Sanders, Not Trump, Scaring Democratic Convention Donors

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By Llewellyn Hinkes-Jones

April 12— A new fundraising obstacle has emerged this election year—potential individual and corporate donors to the 2016 Democratic National Convention in Philadelphia have hesitated to contribute because of a possible nomination of Sen. Bernie Sanders (I-Vt.), said Ed Rendell, chairman of the Democratic National Convention host committee.

Sanders has taken aim at big business, calling for the breakup of big banks and a tax on Wall Street to fund tuition-free colleges and universities and also wants the wealthiest Americans to pay their “fair share” of taxes.

Rendell, who was a Democratic Pennsylvania governor and worked with previous DNC host committees, said “there are always a few people that have some excuse for not giving money,” but that it also has been harder to raise funds this year because some donors who usually finance both conventions are sitting them out to avoid any association with a potential nomination of candidate Donald Trump at the Republican National Convention.

However, Republican National Convention host committee President and Chief Executive Officer David Gilbert said the prospects of a Trump nomination are doing little to dampen corporate financial support for this summer's event in Cleveland. According to Gilbert and state tax filings, the host committee is raising more funds in cash and at a quicker pace than previous convention years. If that is true, it raises the question of whether donors might only be withholding support from the DNC convention in Philadelphia.

“We’ve seen little evidence of anybody not wanting to support the host committee because of the potential candidates,” Gilbert told Bloomberg BNA, dismissing a March 30 New York Times report that corporations were hesitant about funding this year’s convention out of concern about Trump’s divisive political views and the potential for unrest.

(Click image to enlarge.)

RNC and DNC convention funds received by year

No Public Funding for Conventions

The stakes are particularly high for organizers of both events because 2016 will be the first year in the post-Watergate era without public funding for the presidential conventions, which were removed by legislation (H.R. 2019) that President Barack Obama signed into law in April 2014. . Without those funds, the parties are more dependent on private donations to fund this year’s events, and the host committees are tasked with raising historically larger amounts than any previous convention.

No corporations acknowledged that they were holding back contributions because of a potential Trump nomination in the March 31 Times story. But the newspaper reported that the Coca-Cola Co. will scale back its contributions considerably to the Republican National Convention and attributed the reduction to an anti-Trump campaign by the activist group ColorOfChange.

State tax filings showed that the Republican host committee had already raised more than $34 million by the end of 2015, and Gilbert said organizers were currently only $10 million shy of their $64 million goal.

Gilbert downplayed concerns that donors might not follow through on their pledges to fund the convention because of Trump. He said none of the donations are pledges, 80 percent of the money raised is “cash-in-hand,” and that there are payment schedules for the rest. State tax filings show that the host committee had already raised more than $34 million by the end of 2015, and Gilbert said organizers were currently only $10 million shy of their $64 million goal.

ColorOfChange Executive Director Rashad Robinson told Bloomberg BNA that he was skeptical about whether the host committees had actually raised that much. “Both sides of the aisle usually fall short in their fundraising for the convention,” he said. “It would be surprising if they had raised so much so quickly.”

While Robinson confirmed that no company has gone on record about withholding donations to the convention, he did indicate that the group has had discussions with a number of corporations that still haven't decided whether to back the convention, “which means there's still some discrepancy between these corporate decisions and how much the host committees have on hand.”

Depending on Private Donations

While the committees no longer receive public funds for hosting the convention, the nominating committees now receive $50 million from the federal government for convention security, allocated through a National Special Security Event grant in the 2015 Omnibus law.

The fiscal year 2015 omnibus spending law (Pub. L. No. 113-235) also authorized the Federal Election Commission to create special committee account categories for conventions—as well as for campaign headquarters and election recounts—which increased the total amount each party could receive from each individual donor to $801,600.

Nominating committees can transfer money to these accounts, or donors could donate directly to the new accounts, which would then be available to spend on staging the convention, improving party headquarters, or funding a recount. If money is transferred from one account to another, donors must be notified of the transfer according to FEC regulations .

This year is also the first year since Obama was nominated in 2008 that Democrats lifted their self-imposed ban on donations from political action committees and lobbyists for convention funding.

Private Funding Criticized

The lack of public funding in 2016 has spurred criticism from public funding advocates who believe the FEC has given up on regulating the conventions.

Without public funding, the conventions reverted back to “an entirely privately financed soiree for both parties.”Craig Holman, Public Citizen

In a 2012 report, Public Citizen called the conventions a “free-for-all for influence peddling” and a “soft-money loophole for lobbyists.” One of the authors of the report, Craig Holman, government affairs lobbyist for Public Citizen, told Bloomberg BNA that the lack of public funding would only make things worse. Without it, the conventions reverted back to “an entirely privately financed soiree for both parties,” which had long deviated from the intentions of the FEC to prevent corporate bribery.

In recent election cycles, the political parties had it both ways: accepting public financing for their conventions while also raising corporate funding through the host committees.

“Public funding became a joke,” said Lawrence Noble, general counsel for the Campaign Legal Center and formerly the FEC's general counsel. Instead of removing public funding, the FEC should have “cracked down on the host committees,” he said.

Host Committee Fundraising

Both host committees aim to raise significantly more money than in previous years to make up for the loss of public funding.

According to communications director Anna Adams-Sarthou, the Philadelphia host committee for the DNC convention intends to raise $85 million. Based on FEC data, that target is almost $20 million more than what the 2012 host committee raised. Previous news stories indicated that the DNC host committee only intended to raise $60 million.

At the end of 2015, tax filings showed that the DNC host committee had raised more than $26 million, and Rendell said in January that the committee had $14 million in pledges. As a comparison, during the run-up to the 2008 convention in Denver, the host committee's 2007 tax filings showed that the host committee had raised slightly more than $14 million.

While the Philadelphia host committee would not provide an updated fundraising total, Adams-Sarthou said organizers were “making good progress and hitting all of our benchmarks.” A Democratic National Convention Committee spokesman said that despite the loss of public funds, organizers were “meeting all of our targets and the 2016 Democratic National Convention remains on time, on task and on budget.”

The Cleveland Host Committee's Gilbert told Bloomberg BNA that the lack of public funds wasn’t an issue.

When it was announced that public funds wouldn’t be available, “[the host committee] was still in the bidding process. We adjusted the budget in our bid,” he said. “We knew all along how much to raise. And it hasn’t caused a problem with vendors. We knew what the process would be and had an idea of cash flow needs.”

The Philadelphia host committee for the Democratic National Convention intends to raise $85 million.

Anna Adams-Sarthou,Philadelphia host committee

The Cleveland Host Committee also raised the funds much earlier than in the past. According to tax filings, the Cleveland committee had already raised $34 million by the end of 2015, whereas the 2012 Tampa Bay Republican host committee had only raised $11 million by the end of 2011.

According to the Campaign Legal Center's Noble, there never has been a concern that the parties wouldn't raise enough money for the conventions.

“They’ve always made it up to the limits,” Noble said. “It’s rare that they would let a contribution limit go unused. And without public funds, they’ll raise more money than ever before.”

To Noble, the convention accounts will be another opportunity for the parties to raise more money—whether they need it or not. “They may try to shift expenditures around so that general campaign costs fall under convention expenses,” he said.

Funding for Brokered Convention

Noble said that while both parties may raise enough to cover their predicted budgets for the event, additional costs could arise from a brokered convention.

If a candidate is not chosen on the first ballot—widely predicted for the Republican convention and also remains a possibility for Democrats—more money may be needed for lawyers, security, and messaging “to make the convention look as normal as possible,” especially if the decision making turns raucous, Noble added.

Representatives from both host committees said they had not budgeted for a brokered convention, but such additional funds would be handled by the party committees.

While Rendell told Bloomberg BNA he believed there could be some divisiveness over who gets nominated at the DNC convention, he didn't think it would be particularly contentious. “There may be some debate, but it won't be 1968 again.”

To contact the reporter on this story: Llewellyn Hinkes-Jones in Washington at ljones@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com