Campaign Finance Flap Over 527s

LOS ANGELES – Organizations that raise money for political purposes, known as 527 groups (search), are under fire as critics charge that they are overstepping their bounds.

Prominent 527s, which are named for the tax code that governs their tax-exempt status, include Moveon.org (search), which produces commercials promoting the Democratic agenda, and the Club for Growth (search), which boosts Republican causes.

The rules say 527s are not allowed to call for the victory or defeat of a certain candidate, but some watchdog groups say these organizations are crossing that line.

"They are staying away from what they call 'express advocacy,' which means saying who to vote for or who to defeat in explicit words. But what they are doing is very clearly doing ads that very clearly oppose a candidate or promote a candidate," said Larry Noble, executive director of the Center for Responsive Politics (search).

But 527s say they are doing nothing wrong.

"We're operating completely and entirely to the letter and in the spirit of all the relevant campaign finance rules and regulations," said Jim Jordan of America Coming Together (search).

Unlike political action committees, there are no restrictions on how much money they can collect or who can donate to 527s, so they continue to raise a whole lot of money. But the Federal Election Commission (search) is starting to take notice.

Click on the video box at the top of this story to watch a report by FOX News' Anita Vogel.