washingtonpost.com
Obama Taps Two Worlds To Fill 2008 War Chest

By Matthew Mosk and John Solomon
Washington Post Staff Writers
Sunday, April 15, 2007

Sen. Barack Obama's elite inner circle of presidential-campaign fundraisers filed into the basement ballroom of a Washington hotel last week to hear the candidate describe "the yearning that America has for change" and his strategy for "tapping into it."

A senator for only two years, the Illinois Democrat has been cast in the early stages of the campaign as an upstart who refused money from Washington lobbyists and parlayed Internet savvy, opposition to the Iraq war and grass-roots enthusiasm into a surprising $25 million first quarter of fundraising -- money that has made him a legitimate contender for the party's nomination.

Behind the closed doors of last week's strategy session, though, was another side to Obama's fundraising success. Filling the room were many veterans of the Democratic financial establishment: a Hyatt hotel heiress, a New York hedge fund manager, a Hollywood movie mogul and a Chicago billionaire.

Obama stood at the front of the room fielding questions for nearly an hour from his national finance team, each of whom has pledged to raise at least $250,000. He shared secret plans for a series of soon-to-be-released policy statements and urged them to call him personally to "tell me how to communicate talking points to you to make you more effective."

As the first-quarter finance report his campaign will file today is expected to document, Obama has managed to successfully bridge two very different political worlds. Along with thousands of first-time donors who sent $50 or $100 from their home computers, the report is to list scores of longtime political insiders who funneled stacks of $2,300 checks to Obama's accounts.

The campaign announced earlier this month that Obama has received money from more than 100,000 people, including 50,000 Internet donors -- more online donors than his chief Democratic rival, Sen. Hillary Rodham Clinton (N.Y.), had total donors. Less well-known is the story of how he built a more traditional fundraising machine fueled, in part, by some of the biggest names in Democratic politics.

"It is the single easiest fundraising phone call that I have ever made, ever," said Jeffrey Katzenberg, the Hollywood producer, who set out to raise half a million dollars for Obama and raised more than $1.7 million. "In 25 years. Literally. For charity, politics, anything. It kind of blew me away; if I made 100 phone calls, 90 of them were successes."

In contrast to Clinton and former North Carolina senator John Edwards, his other main Democratic rival, Obama was a late entrant in the presidential race, first raising the idea publicly last October and not deciding firmly until January.

In his 2004 Senate campaign, Obama relied in part on the muscular financial team of Chicago Mayor Richard M. Daley, as well as the national donors he picked up after his well-received speech at the 2004 Democratic National Convention. With nothing like the national networks of Edwards and Clinton, Obama finance officials said they expected it to take time to woo and sign up establishment fundraisers -- many of whom had long-standing ties to Clinton and her husband, President Bill Clinton.

They also knew it would take effort to grow a direct-mail fundraising base to keep a regular flow of small donations coming in.

Penny Pritzker, the Hyatt heiress, helped raise money for Obama's Senate campaign, and he enlisted her as national finance chairwoman for the presidential race. "Candidly, I'd never done this before; I didn't know what to expect," she said.

Fundraisers in the field also worried that Obama's initial pledge to reject money from lobbyists would slow the early hunt for donations.

"One of the quickest sources of cash was off the table, and there was some early grumbling," said one campaign adviser, who was not authorized to talk to reporters and spoke on the condition of anonymity.

The original goal for the first quarter, back in December, was cautiously set at $8 million to $10 million.

The Pritzker family name brought instant fundraising cachet to the presidential campaign as well as the support of many of Chicago's best rank-and-file fundraisers, such as Paula Crown of the Henry Crown family. The Crowns are worth an estimated $4.1 billion and hold stakes in the Chicago Bulls and the New York Yankees, Hilton Hotels, and Rockefeller Center.

Over the Christmas holidays and into early January, Obama made several personal appeals and lured big-name fundraisers in such donor-rich settings as Hollywood and Wall Street. Big-dollar events began coming together quickly.

Obama scored early headlines by snagging Hollywood record mogul David Geffen, one of the Democratic Party's biggest donors and fundraisers during the Clinton era, who publicly defected and hosted a $1 million fundraiser in Hollywood with Katzenberg and director Steven Spielberg, anchors of the Clintons' Hollywood fundraising dream team in the 1990s.

Black fundraisers also responded to Obama's call, tapping into new sources of Democratic cash in black communities. "You actually have someone now who looks like he can reach out to a wide and diverse group," said Lorenzo M. Bellamy, an African American from Annapolis who is raising money for Obama.

"He has a way of allowing you to feel as though you are a critical part of the operation," said Orlan Johnson, a Washington lawyer and law professor at Howard University who hosted a fundraiser at Union Station last week that raised more than $400,000.

The initial enthusiasm about Obama pushed his first-quarter goal up to $15 million early in the year, and by March it had shifted again to more than $20 million. Although his final numbers for the quarter exceeded expectations, Clinton still finished first in the fundraising race with $26 million, the bulk of which came from longtime party loyalists. Clinton's husband, renowned for his persuasive skills, has not yet become fully engaged.

Still, Obama has lured many establishment donors and fundraisers from the former president's team. Both of the Clinton Federal Communications Commission chairmen -- Reed Hundt and William E. Kennard -- have jumped to Obama, bringing instant credibility and lengthy Rolodexes in the wealthy telecommunications and Internet industries they once oversaw.

Boston philanthropist Alan Solomont and hedge fund executive Orin Kramer, two anchors of the Clinton money machine dating to 1992, also joined Obama, as did two prominent Clinton supporters' sons, James P. Rubin and Kirk Dornbush.

Rubin, a private equity investor, is the son of former Clinton Treasury secretary Robert E. Rubin, a key architect of Bill Clinton's Wall Street fundraising machine and now an adviser to Hillary Clinton.

Dornbush, an Atlanta businessman and the son of Clinton's ambassador to the Netherlands, K. Terry Dornbush, is anchoring Obama's fundraising in the South. Kirk Dornbush has raised money for Southern Democrats such as Edwards and former Virginia governor Mark R. Warner and planned to sit out the Democratic primaries after Warner dropped from the race.

But after an overture from the Obama campaign that included a copy of one of the senator's books, Dornbush said he thought Obama "had a genuine heartfelt respect for people whose opinions might be different."

After half an hour with Obama in Washington, Dornbush enlisted in the campaign.

From the outset, Obama tried to establish a "Washington outsider" image -- moving his campaign operations to Chicago and making a bold promise to refuse checks written or gathered by registered federal lobbyists.

The campaign received $50,566 from 49 lobbyists, but aides flagged the checks during initial screening and said they will return the money. Still, for hosting events and otherwise raising money, the Obama fundraising team is relying on partners in lobbying firms who are not registered for specific clients, former lobbyists who recently dropped clients and spouses of lobbyists. The strategy allows Obama's team to reach the wealthy clients of lobbying firms while technically complying with his pledge.

Joanne Hannett, whose husband, Fred, is a lobbyist for UnitedHealth Group and other clients, is helping raise money for Obama. Although Fred Hannett attended an Obama event, he said he has not personally donated any money or "solicited any of my clients."

Obama also has no prohibition against using state lobbyists to raise money, even when they represent companies with business before the federal government.

"I like that he is not accepting money from federal lobbyists," said Bellamy, a onetime federal lobbyist who now lobbies the Maryland legislature for such clients as Internet giant AOL and defense contractor Lockheed Martin. "I think people find that interesting and insightful that he won't be beholden to those with interests before the federal government."

Obama spokesman Bill Burton said the rule "isn't a perfect solution to the problem and it isn't even a perfect symbol, but it is representative of the kind of administration Obama is going to have."

Pritzker said Obama could have fundraising momentum after the first quarter. "I think that cycle between excitement and enthusiasm and money is beginning, and I think it is really feeding on itself," she said. "It feels very solid."

Certainly, the mood in the Washington ballroom reflected that. Fundraisers left with red folders stuffed with campaign contacts and the dates of coming events. They clamored to join policy advisory groups and pledged to seize on the mood Obama referred to -- the palpable desire for political change.

Still, Obama faces the prospect of an energized Clinton campaign, armed with a donor list of 250,000 names it has not fully tapped. And even Obama's fundraising success could have a downside if it undermines the contrast he has sought to draw between himself and his rivals.

Speaking to voters in New Hampshire earlier this month, as the news broke of his formidable first-quarter haul, he tried to remind them that he has "always tried to curb the influence of money in politics."

"Listen," he told them, "I would love not to have to raise money so I could spend all my time in town hall meetings."

View all comments that have been posted about this article.

© 2007 The Washington Post Company