerry has maintained a comfortable lead in the polls, 527 organizations have been relatively quiet during this presidential election. But California’s influence as the home of big-money donors extends far outside the state. Forty-five donors gave a million dollars or more during this election cycle, and eleven of them are from California.

The 527 groups are not allowed to coordinate their work in any way with the political parties or candidates.

However, the organizations have been a major factor in this race, both in influencing the issues of the campaign through advertisements, as well as by providing resources for nuts and bolts get out the vote efforts. They are credited with keeping Kerry in the race after the Democratic nomination, when the Democratic Party funds were low after a bruising primary. The 527 groups ran television ads that countered the Bush-Cheney campaign’s ads attacking Kerry.

One of the best known 527 groups, Swift Boat Veterans for Truth, ran ads against Kerry’s Vietnam War record. But there have also been biting ads put out by Moveon.org and others against Bush.
Morse said that severing the connection between the political parties and soft money has actually reinvigorated grass roots participation. “What we’re increasingly seeing is political parties reaching out to more people, soliciting contributions from individuals. The number of actual individual people contributing has gone up and that’s a positive thing, ” he said.

The 527 groups are having an impact not just in the television ads, but also in the crucial get out the vote efforts.

“They’re backing Kerry with a massive get out the vote program,” said pollster Mervin Field. “They claim they’ve actually registered 10 million more people. They’re determined to get a high proportion of that 10 million out.”

Field noted that the Democratic group Americans Coming Together has funded door-knocking, phone banks and even “creature comforts” like sandwiches, soda, and Port-a-potties for voters standing in long lines at polling places.

More money has been raised for Democratic 527 groups than for Republican ones, according to the Center for Public Integrity. But according to Morse, that is no indication that 527s favor Democrats in and of themselves. “I think what we’re seeing is 527s tending Democratic,” he said. “I think that’s largely just an artifact on of this election. I’m not sure that there’s any long term conclusions to be dawn from that.”

In addition, while Democrat-leaning 527s started out raising more money, Republican-supporting groups have been catching up. Republican-supported groups raised one-third of 527 money raised in recent months.

California's Eleven Million-Dollar Donors