THE NOT-SO-JOINT JOINT FUND-RAISING AGREEMENTS
ONE OF THE MOST EGREGIOUS EXAMPLES of the DNC’s lopsided support for the Clinton campaign was the abuse of the joint fund-raising agreement signed by them and a number of state parties. It allowed Hillary for America (HFA) to launder millions in donations that were above the limit they could accept under federal election law and robbed cash-starved state parties of tens of millions of dollars.
The purpose of a joint fund-raising agreement is to allow big donors to write a single check to the parties to the agreement. What is raised is then divided up among the parties, according to the terms of the agreement and in accordance with federal election law. The DNC’s joint fund-raising agreements provided that the first $2,700 (the maximum amount an individual can give to a federal candidate per election) would go to the candidate. The next $33,400 would go to the DNC, and then the participating thirty-two state parties would get up to $10,000 each. The goal is to get a donor to write one big check of over $350,000. There is no purpose to the joint fund-raising committees doing small-dollar fund-raising. That’s because in that scenario, all the money raised would go to only one of the parties—in this case, the Clinton campaign, because under the agreement the Clinton campaign sets the first $2,700 of each contribution.
One interesting feature of the DNC’s joint fund-raising agreements was that there was no deadline for the dispersal of the money raised by the committee to the various participants. The committee could keep the funds and use them to do additional fund-raising. Okay, fair enough. Turning money into more money in the fund-raising world seems like a good move.
However, the joint fund-raising committee’s goal was to take those larger-than-$2,700 checks (which the Clinton campaign could not accept under federal election law) and convert them into smaller donations that all went to HFA. They accomplished this by using joint fund-raising dollars to do direct-mail and online solicitations.
It is empirically true that both direct-mail and online fund-raising almost always bring in contributions well below the federal limit, regardless of who sends the solicitation. Bernie’s average contribution of $27 (raised almost entirely online) is a prime example of this reality. Online donations to HFA or the DNC would also have been relatively low—certainly low enough that HFA would have captured almost all the money raised in that way. In this way, HFA and the DNC could take $350,000 donations (of which HFA could accept only $2,700) and turn it into multiple $25 or $35 contributions from the online or direct mail program—all of which could flow into HFA’s coffers under federal election law.
And they were successful at it. The $2,700 limit that the Clinton campaign had to observe is a small fraction of the amount that could be raised in a single check. It’s only seven-tenths of 1 percent of $350,000. Even if the average donation to the joint fund-raising committee was only $20,000 instead of the over-$350,000 limit, the Clinton campaign share would only be 13.5 percent of the funds raised.
But Politico’s Kenneth Vogel, in a story that ran May 2, 2016, noted that the disbursement of the $61 million raised by the Clinton/DNC joint fund-raising committee was “$15.4 million to Clinton’s campaign and $5.7 million to the DNC.” That’s 25 percent for the Clinton campaign. It gets worse. As Vogel reported, the joint fund-raising committee put out over $11 million that “has gone toward expenses that appear to have directly benefited Clinton’s campaign, including $2.8 million for ‘salary and overhead’ [to the Clinton campaign itself] and $8.6 million for web advertising that mostly looks indistinguishable from Clinton campaign ads and that has helped Clinton build a network of small donors.” With those figures added in, the Clinton campaign was getting almost 44 percent of the money. That would only make sense under the distribution formula if the average contribution to the joint fund-raising committee was in the $6,000 range.
As anyone who has built an online donor list can tell you, it is an enormously expensive proposition. The much-talked-about Bernie 2016 email list cost millions of dollars to create. And unlike in our campaign, where money spent for online ads always yielded more than they cost, it takes multiple solicitations for almost any other candidate to recoup the investment. Not the Clinton campaign. They got it for free. Not only did the Clinton campaign benefit by converting above-the-limit contributions they couldn’t accept to small-dollar contributions they could accept. They also got a free email list that our campaign had to spend millions to create with money given to us $27 at a time.
They protested loudly when we called this arrangement out for what it was—a device for laundering big donations. Our attorney Brad Deutsch laid this all out in an April 18, 2016, letter to Chairwoman Wasserman Schultz. Needless to say, the DNC jumped in to defend the operation of the agreements, because they were in on the scheme.
And what of the state Democratic parties who were participants in the joint fund-raising committee? The donors to these big-ticket events were told that the bulk of the money was going to help down-ballot candidates. As reported by Politico, George Clooney, who hosted one of the Clinton/DNC events in April with an over $350,000 ticket price, “admitted that was ‘an obscene amount of money.’ But he justified it by saying ‘the overwhelming amount of the money that we’re raising is not going to Hillary to run for president, it’s going to the down-ticket.’”
Unfortunately, for state parties and down-ballot candidates that was just not true. The Clinton campaign snookered Clooney and the other guests, as well as the participating state Democratic parties. They weren’t the only ones. Among others snookered were pro-Clinton writers, including one who penned the following for the Washington Post at the end of March: “Sanders makes it sound like Clinton is raising such obscene amounts of money for her campaign. In actuality, she’s raising money for herself, the Democratic Party and state Democratic parties around the country.” Oops!
An analysis by Politico on May 2, 2016, revealed that less than 1 percent of the funds raised by the joint fund-raising committee was left with state parties. That’s because money that was deposited with state parties was almost immediately withdrawn from their accounts by the DNC. According to a CNN story that ran on the same day, some $3.8 million had been transferred to the states, but 88 percent of it had been almost immediately taken by the DNC—leaving the thirty-two state parties collectively with only about $450,000 out of $61 million.
More than one state party chair has told me since that they would never have participated had they known how this joint fund-raising agreement would operate. Usually some variation of “they lied to us” is in their description of the sales pitch they were given to participate. This is in part why so many state parties are resource-starved. Even when money was donated specifically for their benefit, it was grabbed away by the DNC bureaucracy and the Clinton campaign.
Some of the money snatched by the DNC from state parties would eventually find its way back to state-level operations but only in those states targeted by the Clinton campaign as presidential battleground states. That meant a lot of money spent in Florida and Ohio. But if you were in a red state like Alabama, South Carolina, Montana, or Texas, you got virtually nothing. I specifically asked a top Texas party official how much money they kept from the joint fund-raising. “I don’t think we got anything,” he told me.
The parties in heavily red states will never be able to become competitive if this practice continues. It was a point that Bernie raised on the trail often—the complete abandonment by the national Democratic Party of over half the states. It is a shortsighted policy that had disastrous effects in November 2016. Because the Democrats are locked out of so many states, Trump’s flipping of a few states in the “blue wall” doomed the Clinton campaign.
On top of that, down-ballot candidates were left high and dry. The Clinton campaign ultimately had so much financial control over the DNC that after Donna Brazile became acting chair and was desperately scrambling to find money for down-ballot candidates, she told me that “the Clinton campaign has complete control of every dollar that comes into this [DNC] building.” And according to Brazile, HFA had little interest in letting the national party spend money on down-ballot candidates. Our meeting took place in her DNC office. She gave me a tour of the building. We ran into New Hampshire state party chair Ray Buckley in the hallway. He was surprised that I had never had a tour before. I said to Ray, “In the past, the only thing they’ve wanted to show me here is the door.” Donna Brazile was holding a DNC staff get-together following our meeting. The libations for the get-together were from the liquor Debbie Wasserman Schultz left in her office when she departed.
This reality of what was happening with the Clinton/DNC joint fund-raising agreement was in stark contrast to the attacks leveled by Hillary Clinton herself against Bernie. Gabe Debenedetti’s April 13, 2016, Politico story reports that Clinton had started attacking Bernie for his ties to the Democratic Party “after decades as an independent, even appearing to specifically jab his lack of down-ballot fundraising while campaigning in Wisconsin before its primary.” According to Debenedetti, former Goldwater Girl Clinton said, “I am also a Democrat and have been a proud Democrat all my adult life … I know how important it is to elect state legislators, to elect Democratic governors, to elect a Democratic Senate and House of Representatives.” Important, maybe, but not enough to let the DNC spend any money to help them. Of course, none of this—the looting of state parties and the use of the joint fund-raising committee as a vehicle for HFA to avoid FEC contribution limits—could have taken place without the active support of the Democratic Party’s then chair.
In late May 2017, Hillary Clinton blamed the financial condition of the DNC and its poor data as a factor contributing to her loss. CNN’s MJ Lee quoted her as saying, “I’m now the nominee of the Democratic Party. I inherit nothing from the Democratic Party. It was bankrupt, it was on the verge of insolvency, its data was mediocre to poor, non-existent, wrong. I had to inject money into it—the DNC—to keep it going.”
The irony, of course, is that the operation of the Clinton/DNC joint fund-raising agreement was one of the key reasons the DNC lacked money. By taking all those big-dollar contributions (which would have gone to the national and state Democratic parties) and turning them into small-dollar contributions (which all went to HFA), the Clinton campaign itself bore responsibility for the money problems at the DNC.
Immediately after Clinton’s attempt to blame the DNC, a former senior DNC data staffer responded forcefully on Twitter only to pull down his tweets not long afterward. While most of the coverage of his tweets focused on his defense of the DNC’s data operation, he also tweeted about Hillary Clinton’s role in starving the Democratic Party of resources:
Andrew Therriault @therriaultphd tweeted . May 2, 2016: Also, that’s pretty precious when she couldn’t have raised all that without the DNC’s higher limits as a laundering vehicle.
Bernie for his part raised millions that actually went to down-ballot Democratic candidates in the last election cycle. Combined with the amount raised after the Democratic national convention by Our Revolution, the progressive nonprofit inspired by Bernie’s historic run, over $5 million went to down-ballot Democratic candidates at the federal, state, and local level. Compare that to the measly $450,000 that Politico reports was left with state parties from the Clinton/DNC joint fund-raising arrangement.
As for the joint fund-raising agreement we signed with the DNC, they completely left it inoperative. Our agreement with them was that they would organize events of large donor Democrats, which Bernie would attend. Despite plenty of prodding by Mark Longabaugh, the DNC never organized a single event.