Many big donors using a loophole in presidential race
By Michael Luo and Griff Palmer
Published: October 20, 2008
Much of the attention on the record amounts of money coursing through the presidential race this year, including Senator Barack Obama's announcement Sunday of his $150 million fund-raising bonanza in September, has focused on the explosion of small donors.
But there has been a less-remarked-upon proliferation on the national fund-raising landscape: the rise of mega-donors, a group of givers with arguably greater potential to influence the candidates.
Enabled by a loophole in campaign finance laws, they have written giant checks, which far exceed normal individual contribution limits to candidates, to joint fund-raising committees that benefit both the candidates and their respective parties.
The committees have been used far more heavily in this presidential election than in the past, in part because Senator John McCain's campaign has taken the concept to new levels, enabling donors to write checks of more than $70,000.
Obama's campaign has also leaned on large givers to contribute up to $33,100 at a time to complement his army of small donors over the Internet as he bypassed public financing for the general election. As a result, both candidates have nearly 2,000 people each who have given $25,000 or more to them through September.
"What we're seeing is an emphasis on the high-end check that we have not seen since the days of soft money," said Anthony Corrado Jr., a campaign finance expert at Colby College in Maine.
A New York Times analysis of donors who wrote checks of $25,000 or larger to the candidates' main joint fund-raising committees through August found some notable differences in the industries that Obama and McCain are drawing their largest contributions from.
The biggest portion of money from these mega-donors for both candidates came from the securities and investment industry. For McCain, the next-biggest group was real estate, and then donors who identified themselves as retired. With his emphasis on offshore drilling, McCain has also enjoyed heavy support from wealthy benefactors in the oil and gas industry, a group Obama drew relatively little from.
Besides those in the finance world, Obama drew the most in large checks from retired donors and lawyers - a group McCain collected significantly less in large checks from - followed by those in real estate and then business services, like management consulting.
Donations from the private equity and hedge fund industries accounted for a significantly greater amount of the giving from McCain's largest donors, compared with Obama, with donors perhaps fearing additional regulations that Obama has proposed. The Democrat was much more popular among generous benefactors in the entertainment industry than McCain.
The surge in contributions to these joint fund-raising committees - they have already taken in nearly $300 million this year through September, with McCain collecting slightly more than Obama, compared with just $69 million in 2004 - is a worrisome trend to some campaign finance watchdog groups.
They argue that the heavy emphasis on such arrangements brings candidates one step further into the embrace of major donors who are writing checks to them far larger than they could normally give.
Individuals are normally limited to contributing $2,300 to presidential candidates for the primary and another $2,300 for the general election, if the candidates are not taking public financing.
More than 1,800 people, however, had donated $25,000 or more as of the end of September to McCain through his various "Victory" committees, as the joint fund-raising committees are dubbed, according to Federal Election Commission filings and data compiled by Public Citizen, a nonpartisan watchdog group. More than 300 people have contributed $50,000 or more.
As for Obama, more than 1,900 people donated $25,000 or more to his joint fund-raising committees through the end of September.
The utility of such joint fund-raising committees, which were first used in a significant way at the presidential level by Senator John Kerry's campaign in 2004, is that they conglomerate contributions for various entities together into a single committee under the banner of the candidate. They offer convenience for major donors and afford them a sense of greater clout with the writing of a single large check, as opposed to several smaller ones.
The larger checks to the joint fund-raising committees are made possible because donors can contribute up to $28,500 to the national parties and $10,000 to state parties. The parties can spend on behalf of the candidates under certain restrictions.
McCain finance officials introduced their main joint fund-raising committee, McCain Victory 2008, in the spring. McCain was still able to accept primary money, so money raised through the victory committee was divvied up between his primary campaign coffers, the Republican National Committee, several state parties and a legal compliance fund for the general election. In a measure of how quickly such committees could amass cash, the opening fund-raiser for the victory committee in New York in May brought in $7 million.
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