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The 2004 federal elections witnessed an unprecedented rise in activity by independent political organizations called “527s.” The current campaign finance regime limits how much individuals and groups may contribute to candidates, parties, and political committees, but leaves 527s virtually unregulated. As a result, wealthy donors were able to circumvent federal contribution limits by giving large amounts to 527 groups. In 2004, these groups raised millions of dollars, which they spent on highly influential advertisements and voter mobilization campaigns. The groups were so successful that they are expected to play a significant role in the 2006 and 2008 elections, and both Congress and the Federal Election Commission (FEC) have considered regulating the groups more closely.

This Note examines the role of 527 organizations in the 2004 election and proposes ways to prevent future circumvention of the campaign finance regime. It argues that Congress should address the 527 problem by passing legislation regulating coordination between outside groups and political campaigns. A statute regulating coordination presents several benefits over current proposals for 527 reform. First, it is more likely to satisfy the constitutional limits on campaign finance regulation. Second, it provides a long-term solution that is not dependent on how a group is classified under tax or campaign finance law. Third, it will encourage donors seeking to buy influence over candidates to give smaller, “hard money” contributions. Finally, congressional legislation will avoid the delay and confusion seen in recent FEC efforts to regulate coordination.