A 527 group is a type of tax-exempt organisation that is named after the section of the United States tax code. 527's have legally avoided the restrictions put on spending at elections by the FEC
507's are created for the nomination and election or appointment of a candidate for public office. 527s are not regulated by the Federal Election Commission and are therefore not subject to the same contribution limits as Political Action Committees.
The FEC only requires a group to file regular disclosure reports of the money it has given if it is a political party or if it is a PAC that engages in activities that expressly advocate the election or defeat of a particular candidate.
The money raised by 527's is used mainly for voter mobilisation that does not amount to expressly backing a candidate. Furthermore there is no limit to the amount they can be raised and the money can come from any source whereas a PAC has restrictions on these points. There are two kinds of 527 groups: those that are in being to promote certain politicians and those that are created to promote certain beliefs.
527 groups are very influential in American politics as the loophole means that they can subtly and significantly influence the amount of votes one candidate gets with the finances they have.
They can do this by making sure that more voters for the candidate they support are mobilised to the voting booths.
In mid-October 2006, the leading 527's for the 2006 midterms are:
1) Service Employees International Union
2) American Federation of State, County and Municipal Employees
3) Progress for America
4) America Votes
5) America Coming Together
Between them these 527's have raised over $32 million by the end of October 2006.