How money flows into elections
Money flows into politics in a lot of different ways. Differences in who is donating money, who they give money to and how that money is spent determine whether and how those donations are disclosed.
Posted — UpdatedIt depends.
The following is a list of the different types of entities that most frequently spend money on North Carolina elections and the rules that apply to those organizations.
Political parties
A political party is actually made up of many different organizations on the federal, state, congressional district, county and other local levels. These different party groups may have to obey different rules, depending on whether they are organized under state or federal rules or what kind of activity they are carrying out. But generally, political party organizations must disclose where they get money and how they spend it.
This freedom does not apply to other party groups, such as women's auxiliaries, which have to obey fundraising limits ordinarily placed on candidates.
State candidate committees
Federal candidate committees
State, federal political action committees
Employees of certain businesses, interest groups, unions and others can form political action committees, or PACs. If they are not organized using special rules that have emerged from court rulings in recent years, PACs must obey similar limitations as committees associated with state and federal candidates. The advantage of these sorts of PACs is they can give directly to candidates of their choice, although only within fundraising limits. In general, political committees cannot give money to a candidate if they have collected money from a source – such as a business or an individual who has already reached contribution limits – that the candidate could not accept directly.
Super PACs
The term "Super PAC" is sometimes used to indicate any kind of political group that is allowed to exceed campaign fundraising and spending limits placed on candidates and parties. However, it refers to a very specific kind or organization.
Technically, Super PACs must reveal who their donors are. However, donors have sometimes given donations through nonprofit organizations such as 501(c)(4) groups (see below) to shield themselves from scrutiny.
527 groups
The 527 organization refers to the section of the tax code under which these kinds of groups are organized.
Before the court decisions that created Super PACs, 527 groups were the main way individuals and corporations could give unlimited money toward a political cause. In exchange for not advocating directly on behalf of a candidate, these groups could raise large amounts of money for so-called issue advertising. Issue ads often sound like and look like campaign ads but stop short of using particular words that would make them a "campaign ad" in the eyes of the law.
That said, 527 groups are still an active part of the North Carolina political landscape. Real Jobs, an independent spender known for being a Republican-allied group founded by retail executive Art Pope, is a 527 group, as was N.C. Citizens for Progress, a group allied with Democrats that attacked Republican gubernatorial candidate Pat McCrory during the 2012 election.
501(c)(3) groups
501(c)(4), 501(c)5 and 501(c)(6) groups
Often, 501(c)(4) groups will run issue ads that avoid triggering current electioneering definitions. They are required to file spending disclosures only when they trip certain triggers in federal or state law, primarily those having to do with naming a candidate within a certain number of days before an election. Donations to 501(c)(4) groups are not tax deductible.
Independent Spenders
Independent spender is a generic term used to describe someone who is not a political candidate but is airing a political-style ad. Even groups, such as 501(c)(4) organizations, and individuals who would normally be exempt from reporting their spending on political-style ads can sometimes be compelled to report on their activities.
In North Carolina, the law draws a distinction between an "independent expenditure" – a type of communication and that clearly identifies a candidate and advocates for or against that candidate's election – and an "electioneering communication." All spending deemed an "independent expenditure" must be reported.
An electioneering communication doesn't directly advocate for or against a candidate, but does identify a candidate by name. Such communications can be print or broadcast advertising or mass mailings. In an even-numbered election year, including 2014, electioneering communications must be disclosed only after Sept. 7. However, even groups that normally don't have to report their spending must make reports to the State Board of Election if they conduct an electioneering communication.
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