RNC finances suffer from loss of major donors

By T.W. Farnam
Washington Post Staff Writer
Thursday, January 13, 2011; 8:36 PM

Hundreds of major donors have abandoned the Republican National Committee, leaving it $20 million in debt and threatening its future as a central player in the 2012 presidential election.

The RNC raised just $7 million from major donors for the midterm elections, one sixth as much as it brought in for the previous midterms, in 2006. By contrast, the Democratic National Committee raised $38 million from large donors for last fall's midterms, three times as much as for the 2006 elections, according to a Washington Post analysis of donor records.

On Friday, when RNC members gather at National Harbor to select a chairman, they will meet under the shadow of the committee's finances, which are in worse shape than at any time since the Federal Election Commission began keeping records 35 years ago.

"You can't even dream of winning in 2012 with that kind of operation," said John Dowd, a Washington lawyer and longtime RNC donor who decided against contributing in the past two years because of the "mess" at the party. "As long as it's in that kind of shape, I can't even think of giving."

The run-up to Friday's vote, with Chairman Michael Steele in a tough race for reelection against four other candidates, has been laced with acrimony largely focused on the party's struggles to raise and manage money.

The financial troubles could be a significant challenge going forward, given a broad field of potential Republican presidential candidates and President Obama's fundraising success in the past. In his 2008 campaign, Obama raised $750 million, making him one of the strongest political fundraisers ever.

The Republican Party's donor rolls show that 609 major contributors from the past two elections chose not to write a check for the 2010 midterms, according to an analysis of data from the nonpartisan Center for Responsive Politics.

At least some of those donors decided to give instead to newly formed conservative interest groups, which increased their share of Republican fundraising in the midterms.

Among those donors is Donald Carter, Texas businessman and founder of the Dallas Mavericks NBA franchise, who gave at least $25,000 to the RNC each year from 2004 to 2008. In October, Carter gave $10,000 to American Crossroads, a group founded with support from George W. Bush administration political adviser Karl Rove.

Carter did not return calls seeking comment.

"Major donors are sophisticated," said Mike Duncan, who chaired the RNC during the 2008 elections. "They understand they have a choice."

He predicted continuing challenges for the party, given its outstanding loans.

"The hardest money to raise in politics is money for debt," he said.

The midterms saw a powerful shift of influence from the RNC to interest groups such as American Crossroads, which raised $70 million, more than any other advocacy organization. It was among a number of groups that formed after Supreme Court decisions lifted restrictions on spending. At least some of the new interest groups can shield the identities of donors while fielding hard-hitting campaign ads.

Dowd, a lawyer at Akin Gump, gave $15,000 to American Crossroads this fall, records show. He had given $50,000 to the RNC in recent years but made no contribution for the midterms.

He said no one at the RNC asked him to donate during the past election cycle. "I didn't get any calls," he said. "It is crazy."

The RNC's current debt far exceeds any in its past. In 1996, the year with the second-largest debt on record, the committee carried $5 million in loans, a quarter of the current level. The committee reported not quite $2 million in its bank accounts in November.

The DNC reported owing $15.5 million in November, and it had nearly $10 million in the bank.

Each of the candidates to chair the RNC, including Steele, has said the finances would become the top priority.

"We need money, and we need a lot of money," said Reince Priebus, chairman of the Wisconsin GOP, in a debate last week. "We need a chairman that's going to put his or her head down and spend literally five, six hours every day making major donor calls, major donor visits, literally working like an absolute dog for the next two years to get our fiscal house in order."

Priebus is slightly favored to win the contest when the committee's 168 members vote in an election that will continue for as many ballots as it takes for one candidate to get a majority.

Steele's two-year chairmanship has been controversial, marked by questions about party expenditures, including chartered jets, a retreat to Hawaii and a large bill rung up by staff at a California bondage-themed nightclub.

In defending his tenure, Steele has pointed to the party's success in the November elections, when Republicans captured the House by picking up 63 seats. Steele notes that the victory came after a party low point in 2008, when Obama won the White House and Democrats increased their congressional majorities.

"When I began on the job in 2009, we couldn't find anyone to say they were a Republican," Steele said at the debate. "We put together a small team and got busy at the task of winning elections, reaffirming the value of this party to the American people."

Steele has vowed to stay in the race until the last ballot, even if it is clear that he cannot win. Priebus has collected 40 public endorsements, nearly half the number needed to win.

Other candidates in the race include Maria Cino, a former Bush administration official who ran the party's 2008 convention and has been endorsed by House Speaker John A. Boehner (Ohio); Ann Wagner, a former ambassador to Luxembourg and former head of the Missouri GOP; and Saul Anuzis, a former Michigan party chairman who lost to Steele in 2009.

Staff writer Chris Cillizza contributed to this report.

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