Behind the scenes at the Democratic National Committee’s summer meeting in Minneapolis last August, campaign officials for Hillary Clinton were making a hard sell to the state parties.
In private huddles, they urged state officials to sign on to an ambitious fundraising endeavor that would allow Clinton’s presidential bid, the DNC and the state parties to scoop up and share big checks from wealthy donors. It would mark the earliest creation of a joint fundraising committee between a presidential candidate and the party, and it would be the biggest ever, thanks to a 2014 U.S. Supreme Court decision that knocked down a cap on how much donors could give to federal campaigns in a single year.
A record 32 state parties signed on to the fund, allowing the committee to solicit donations 130 times greater than what a supporter can give to Clinton’s campaign for the primary.
But the states have yet to see a financial windfall. Meanwhile, Clinton’s campaign has been a major beneficiary, getting an infusion of low-dollar contributions through the committee at a time when rival Bernie Sanders’s army of small donors is helping him close in on her financially. The fund is run by Clinton campaign staff, and its treasurer is Clinton’s chief operating officer.
Clinton officials said their use of the fund is proper and that the state parties will benefit from the millions of dollars the joint fundraising committee is generating for the DNC, which provides the infrastructure to support Democratic campaigns across the country.
“Republicans are spending record amounts trying to beat Democrats, and we want to ensure that the Democratic nominee and candidates up and down the ballot are backed by a strong party with the resources needed to win,” said campaign spokesman Josh
The early, expansive use of a jumbo-size joint fundraising committee shows how the Clinton campaign has worked to maximize donations from wealthy supporters, seizing on rules loosened by the Supreme Court.
Many states were wary of joining the effort, worried that such a partnership would be perceived as an endorsement of Clinton and might interfere with their efforts to raise money from home state donors. But campaign officials — including Marlon Marshall, Clinton’s director of state campaigns — emphasized that this was a way to strengthen the party at its roots, a message Clinton echoed in the speech she delivered at the Minneapolis meeting to DNC members.
“It’s time to rebuild our party from the ground up,” the former secretary of state pledged. “When our state parties are strong, we win.”
The joint committee that was formed, called the Hillary Victory Fund, ended up raising nearly $27 million by the end of 2015, thanks to six-figure donations from longtime Clinton allies and a New York fundraiser headlined by the singer Sting.
So far, the state parties have served only as a pass-through for their share of the funds. Campaign finance records show that nearly $2 million in donations to the fund initially routed last year to individual state party accounts was immediately transferred to the DNC, which is laboring to pay off millions of dollars in debt.
Even as it has bolstered the DNC, the Hillary Victory Fund has had striking success bringing in new donors to support Clinton’s fight to beat Sanders for the Democratic nomination. The committee spent more than $4 million prospecting for small-dollar contributors through direct mail and online ads that resemble official campaign material, down to the signature “I’m with her” tagline. The net proceeds raised for the campaign: $3.24 million through the end of 2015.
Several campaign finance attorneys said the fund’s early investments in small-donor recruitment for Clinton were unusual, noting that a joint fundraising committee’s resources are traditionally focused on boosting a party nominee, typically through events at upscale hotels for deep-pocketed contributors.
“I’ve never seen anything like this,” said Lawrence Noble, a former general counsel of the Federal Election Commission (FEC) who is now with the nonpartisan Campaign Legal Center. “Joint victory funds are not intended to be separate operating committees that just support a single candidate. But they appear to be turning the traditional notion of a joint committee into a Hillary fundraising committee.”
Of the $6.4 million the Hillary Victory Fund spent on operating costs last year, two-thirds went to two Washington, D.C.-area vendors that also work for the Clinton campaign: Bully Pulpit Interactive, which received $1.9 million for online ads, and Chapman Cubine Adams +Hussey, which was paid $2.4 million for direct mail solicitations, Federal Election Commission records show.
The victory fund also sponsors Clinton’s online store, allowing donors who have already given the maximum to her campaign to purchase Hillary lapel pins, caps or car magnets, with their money benefiting the party. It’s similar to the way President Obama’s online shop was run in his 2012 reelection.Aides to Sanders, whose joint fundraising committee with the DNC has not yet been active, said the Hillary Victory Fund appears to be functioning as an arm of Clinton’s campaign.
“Senator Sanders has said since the beginning that one thing his campaign is all about is trying to restore trust in the political system, and some of this looks like it’s business as usual,” said Mark
Longabaugh, a senior adviser to Sanders and his campaign liaison to the DNC. “It looks like the Clinton campaign is using the joint fundraising committee to the benefit of their presidential committee, using major donors and now lobbyist money in ways they should not.”
Clinton officials disputed that, saying the campaign has properly covered the costs of donations raised by the victory fund. Federal rules require that the spending by a joint fundraising committee be split in proportion to the amount raised for each participant.
Campaign and DNC officials said the main purpose of the joint fundraising committee is to raise money for the Democratic Party to use in the general election. In addition to the $3.24 million collected for Clinton’s campaign last year, the DNC received $4.13 million from the fund, including the $1.8 million transferred from state parties, FEC filings show.“This is an agreement between our campaign, the DNC and state parties across the country meant to maximize our ability to help the Democratic Party prepare for the general election,” Schwerin said.
DNC spokesman Mark Paustenbach said that the Hillary Victory Fund is helping the party invest in its national voter file, increase the allotments it gives state parties, and expand its research, communications and digital capabilities.
“We have to compete with untold hundreds of millions of dollars being spent with zero accountability by super PACs,” he said in a statement. “We’re going to continue to be transparent while strengthening our state parties, building out critical infrastructure, preparing to host a successful convention and ensuring the party has the tools and resources to elect a Democrat to the White House.”
Paustenbach added that the victory fund is similar those the DNC set up in the past two presidential elections.
However, the national parties have traditionally waited to have a presumptive White House nominee before launching such a vehicle. It was not until June 2008 that Barack Obama and the DNC created one. This cycle, the Republican National Committee has yet to set up a joint fundraising effort with any of its presidential contenders. RNC officials said it is still too early in the primary contest.
Establishing a victory fund the year before the election allowed the Clinton campaign and DNC to ask wealthy backers to give the $356,100 maximum annual contribution twice: once in 2015 and again this year.
After the Hillary Victory Fund was created in September, it collected large donations from longtime Clinton allies such as billionaire investor George Soros, media executive Haim Saban and Esprit co-founder Susie Tompkins Buell. Campaign finance records show there was a rush of six-figure checks in the final weeks of 2015: New York investor Philip Munger gave $353,400, as did Hollywood chieftain Jeffrey Katzenberg, soccer club owner Avie Glazer and Alice Walton, daughter of Walmart founder Sam Walton.
The amount donors can contribute to joint fundraising committees is much larger than in the past, thanks to the Supreme Court’s 2014 decision in McCutcheon v. FEC, which did away with the annual limit an individual could give to federal candidates and party committees.
The change in the law increases the incentive for parties and candidates to create super-sized committees. For every state party that joined the Hillary Victory Fund, officials were able to increase the maximum annual donation from an individual by $10,000.
At the August DNC meeting, Clinton aides lobbied states to get on board.
“A few state parties were pretty suspicious of this, because there was no way you could see it as anything but a tacit endorsement of Hillary Clinton,” said one party leader whose state declined to sign on to the victory fund and spoke on the condition of anonymity to describe private conversations.
Other state officials were concerned that the fund would undercut their ability to raise funds for key races from home-state contributors.
“We felt it was in the best interest of Nebraska Democrats to not participate,” said Vince Powers, the state party chairman there, who said his priority is the reelection of Brad Ashford, the lone Democrat in the state’s congressional delegation.“They raised all that money, so transferring it back out just seemed like the fair thing to do,” she said. “We felt it would help them and also help our efforts in Utah to mobilize voters.” The treasurer of the Hillary Victory Fund is Elizabeth Jones, the Clinton campaign’s chief operating officer. She controls how the money is transferred to the states and the DNC, according to a person familiar with the structure. The timing of the transfers is at her “sole discretion,” according to a copy of the joint fundraising agreement obtained by The Washington Post.
In Minneapolis, the Clinton campaign tried to persuade Powers to come on board, inviting him to meet privately with Marshall, Clinton’s director of state campaigns and political engagement. “It was a nice meeting,” said Powers, though he didn’t change his position.
In the end, states including California, Iowa and Washington declined to sign on. Among the 32 that did was Utah. The state party’s executive director, Lauren Littlefield, said it was clear that the donations the state parties received through the victory fund were expected to be routed to DNC headquarters in Washington.
The victory fund now functions as an operation embedded within the Clinton campaign, run by campaign staffers. Last year, the fund reimbursed the campaign nearly $1.5 million for salary and overheard.
(In comparison, the treasurer of the Bernie Victory Fund, Sanders’s joint fundraising committee with the party, is the DNC’s chief financial officer, Bradley Marshall. So far, the fund has raised just $1,000 — a donation from the DNC.)
Several state party officials participating in the effort — particularly those in battleground states — said they’re confident they will eventually reap the benefits.
“When somebody comes to me and says, ‘Hey, I have a way of making your party stronger,’ I say, ‘Let’s do it,’ ” said Raymond Buckley, chairman of the New Hampshire Democratic Party, who said he expects the DNC will make “enormous” investments in his state before the November elections.
Alice Crites and Anu Narayanswamy contributed to this report.