Six-Figure Donors Fueled A Mountain of Political Mail in Michigan

 

By SIMON D. SCHUSTER

Michigan Campaign Finance Network

 

LANSING (Dec. 2, 2020) — Robin VanderRoest has lived in the Kalamazoo area for the last 30 years. During campaign season, her household usually gets a fair amount of mail from both parties, but this year was unlike any other.

“This year, I can’t quantify it, it just seemed like a lot more,” VanderRoest said. “We had a stretch there where we were getting something from (Joe) Biden and Kamala (Harris) every day. … I mean, we had eight-page booklets for Biden-Harris and I’ve never seen anything like that.”

This election season, mailboxes were filling up. And much of the mail appeared to come from just two sources: Michigan’s Democratic and Republican parties.

Through the middle of October, the federal account for the Michigan Democratic Party (MDP) reported spending $9.7 million on political mail for federal candidates, the vast majority supporting Biden. The account for the Michigan Republican Party (MRP) spent $5.7 million. It’s more than triple the amount of any prior election, according to Federal Election Commission filings analyzed by Michigan Campaign Finance Network.

MCFN repeatedly found mailers supporting both presidential candidates, while paid for by the state parties, had also been received by voters in numerous other states. It’s because in most instances, the parties were using money raised by campaigns to pay the same mailing firms those campaigns had also hired. 

Vague FEC rules and a 2014 supreme court decision meant campaigns could use Michigan’s state parties to bypass contribution limits and spend unlimited amounts on political mail with the messages they tailor.

 

Michigan Parties Spent For Campaigns

Much of the cash fueling these mailings, especially in the presidential race, was from the wealthiest donors of the campaigns they were supporting thanks to the use of joint fundraising committees.

These committees are set up so donors can give to multiple campaigns and committees at once and the committees ostensibly agree how large donations will be divvied up. Individual contribution limits to each committee still apply; for state parties it’s $10,000 per year. 

The result is some very large donations by the ultra-wealthy, bringing money from billionaire megadonors like Sheldon Adelson and George Soros into the coffers of Michigan’s political parties.

By far the largest at work this election was the joint fundraising committee of now President-Elect Joe Biden, the Biden Victory Fund. It included Biden’s campaign, three Democratic National Committee accounts and 47 state party committees, including Michigan’s. With a single check, individuals could donate up to $721,300. By mid-October it had raised nearly $590 million. 

While the victory fund directly transferred a total of more than $4.4 million to Michigan Democrats’ federal account, in reality the account received much more.

For every donation of $188,300 or more, the Michigan Democratic State Central Committee, MDP’s federal account, received $10,000. But federal campaign finance rules also allow state parties to transfer unlimited amounts between one another. On Oct. 6, the victory fund transferred a total of nearly $2.4 million to three state parties in Louisiana, Alabama and Tennessee, states Biden had little hope of winning. That same day, those committees transferred identical amounts to Michigan, according to Federal Election Commission filings. The Vermont Democratic Party did the same with nearly $1 million spread out over a month.

MCFN found through an analysis of FEC records that if the funds from those transfers had been directly sent to Michigan, more than 175 people would have exceeded the $10,000 contribution limit. At least 50 gave $40,000 or more and donors from Michigan made up less than half a percent of the total amount.

Between the Biden Victory Fund and other state Democratic Parties, the Michigan Democratic State Central Committee received about $8.3 million. By about three weeks before the election, the most recent filing available, the party had spent about $8 million on mail supporting Biden. MDP did not respond to repeated requests for comment.

The vendors paid by campaigns and the parties were usually one and the same. MDP primarily paid SKDKnickerbocker, a major Democrat-aligned consulting firm, for the mailings supporting Biden. FEC records show it had never before been paid for direct mail until Biden’s campaign became its first patron in June 2019. 

On the day the Biden Victory Fund was created, the campaign paid the firm for “travel,” perhaps to meet with the campaign, then payments to SKDK stopped.

By September, state democratic parties began paying SKDK for mailings supporting Biden and the deluge of mail began in earnest. Democratic parties in 14 states paid the firm close to $30 million for Biden mailers by mid-October. Only Pennsylvania spent more than Michigan.

Brendan Fischer, the director of federal reform for Campaign Legal Center, an electoral reform nonprofit, called MCFN’s findings “striking.” He’s troubled by the practice of large donations supporting a single candidate.

“Even though the checks would be ostensibly split between the participating party committees, the proceeds would ultimately be spent to benefit the candidate,” Fischer said in an email. “The prospect of candidates both soliciting and benefitting from six or seven-figure contributions raises serious risks of actual or apparent corruption.”

The Michigan Republican Party employed similar tactics, though with smaller sums. At times, the amounts aligned closely. The joint fundraising committee supporting Republican Senate candidates, Targeted State Victory PAC, is made up of 23 committees, including Michigan’s Republican party. Two days after the PAC transferred $236,000 to Tennessee’s Republican Party, it reported passing $235,000 along to MRP. The next day MRP spent that same amount on a mailing for U.S. Senate candidate John James.

The six-figure donations fueling this spending are possible because of a 2014 U.S. Supreme Court ruling, McCutcheon v. FEC. There, a four-justice plurality found that placing a limit on the overall amount an individual can give in an election cycle, as the FEC had done by law for the prior 40 years, was unconstitutional.

CLC had joined a brief in support of the limits. Fischer said his organization had warned the court of exactly what is now occurring.

“(Supreme Court Chief Justice John) Roberts dismissed these scenarios as ‘divorced from reality.’ But state parties spending joint fundraising proceeds in apparent coordination with presidential candidates shows that the risks we warned about were very real,” Fischer said.

 

For Mail, Spending Limits Rarely Applied

Ostensibly there are limits to how much parties can spend supporting candidates. For presidential candidates there’s a national limit of $26.4 million. For U.S. Senate and House candidates in Michigan, the limit was $813,300 and $51,900, respectively. These are known as coordinated party expenditures.

Those limits were exceeded for every federal candidate both party committees spent money to support in Michigan, including both Senate candidates and seven of the 28 House candidates running, if not for one rule.

Parties can avoid these limits using the volunteer materials exemption, where “substantial volunteer involvement” in the making and distributing of things like mail, buttons and yard signs doesn’t count toward those spending limits.

For mail that standard is particularly easy to meet. More than 99% of the mail sent this election cycle was exempt from spending limits, according to the latest FEC filings.

When the rule was created in 1979, the goal had been to encourage state and local parties to have a larger role in federal elections. The highly automated process used today, however, has made that role much less clear, Fischer said.

“The purpose of the exemption was to encourage and protect genuine volunteer activity, which in the 1970s and 1980s included physically stuffing and stamping envelopes,” Fischer said. “It is not at all clear how modernized direct mail operations promote volunteer engagement.”

Tony Zammit, communications director for the Michigan Republican Party, said the party doesn’t coordinate any volunteers for mailings — the firms do it for them. Nearly all those firms are located outside Michigan.

“It is done on the vendor's side, the volunteers fulfill this for the federal government in case we are ever asked about it,” Zammit said. “We make sure that we have not only documentary proof that this person was a volunteer, basically signing in saying that they are volunteering, and then we also require photographic evidence of the activities taking place.”

For more than a decade the FEC’s commissioners, a six-person panel that sets campaign finance rules, haven’t agreed on what counts as substantial involvement from volunteers. The agency has conducted more than a dozen investigations without a clear standard to rely on. And the standard has not been particularly high.

In a 2009 case, FEC investigators said Utah’s state Republican Party didn’t qualify for the exemption when volunteers after receiving printed mailers from a vendor, stamped them, then loaded them back into a truck. The truck returned the mail to the vendor, which addressed, sorted and delivered the mail to the post office. The commissioners, noting the standard was still unclear, instead chose to dismiss the case.

Since then, Republican commissioners have repeatedly proposed a standard where as little as loading the mail into a truck would qualify, but Democratic members have reversed course and repeatedly blocked the proposal.

Some see this ability as the lesser of two evil. Kenneth Gross, a lawyer with deep expertise on federal campaign finance issues, finds this approach preferable to the current alternative, where huge amounts of money work their way into elections as dark money, through super PACs and nonprofits.

“I do feel the permission of raising higher money, it does work against a lot of the outside money,” Gross said in an interview. “(The U.S. campaign finance system) is a balloon, you know, and when you press down one place it pops out somewhere else. It's not that the money is going away. I think that having higher limits under the tent is generally a good thing.”

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