This installment of our explainer series on “testing the waters” examines how a 2016 presidential candidate, Scott Walker, used a political organization that claims tax-exempt status under Section 527 of the Internal Revenue Code — a “527 organization” — as a one-stop shop for fundraising and campaigning before declaring candidacy.
Running for president is an expensive and challenging endeavor. Any viable contender needs to raise millions of dollars, build a strong network of allies, donors and supporters, and show strong electoral prospects right out of the gate.
These daunting realities have prompted some candidates to break the law to get a leg up on their competition.
Scott Walker won his first election in 2010 to become Governor of Wisconsin, then became the first governor in history to beat back a recall effort in 2012, which raised his national profile. After winning reelection in 2014, he began to be widely viewed as a potential contender for the White House in 2016; Walker himself said it was “pretty obvious” that he should consider a run for president.
In January 2015, Walker established Our American Revival (OAR), a 527 organization whose stated goals were to promote lower taxes and limited government. OAR’s activities, however, indicate that it solely promoted Walker’s presidential aspirations.
Walker used OAR to illegally raise and spend millions of dollars to lay the groundwork for his presidential campaign months before he officially acknowledged entering the race.
Individuals can raise and spend money solely to test the waters of a possible candidacy, but federal law prohibits accepting contributions — even before candidacy — above a certain amount in this period.
If someone testing the waters eventually becomes a candidate, they must publicly disclose the money they raised and spent while exploring whether to run for office.
Walker claimed he was “testing the waters” for only two weeks before he officially announced his candidacy on July 13, 2015, but his actions tell a different story: he had decided to run for president months before but delayed publicly acknowledging that fact to continue traveling, giving speeches, fundraising and networking without regard to the legal rules applicable to candidates.
During the six months preceding his official candidacy announcement, OAR paid for these cost-intensive activities, thereby making illegal and unreported contributions to Walker’s presidential campaign.
OAR raised and spent over $7.6 million to establish Walker’s campaign, paying for Walker to travel and speak all over the country, raise funds and tout his personal achievements and credentials.
Through OAR, Walker opened offices and hired advisors in Iowa and New Hampshire — the two states that hold the first presidential nominating contests — as early as February 2015, four months before he announced his candidacy.
In spring 2015, Walker relied on OAR’s support to look the part of a future president: OAR paid for him to visit the U.S.-Mexico border in Texas, speak at conventions in Tennessee hosted by the National Religious Broadcasters’ Association (NRB) and the National Rifle Association (NRA) and attend foreign policy briefings at an American Enterprise Institute (AEI) retreat in Georgia.
OAR also paid for Walker to meet and mingle with top GOP donors, including Charles and David Koch — billionaire megadonors whose support is “highly coveted” — as well as key party officials that would further enhance his national profile.
In speeches, Walker was careful to speak only in conditional terms about running for president — e.g., “You want to bring in people who can help you sort out how that would happen if it were to happen” — but his actions spoke volumes.
In March 2015, Campaign Legal Center (CLC) and others filed complaints with the FEC alleging that Walker and OAR had violated federal campaign finance laws.
Over four years later, in May 2019, the FEC finally found that there was reason to believe Walker’s ultimately unsuccessful campaign had accepted and failed to report illegal contributions from OAR when Walker used OAR’s resources to travel, fundraise and support his testing the waters activities.
Nevertheless, although the FEC’s ensuing investigation confirmed these preliminary findings, the agency declined to take enforcement action and dismissed the complaints in April 2021, over six years after they were filed.
Several Commissioners reasoned that dismissal was appropriate because the five-year statute of limitations had expired and the FEC faced a backlog of cases from its lack of a quorum in 2019 and 2020 — i.e., fewer than four Commissioners were serving. But the complaint was filed in 2015, and the FEC could certainly have acted when there was plenty of time left on the clock.
Instead, Walker walked away without any legal consequences after he blatantly circumvented campaign finance rules and deprived the public of crucial information about how much money he raised and spent while testing the waters and campaigning for the presidency.
So long as the potential reward is the White House and the only “risk” is FEC inaction, presidential candidates from all political parties will likely continue to break the law and rig the system, undermining voters’ right to know who is influencing elections by deliberately extending the largely unregulated period when campaigning for the presidency is unreported and underwritten by wealthy special interests.
Testing the Waters Blog Series
Part 1 - Testing the Waters, Explained
Part 2 - How Have Candidates Taken Advantage of the Testing the Waters Rules?
Part 3 - How Candidates Use Election Spending Vehicles to Test the Waters (You are here.)