Clinton fundraising leaves little for state parties

Clinton fundraising leaves little for state parties

The Democratic front-runner says she's raising big checks to help state committees, but they've gotten to keep only 1 percent of the $60 million raised.

http://www.politico.com/story/2016/04/clinton-fundraising-leaves-little-for-state-parties-222670

By Kenneth P. Vogel and Isaac Arnsdorf

In the days before Hillary Clinton launched an unprecedented big-money fundraising vehicle with state parties last summer, she vowed “to rebuild our party from the ground up,” proclaiming “when our state parties are strong, we win. That’s what will happen."

But less than 1 percent of the $61 million raised by that effort has stayed in the state parties’ coffers, according to a POLITICO analysis of the latest Federal Election Commission filings.

The venture, the Hillary Victory Fund, is a so-called joint fundraising committee comprised of Clinton’s presidential campaign, the Democratic National Committee and 32 state party committees. The setup allows Clinton to solicit checks of $350,000 or more from her super-rich supporters at extravagant fundraisers including a dinner at George Clooney’s house and a concert at Radio City Music Hall featuring Katy Perry and Elton John.

The victory fund has transferred $3.8 million to the state parties, but almost all of that cash ($3.3 million, or 88 percent) was quickly transferred to the DNC, usually within a day or two, by the Clinton staffer who controls the committee, POLITICO’s analysis of the FEC records found.

By contrast, the victory fund has transferred $15.4 million to Clinton’s campaign and $5.7 million to the DNC, which will work closely with Clinton’s campaign if and when she becomes the party’s nominee. And most of the $23.3 million spent directly by the victory fund has gone toward expenses that appear to have directly benefited Clinton’s campaign, including $2.8 million for “salary and overhead” and $8.6 million for web advertising that mostly looks indistinguishable from Clinton campaign ads and that has helped Clinton build a network of small donors who will be critical in a general election expected to cost each side well in excess of $1 billion.

The arrangement has sparked concerns among campaign finance watchdogs and allies of Clinton’s Democratic rival Bernie Sanders. They see it as a circumvention of campaign contribution limits by a national party apparatus intent on doing whatever it takes to help Clinton defeat Sanders during the party’s primary, and then win the White House.

But it is perhaps more notable that the arrangement has prompted concerns among some participating state party officials and their allies. They grumble privately that Clinton is merely using them to subsidize her own operation, while her allies overstate her support for their parties and knock Sanders for not doing enough to help the party.

“It’s a one-sided benefit,” said an official with one participating state party. The official, like those with several other state parties, declined to talk about the arrangement on the record for fear of drawing the ire of the DNC and the Clinton campaign.

In fact, the DNC, which has pushed back aggressively on charges that it is boosting Clinton at the expense of other Democrats, has advised state party officials on how to answer media inquiries about the arrangement, multiple sources familiar with the interactions told POLITICO.

“The DNC has given us some guidance on what they’re saying, but it’s not clear what we should be saying,” said the official. “I don’t think anyone wants to get crosswise with the national party because we do need their resources. But everyone who entered into these agreements was doing it because they were asked to, not because there are immediately clear benefits.”

Some fundraisers who work for state parties predict that the arrangement could actually hurt participating state parties. They worry that participating states that aren’t presidential battlegrounds and lack competitive Senate races could see very little return investment from the DNC or Clinton’s campaign, and are essentially acting as money laundering conduits for them. And for party committees in contested states, there’s another risk: They might find themselves unable to accept cash from rich donors whose checks to the victory fund counted toward their $10,000 donation limit to the state party in question — even if that party never got to spend the cash because it was transferred to the DNC.

Sources working with the Hillary Victory Fund said the committee is sensitive to these concerns and that state parties were asked to submit names of donors they wanted to save for themselves.

Clinton’s campaign and the DNC argue that all Democratic politicians and state parties — even those that aren’t enrolled in the victory fund — will benefit from its fundraising. That’s because the cash will go toward enhancing national voter data, and research and communications efforts that all state parties are entitled to.

And Josh Schwerin, a spokesman for Clinton’s campaign, suggested that a handful of key state parties last month received another $700,000 in transfers from the victory fund, and enjoyed other benefits from it that will be detailed in subsequent FEC reports. (The latest reports cover only through the end of March.)

“About $4.5 million has already been transferred to state parties and there is an additional $9 million on hand that will be distributed over the coming months as state parties ramp up for the general election,” he said in an email. He added that in April, “money raised through the HVF has started to be used to fund Democratic coordinated campaigns across the country, which will help strengthen the party and elect Democrats up and down the ballot.”

But Schwerin did not respond to follow-up questions about how much of the $700,000 in victory fund transfers to the state parties was subsequently transferred to the DNC.

DNC spokesman Mark Paustenbach pointed out that the national party committee “offered to engage in the same joint fundraising efforts with all the major presidential candidates early in the cycle, and we welcome the efforts of the candidates to help raise money for the DNC and state parties now to ensure we can build out the infrastructure to win in November.”

Sanders' campaign late last year signed a joint fundraising agreement with the DNC, but the committee has been largely inactive. Instead, after Sanders was chided by Clinton allies for not helping down-ballot Democrats, he sent out appeals to his vaunted email list that helped raise hundreds of thousands of dollars for a trio of progressive House candidates, who got to keep all the cash.

The Hillary Victory Fund, by contrast, allows the Clinton campaign to maintain tight control over the cash it raises and spends. The fund represents by far the most ambitious use to date of a joint fundraising committee — and arguably one of the most ambitious hard-dollar fundraising efforts in modern presidential politics. Until 2014, the most an individual could have given to such a committee was $123,200. But in April of that year, the Supreme Court, in a case called McCutcheon v. Federal Election Commission, struck down aggregate limits on total giving to federal campaigns, allowing maximum donations to as many different committees as a donor wanted.

That paved the way for massive joint fundraising committees that could accept ever-larger checks based on the number and type of committees that agreed to participate. In the case of the Hillary Victory Fund, the maximum donation in 2016 is $356,100, based on maximum donations of $2,700 to Hillary for America for the primary election, $33,400 to the DNC and $10,000 to the federal accounts of each of the 32 state parties.

After POLITICO revealed that the victory fund was asking for couples to donate or raise a whopping $353,400 in order to sit at a table with Clinton, Clooney and his wife, attorney Amal Clooney, at a fundraiser last month in San Francisco, Clooney admitted that was "an obscene amount of money." But he justified it by saying "the overwhelming amount of the money that we're raising is not going to Hillary to run for president, it's going to the down-ticket."

According to the agreements signed by the participating committees, which were obtained by POLITICO, the money is required to be distributed, at least initially, based on a formula set forth in joint fundraising agreements signed by the participants. The first $2,700 goes to the Clinton campaign, the next $33,400 goes to the DNC, and any remaining funds are to be distributed among the state parties.

But what happens to the cash after that initial distribution is left almost entirely to the discretion of the Clinton campaign. Its chief operating officer, Beth Jones, is the treasurer of the victory fund. And FEC filings show that within a day of most transfers from the victory fund to the state parties, identical sums were transferred from the state party accounts to the DNC, which Sanders’ supporters have accused of functioning as an adjunct of the Clinton campaign.

For example, the Minnesota Democratic-Farmer-Labor Party received $43,500 from the victory fund on Nov. 2, only to transfer the same amount to the DNC that same day. The pattern repeated itself after the Minnesota party received transfers from the victory fund of $20,600 on Dec. 1 (the party sent the same amount to the DNC the next day) and $150,000 on Jan. 4 (it transferred the same amount to the DNC that day).

That means that Minnesota’s net gain from its participation in the victory fund was precisely $0 through the end of March. Meanwhile, the DNC pocketed an extra $214,100 in cash routed through Minnesota — much of which the DNC wouldn’t have been able to accept directly, since it came from donors who had mostly had already maxed out to the national party committee.
Democratic presidential candidate Hillary Clinton delivers the keynote to the Eagle Academy Foundation annual fundraising breakfast in Gotham Hall on April 29.

A similar pattern transpired with most of the participating state parties. As of March 31, only eight state parties (most of which were in battleground states such as Colorado, Florida, Nevada, New Hampshire and Virginia) had received more from the victory fund than was transferred from their accounts to the DNC.

But even if state parties aren’t getting to keep the victory fund cash, they benefit from money spent to enhance the DNC’s data, research and design services, said Jeremy Kennedy, the executive director of the Maine Democratic State Committee, which is a victory fund participant.

“In my opinion, strengthening the state parties strengthens the DNC and vice versa,” Kennedy said. “I’d be the first one to tell you if I felt differently.” His party received $59,800 from the victory fund, but transferred that exact amount to the DNC, though Kennedy said he hopes that money will find its way back to benefit the party in Maine.

While state party officials were made aware that Clinton's campaign would control the movement of the funds between participating committees, one operative who has relationships with multiple state parties said that some of their officials have complained that they weren't notified of the transfers into and out of their accounts until after the fact. That's despite their stipulations in the banking documents that their affirmative consent was required before such transfers could be made from their accounts. But the operative said that the state party officials are reluctant to complain to the DNC about the arrangement out of fear of financial retribution.

“Particularly the parties in states that are not competitive, they worry that the DNC won’t let them keep any of the money, but the historical reality is that they wouldn’t have gotten the money anyway,” the operative said.

Asked about whether the victory fund has taken steps to keep the state parties apprised of the transfers, Schwerin said, “We work closely with all parties involved and all transfers occur in accordance with the joint fundraising agreements.”

Amalgamated Bank — the union-run bank that handles the accounts for the victory fund, as well as Clinton’s campaign and the DNC — did not directly address the complaints about money being transferred without consent of the state party committees.

“We do not comment on the account activity of any customers other than to say that all clients enjoy the highest standards of security protocols and safeguards to ensure only listed account owners or their designated agents are able to execute transactions of any kind and, of course, always in full compliance of all banking laws,” said bank spokesman Loren Riegelhaupt.

Another area in which critics contend the Hillary Victory Fund appears to be pushing the bounds of joint fundraising is in its online advertising campaign, which has included many ads urging readers to “Stop Trump” or to support Clinton.

While joint fundraising committees are allowed to pay for ads as part of their fundraising efforts, they are forbidden from funding campaign advertising urging voters to vote for or against specific candidates. Those types of ads qualify as electioneering expenses that are supposed to be paid for directly by the campaign or by party committees.

Schwerin said the “Stop Trump” ads aren’t urging readers to vote against Trump. “All of HVF's activities, including online ads, are for fundraising purposes,” he said.

Most of the victory funds ads were executed by the same firm that does advertising for Clinton’s campaign, Bully Pulpit Interactive, which has been paid $8.6 million by the Hillary Victory Fund for online advertising, and $9.2 million by Hillary for America for online advertising and media buys.

Those victory fund ads, as well as a direct mail campaign funded by the same committee, “appear to benefit only [the Clinton campaign] by generating low-dollar contributions that flow only to HFA, rather than to the DNC or any of the participating state party committees,” charged Sanders’ campaign lawyer in an open letter sent to the DNC in April. It alleged that the victory fund was essentially a pass-through to allow Clinton to benefit from contributions that far exceed the amount that her campaign could legally accept.

In a news release accompanying the letter, Sanders campaign manager Jeff Weaver argued “it is unprecedented for the DNC to allow a joint committee to be exploited to the benefit of one candidate in the midst of a contested nominating contest.”

Clinton’s campaign manager Robby Mook called the letter a “shameful” and “irresponsible” fundraising ploy, and urged Sanders to “think about what he can do to help the party he is seeking to lead.”

Read more: http://www.politico.com/story/2016/04/clinton-fundraising-leaves-little-for-state-parties-222670#ixzz4FQRJx7Bc
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