'Soft money' committees skirt donor limits

Maryland individual and corporate donors gave $4.8 million in the past three years to a type of "soft money" political committee that critics say can be used to legally skirt state and federal campaign finance restrictions, a new study shows.

The analysis by the Center for Public Integrity in Washington examined political committees similar to the one that Maryland Senate President Thomas V. Mike Miller heads to raise money for Democratic candidates running for state offices around the country.


Miller's work for the Democratic Leadership Campaign Committee has drawn critical scrutiny - and prompted a federal inquiry - because $225,000 in contributions were obtained from racing interests seeking to legalize slot machine gambling in Maryland.

The report by the Center for Public Integrity, a nonprofit, nonpartisan research group, says both major political parties and their special-interest allies have been using the same type of tax-exempt committees to raise big sums around the country.


These committees, known as "527 Committees" after the section of the tax code that permits them, can raise unlimited amounts of money to influence elections, the study says.

They must file reports with the Internal Revenue Service but can avoid regulation by state or federal election authorities.

The report found that 471 such committees have raised $397.8 million in the past three years, with Democratic-leaning organizations making the most use of them.

"This isn't illegal, and we're not saying that it is," said Derek Willis, a co-author of the center's report. "Many groups such as the League of Conservation Voters, NARAL [National Abortion Rights Action League] and labor unions have used this process for years."

But now that "soft money" has been banned from federal elections by the McCain-Feingold law, he said, those groups and newly formed committees with a partisan bent are focused on furthering their agenda through other means - such as raising and spending money on behalf of candidates in state races around the country.

"People are trying to use these committees to do the kinds of fund raising and spending that the national political parties did before McCain-Feingold," Willis said.

He said that state campaign finance laws vary, but the special committees can easily skirt them.

As an example, he said, Mississippi bars corporate contributions to candidates in state races. However, Willis said, Nissan-Mississippi Inc. gave $100,000 each to the Democratic Governors' Association and the Republican Governors Association recently. Those groups, in turn, are able to legally contribute to the candidate for governor from their respective party.


"Because there is no limit on what type of donor can give, that opens the possibility that you could create a shell entity for a donor and make it hard to figure out who the real donor is," Willis said.

In Maryland, the Democratic Governors' Association raised the largest amount of money at $897,000, followed by the Democratic Leadership Campaign Committee at $588,377. Working Families 2000, a labor-backed group, took in $525,000.

Peter G. Angelos, trial attorney and Orioles managing partner, was the biggest individual donor from Maryland to tax-exempt political committees around the country, the report shows. He gave $265,000.