American Politics Today - Essentials (3rd Ed)

244 CHAPTER 8|INTEREST GROUPS

Federal laws limit groups’ electioneering and lobbying eff orts. Nuts and

Bolts  8.2 provides information on what diff erent types of organizations can and

cannot do. For example, most private organizations and associations in America

are organized as 501(c)(3) organizations, a designation based on their Internal

Revenue Service classifi cation, which means that donations to the group are tax-

deductible. However, 501(c)(3)s must not engage in any political activities or lob-

bying (other than certain voter education programs or voter registration drives

that are conducted in a nonpartisan manner). Groups that want to engage in lob-

bying or electioneering can incorporate under other IRS designations and oper-

ate as a political action committee (PAC), a 527 organization, or a 501(c)

(4). While contributions to these organizations are not tax-deductible, they have

fewer restrictions on the size of contributions or how money can be spent: 527

organizations, for example, have no contribution or spending limits.

In 2012, federally focused 527 organizations spent more than $300 million on

electioneering, and PACs spent nearly $375 million.^34 Table 8.2 reports campaign

spending for the top ten 527 organizations. In the 2012 election, the 576 active

527 organizations that participated in the campaign spent an average of about

$486,000 each.

Data on the top ten PACs in 2012 show that the largest PAC contributed just

under $3 million to candidates in the 2012 election, and the tenth largest slightly

less than $2 million. These organizations donating millions of dollars are the

exception: in the 2008 election, the average PAC gave only $100,000 in contribu-

tions. Part of the reason for this lower spending is that PACs’ direct contributions

501(c)(3) organization A tax
code classifi cation that applies to
most interest groups; this des-
ignation makes donations to the
group tax-deductible but limits the
group’s political activities.

political action committee
(PAC) An interest group or a
division of an interest group that
can raise money to contribute to
campaigns or to spend on ads in
support of candidates. The amount
a PAC can receive from each of its
donors and the amount it can spend
on federal campaigning are strictly
limited.

527 organization A tax-exempt
group formed primarily to infl uence
elections through voter mobilization
efforts and issue ads that do not directly
endorse or oppose a candidate. Unlike
political action committees, 527s are
not subject to contribution limits and
spending caps.

INTEREST GROUPS AND ELECTIONEERING: TYPES OF ORGANIZATIONS

The ability of an interest group to engage in electioneering depends on how it is organized—what section of the IRS
code applies to the organization. The following table gives details on four common organizations: 501(c) organizations,
527 organizations, political action committees (PACs), and so-called Super PACs.
Therefore, many choose to contribute money to nonprofi ts organized as 501(c)(4) groups, which can lobby and engage in
electioneering as long as their “primary activity” (at least half of their overall activity) is not political.

Type of Organization Advantages Disadvantages

501(c)(3) Contributions tax-deducible Cannot engage in political activities or lobbying, only

voter education and mobilization

527 Can spend unlimited amounts on

issue advocacy and voter

mobilization

Cannot make contributions to candidates or

coordinate efforts with candidates or parties

501(c)(4) Can spend unlimited amounts on

electioneering, do not have to

disclose contributors

At least half of their activities must be nonpolitical,

cannot coordinate efforts with candidates or parties

PACs Can contribute directly to candidates

and parties

Strict limits on direct contributions

Super PACs Can spend unlimited amounts on electioneering, support or oppose

specifi c candidates

Cannot make contributions to candidates or

coordinate efforts with candidates or parties

NUTS & bolts

8.2