Why 527 Is the Dems' Lucky Number

These fund-raising groups have discovered how to merge vast sums of money with political canvassing and get-out-the-vote efforts

By Paula Dwyer

One of the more interesting inventions of the 2003-04 election cycle is the so-called 527 organization, a shadow group that's both a tax-exempt political action committee and recipient of soft-money contributions. You know -- the groups that accept the multimillion-dollar checks from fat-cat donors that the official parties are barred from taking, under the 2002 McCain-Feingold campaign-finance reform law. The two largest 527s are called The Media Fund and America Coming Together (ACT), sister groups under a common fund-raising structure called the Joint Victory Committee.

So how successful have they been? Phenomenally so. Media Fund and ACT alone have raised $80 million to pay for a vast -- and very sophisticated -- voter-turnout effort, as well as to place ads in 15 to 17 battleground states. Officials from both organizations say they will have no trouble reaching their goal of $125 million by November. That would be as much as the Kerry campaign has raised so far, itself a record sum for a challenger.


  Raking in money has been only the half the achievement. Take voter turnout, ACT's specialty. Between now and Nov. 2, the group will have 540 full-time organizers and a 1,300-strong army of paid canvassers. They combine high-tech techniques (Palm handhelds that do everything from recording voter responses to their questions to showing 16-second videos on Kerry's positions on issues) with the ward-heeler's low-tech approach (going door-to-door in Democratic-leaning neighborhoods to register voters, collecting absentee ballots, and reminding folks to show up at the polls on election day).

In Ohio -- in many ways, the epicenter of this election -- ACT sends out 160 canvassers every night of the week. It has registered 73,000 new voters in Cleveland alone. "Under the Bush Administration, ACT has created the only new jobs in Ohio," jokes Steve Rosenthal, the group's chief executive. "And we aim to be the biggest employer in the state."

Jokes aside, Rosenthal and Chief of Staff Harold Ickes, who was one of former President Bill Clinton's top aides, claim to have pulled together the largest grass-roots political apparatus ever assembled. "The side that has the best on-the-ground organization, that can move the undecideds and energize their base, will win this election," says Rosenthal.


  And while they're at it, Ickes and Rosenthal are also turning out new voters to elect Democratic candidates in U.S. House and Senate races, as well as at the state and local level. The door-knockers can't advocate voting against Republicans, but their message is unmistakable: Democrats care more about jobs, the economy, and affordable health care than Republicans. Ickes prefers to call the unbridled partisan message "comparative advertising."

Pity the GOP. It spent months screaming that the liberal 527s were illegal. After all, they were accepting now-banned soft money to work toward the defeat of President Bush. How is it that McCain-Feingold didn't mean to include such electioneering under the reform umbrella? If the 527s mobilize voters, help get out the candidates' message on the issues, and raise the money to pay for it all, why aren't these functions -- message, mobilization, and money -- the same ones a political party performs?

Many people believe that they are, and that the 527s ought to be regulated alongside PACs and other party-building groups. But the timid Federal Election Commission has punted the issue of whether to regulate the 527s until after the election, leaving the GOP out in the cold for now. So the Republicans are trying to catch up. But with most corporations and chief execs skittish about getting back into the soft-money game, the conservative 527s have raised just $1 for every $4 raised by the Dems.


  The only handcuffs on the 527s are loophole-ridden rules that say they can't both take soft money and coordinate their activities with the official party and candidates. Does that mean ACT and the Democratic National Committee poobahs never talk politics? Not exactly. Ickes admits that he occasionally tells the Kerry camp what he's up to, and he insists it's perfectly legal.

In fact, you couldn't get any closer coordination without it crossing the line into possible illegality. Reporters covering the Democratic convention couldn't help but notice that ACT and The Media Fund were briefing journalists just down the hall from the DNC Finance Committee's hospitality suite at Boston's Four Seasons Hotel.

For more on the Democratic National Convention, see BusinessWeek Online's continuing coverage at www.businessweek.com/election2004.htm

For more on the Democratic National Convention, see BusinessWeek Online's continuing coverage at www.businessweek.com/election2004.htm

Dwyer is a senior writer for BusinessWeek in the Washington bureau

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