Soft Money in the 2006 Election and the Outlook for 2008: The Changing Nonprofits Landscape

During the 2006 election campaign, financier and prominent Democrat George Soros contributed $95,382 in limited "hard money" to federal candidates and party committees. In addition, he donated $3,890,000 to Section 527 political organizations, was the largest investor in "Catalist," a company formed to supply voter files to politically active pro-Democratic interest groups, and was one of about 100 "partners" in the Democracy Alliance which channeled funds to "center-left" 501(c)(4) social welfare organizations and 527s that were active in federal elections.

Meanwhile, insurance tycoon and long-time Republican donor Carl Lindner Jr. gave $99,800 to candidates, Political Action Committees and party committees, $801,321 to 527s and $479,224 to Common Sense Ohio, a 501(c)(4) that promoted Republican candidates in six Senate races.

These are just two prominent examples of a phenomenon described by Steve Weissman and Kara Ryan in this CFI study on the role of unlimited corporate, labor union and individual "soft money" in the 2006 elections and what these developments might mean for 2008.

The study analyzed the broad array of nonprofits active in the 2006 election: 527 political organizations, Section 501(c)(4) social welfare groups, (c)(5) labor unions and (c)(6) trade associations, and "taxable" entities that operate as nonprofits, comparing the groups' activities with those undertaken in 2002 and 2004. It assessed how the changing legal and political environment affected the groups' operations in '06 and might do so in '08. In particular, it inquired how parent interest groups and large individual donors might react to changing circumstances by reshuffling their nonprofit organizational cards.