The move this week by pro-business organization Club for Growth to spend an additional $700,000 backing the Senate hopes of its former president Pat Toomey seems likely to add to the already deafening debate over the shortfalls of the current campaign finance system.
The organization announced on Tuesday that it would make the late-stage investment in the race as poll results emerged showing Toomey's once-strong support dwindling. At the bottom of the solicitation, it conspicuously reminded members that they could add to the total by giving unlimited amounts to Club for Growth Action -- an organizational arm that was set up for the purposes of making independent expenditures:
Pennsylvania is our top priority - please also make it yours by contributing right now to Club for Growth Action.
As you know, there are NO CONTRIBUTION LIMITS for Club for Growth Action, and it can accept both personal and corporate contributions. Every dollar you can spare is another dollar closer to victory.
Club for Growth Action is, in informal terms, a Super PAC. Taking advantage of the Supreme Court's Citizens United ruling, it can raise as much money as it can get its hands on right through the election. The names of the donors will be disclosed. But the potential for funneling huge donations into individual races is profound.
"Club for Growth Action is something we came up with directly after the court case," said Mike Connelly, a spokesperson for the organization. "We refer to it as an independent expenditure PAC. Under the new rules if the money is solicited for individual races, you can have corporate and individual donors and there are no limits."
But that's not the only arm of the pro-business group that's been shepherded behind the task of getting its former president into the Senate. The Club for Growth PAC is a traditional political action committee that funnels member donations to specific races.
The organization itself, meanwhile, is a 501(c)(4), and as such can spend money on issue advocacy, polling research and overhead costs. This legal distinction is something shared by a whole host of other policy-oriented institutions, including many on the progressive side of the aisle. And in the current election climate, scrutiny has increased over the fact that donors to these groups don't have to disclose their names. But what sets the Club for Growth apart is that Toomey himself was the one who changed the organization's status from a 527 to a 501(c)(4). And he did so for the stated purposes of raising large amounts of money to help candidates in critical races -- the type of scenario in which he now finds himself.
As the Wall Street Journal reported in December 2007 (emphasis ours):
The 501(c) organizations are likely to become even more important in the 2008 election. After the 2004 election, the FEC sought to crack down on 527 organizations that violate the IRS rule against calling for the election or the defeat of any candidate. Now, several large 527 groups are setting up 501(c)4 social-welfare organizations, which are allowed to back candidates explicitly.
Scott Reed, a Republican strategist, says that for political campaigns, using 501(c)4 organizations is "now the most effective way to go because donors are safe and don't need to be disclosed."
The Club for Growth, the antitax group, used to use a 527 structure for its election work. But the FEC fined it earlier this year for stepping over the line barring explicit voting recommendations. During the current election cycle, the group is shifting the work to a 501(c)4 unit, which carries fewer restrictions. The new structure will make the organization "bigger, better and more effective," said its president, Pat Toomey, in a letter to members. "We now have a significant new ability to run advertisements that directly call for the election or defeat of candidates." Another advantage, Mr. Toomey noted, is that "unlike the past, your donations to the Club will not be disclosed to the public."