Convention Cash More Controversial Than Ever

(Photo: AP/Carolyn Kaster)

President Barack Obama and Vice President Joe Biden celebrate their nominations on stage at the 2012 Democratic National Convention in Charlotte, North Carolina.

Political conventions have long been notorious for being rules-free zones where corporate donors may funnel fat checks to little-regulated host committees in exchange for exclusive cocktail receptions, briefings, and special-access events with candidates, party officials, and lawmakers.

But this year, the Republican and Democratic National Conventions have taken this wide-open fundraising to a whole new level. The checks are bigger. The disclosure is scantier. Both parties will inaugurate a number of dubious “firsts”—the first conventions with no public funding; the first conventions funneling six-figure checks into new, high-dollar party accounts; the first conventions in many years staged as early as July, to leave more time for general election fundraising. For Democrats, it will also be the first convention in eight years to permit lobbyist donations.

At the same time, mounting public outrage over political money, coupled with the controversial nature of presumptive GOP nominee Donald Trump’s campaign, have complicated convention fundraising on both sides of the aisle. When Republicans gather in Cleveland next week, many Wall Street executives, K Street business lobbyists, and erstwhile corporate sponsors will stay home. Democrats, who will gather in Philadelphia from July 25 to July 28, face calls for three members of their host committee—former Pennsylvania Governor Ed Rendell, Comcast Executive Vice President David Cohen, and health-insurance industry executive Daniel Hilferty—to step down.

“These three figures are multimillionaire lobbyists and high-profile supporters of political positions that most Democrats abhor,” declares an open letter by the group Reclaim Philadelphia, which describes itself as founded by “former staff and volunteers” of the Bernie Sanders campaign. “Their prominent role in hosting this year’s convention might lead one to forget that the Party pledged in its 2012 platform to ‘take immediate action to curb the influence of lobbyists and special interests on our political institutions.’”

The DNC’s host committee also has drawn fire for failing to disclose its donors in advance of the convention itself—something election laws don’t require until 60 days after the event. For unknown reasons, Democrats’ host committee also has yet to obtain official tax-exempt status as a 501(c)3 charity from the Internal Revenue Service, placing donors who want to deduct convention contributions from their taxes in a precarious spot. Organizers have said they will convert the committee to a 501(c)6 “business league” if charity status doesn’t come through.

The role of tax-exempt groups in helping underwrite conventions has always been what made the money behind these party gatherings so suspect. Under the fiction that local officials and civic leaders should be free to spend private money to promote their cities, party operatives have routinely scooped up millions for tax-exempt host committees from corporate sponsors operating outside the campaign-finance rules.

In the past, conventions have also received a federal grant—in 2012 it was about $18 million for each party convention—under the presidential public-financing system. But in 2014, Congress eliminated public convention funding, steering the money instead to pediatric medical research. That same year, Senate leaders tucked a provision into an omnibus spending bill that dramatically lifted the limits on contributions to political parties for special accounts that pay for recounts, buildings, and conventions. That means that big donors, previously banned from giving more than $33,400 a year to the Republican or Democratic National Committees, may now give an additional $100,200 apiece annually—$200,400 per election cycle—to a party’s special convention account.

The upshot is that this year’s conventions, which will cost an estimated $60 million or more apiece, will be funded entirely with private money, much of it in the form of six-figure checks from hedge fund donors, corporate executives, and other top-tier contributors. As of March 31, the two parties had collectively pulled in $10.7 million for their special convention accounts, according to the Federal Election Commission.

The larger share of the special convention account contributions has gone to Republicans, who have leveraged the parties’ new high-dollar accounts more aggressively than Democrats. Recent big contributions to the GOP convention accounts include $100,200 apiece from coal company magnate Joseph W. Craft III; Uline, Inc. CEO Richard Uihlein; and hedge fund executive Robert Mercer. Corporate GOP convention sponsors also include AT&T, Delta Airlines, and Microsoft Corp.

Big Democratic convention donors include the Comcast Corp. PAC, which gave $105,000; Eric Schoenberg, chairman of the education technology firm CampusWorks, Inc., who gave $100,000; and the Native American tribe known as the Aqua Caliente Band of Cahuilla Indians, which gave $200,000. The DNC host committee’s website also boasts a long list of corporate sponsors, including Chevron, Comcast, Facebook, Samsung, and Sunoco. Corporate funding of conventions directly contradicts campaign finance laws, which explicitly bar corporate and labor union contributions to candidates, parties and nominating conventions, according to a new report from the Campaign Legal Center. The group blames regulatory loopholes and enforcement failures at the FEC.

It’s nothing new for conventions to rake in big corporate dollars, but the combination of newly relaxed rules and the mood of voters makes this year’s party fundraising festival more unseemly than ever. Donald Trump, who once boasted about his independence from special-interest donors, will arrive in Cleveland fresh off a fundraising blitz that included a Bel-Air, California dinner that charged up to $449,400 per person. It’s a once-illegal sum made possible now only by the parties’ new special high-dollar accounts to pay for buildings, recounts, and yes, conventions.

For Democrats, convention fundraising could prove even more awkward. Presumptive Democratic nominee Hillary Clinton has increasingly touted her plan to rein in big money, a goal that was once a centerpiece of the Sanders campaign. It remains to be seen whether Sanders’s supporters buy it. As the Reclaim Philadelphia letter calling on Rendell, Hilferty, and Cohen to step down proclaims: “Granting lobbyists privileged access to elected officials reveals the Party leadership’s hypocrisy, disregard for its own policy positions, and disconnect from the values of the Democratic electorate."

This story has been updated to reflect the July 14 release of a Campaign Legal Center report on corporate convention funding.

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