Clinton’s super-sized fundraising machine pushes legal boundaries

Michael Beckel
Updated

Pay attention to the fine print and you’ll see that some of the online messages touting Democratic presidential nominee Hillary Clinton are paid for by “Hillary for America,” while others are sponsored by the “Hillary Victory Fund.”

How powerful is this two-word change? It means the difference between ads funded by donors who may legally give Clinton up to $2,700 — or by those who may give hundreds of thousands of dollars.

Joint fundraising committees, often called “victory funds,” are not new in federal politics. Candidates routinely raise money through these collaborative operations that, by design, split the funds they collect among a number of beneficiaries, such as national and state party committees, as well as the candidate’s own campaign.

But instead of just transferring its cash to the signatories of the joint fundraising agreement, the Clinton campaign is also using a significant amount of the money the Hillary Victory Fund collects to finance pro-Clinton advertising.

This is innovative, to say the least. But it’s also worrisome to campaign finance reformers who see it as a way to shift costs onto groups funded by big donors, thereby evading campaign contribution limits.

And in that respect, critics see Clinton’s big-money operation as a way for well-heeled donors to better access and influence the woman who may be the next president of the United States.

Larry Noble, general counsel at the nonpartisan Campaign Legal Center, which advocates for stricter campaign finance regulations, told the Center for Public Integrity that Clinton’s team had taken the interpretation of a joint fundraising committee “to another level.”

Videos produced by the Hillary Victory Fund, and appearing online on websites like YouTube and Twitter, “are basically campaign ads,” Noble said. “This is a problem.”

Democratic operatives, however, argue that Clinton and her party allies should use all available financial weapons to fight Republicans.

Josh Schwerin, a spokesman for the Clinton campaign, told the Center for Public Integrity that online videos help “give people a reason to donate” to the Hillary Victory Fund, which he called “critical to funding the coordinated campaigns that are helping elect Democrats up and down the ballot.”

Related: Key findings from our investigation into the Hillary Victory Fund

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The ads

To the average viewer, the online videos sponsored by the Hillary Victory Fund are almost indistinguishable from those sponsored by Hillary for America, the official name of Clinton’s presidential campaign committee, which is legally allowed to accept no more than $2,700 per donor.

The ads have featured testimonials from Americans across the country as well as updates from campaign staffers and excerpts of remarks made by Clinton and her Republican rival, Donald Trump.

One such video features New York resident Mae Wiggins, an African-American woman. She recalls how, in 1963, she was “denied an apartment in the Trump buildings based on the color of my skin." The Department of Justice eventually sued the Trump organization, which settled the lawsuit without admitting guilt.

The video, which runs more than three minutes, also feature interviews with Clinton’s running mate, Sen. Tim Kaine of Virginia, and civil rights activist Eleanor Holmes Norton, now the District of Columbia’s delegate in the U.S. House of Representatives.

In the video, Wiggins, who struggles to hold back tears, goes on to say that Trump is “not worthy of becoming president of this country.”

Another features Monique Corzilius Luiz, who, as a 3-year-old in 1964, starred in President Lyndon Johnson’s infamous “Daisy” political ad. She expresses dismay at what she considers Trump’s cavalier attitude toward nuclear proliferation, and she encourages viewers to vote for Clinton.

Yet another video features Clinton campaign press secretary Brian Fallon pushing back against the recent news that the FBI had discovered new e-mails that appear “to be pertinent” to its earlier investigation into Clinton’s handling of classified emails on a private server during her tenure as secretary of state.

One thing all of the Hillary Victory Fund videos have in common? The final seconds of the ads show a fundraising message, asking viewers to text the campaign to make a donation to the Hillary Victory Fund.

This is important, campaign finance experts say, because joint fundraising committees are allowed to use the money they collect to pay for their own fundraising costs.

But these online videos are not your typical solicitations.

Paul S. Ryan, vice president of policy and litigation at Common Cause, told the Center for Public Integrity that if you are “not a lawyer or a journalist,” then “you would just perceive it to be a candidate campaign ad.”

Why is that potentially problematic?

“Under a strict reading of the law, candidate campaign ads should, and must, be paid for with money raised under the low candidate contribution limit,” said Ryan. “A joint fundraising committee is a way for the Clinton campaign to offload campaign costs onto others.”

Related: Hillary Victory Fund video

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Money in

Campaign finance records show that the Hillary Victory Fund raised more than $473 million from its inception on Sept. 10, 2015, through Oct. 19, 2016, the date covered by its most recent report.

By contrast, President Barack Obama’s 2012 victory fund raised about $456 million, and his joint fundraising operation in 2008 pulled in about $198 million.

One reason Clinton has been able to collect so much cash: Donors are able to give larger sums than they were in either 2012 or 2008.

Related: Paul S. Ryan quote on joint fundraising committees

In 2014, in a case known as McCutcheon v. Federal Election Commission, the U.S. Supreme Court struck down the aggregate campaign contribution limit that had prohibited individuals from giving more than about $123,000 combined to all federal candidates, parties and political action committees during a two-year election cycle.

The ruling freed individuals to donate the legal maximum to as many candidates, parties or PACs as they desired.

Therefore, individual donors may contribute hundreds of thousands of dollars directly to the Hillary Victory Fund, which raises money for Clinton’s presidential campaign as well as the Democratic National Committee and state parties in 38 states. A handful have even given the Hillary Victory Fund more than $750,000, according to campaign finance records.

When the McCutcheon decision came down, Clinton campaign manager Robby Mook reacted, in part, by saying, “Gotta have the state parties in the joint — so much money on the table,” according to hacked e-mail records that have been released by WikiLeaks.

Related story: Supreme Court opens door to flood of political cash — again

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To date, 120 donors have contributed at least $400,000 to the Hillary Victory Fund, according to a Center for Public Integrity analysis of campaign finance filings.

Their ranks include Hollywood icons, Silicon Valley visionaries and a plethora of other mega-rich Americans.

Among them:

(*The Center for Public Integrity receives funding from the Open Society Foundations, which George Soros funds. A complete list of Center for Public Integrity funders is found here.)

Some of these deep-pocketed contributors — including Sussman, the Pritzkers and the Sabans — are also major donors to Priorities USA Action, the main super PAC established to help elect Clinton.

For his part, Trump operates a joint fundraising committee with the Republican National Committee that also benefits 21 state Republican parties.

Libertarian presidential nominee Gary Johnson, likewise, operates a joint fundraising group that benefits his longshot campaign as well as two-dozen state-level Libertarian parties.

Related: Top donors to the Hillary Victory Fund

Money out

About $1 of every $4 the Hillary Victory Fund has raised — about $120 million — has been spent on its own “operating expenditures.”

That includes more than $54 million for what’s described in campaign finance reports as “online advertising.”

At the same time, the Hillary Victory Fund has transferred the majority of the money it’s raised to its designated beneficiaries — more than $266 million, or about 56 percent of its receipts through Oct. 19.

That includes about $139 million transferred to the Clinton campaign and about $55 million transferred directly to the DNC.

Tens of millions of dollars have also been transferred to state Democratic parties, though a sizeable portion of those funds were transferred back to the DNC by the state parties — an arrangement campaign finance watchdogs have said falls into a “gray area” of the law.

Why it matters

If Clinton wins, the people who made the largest contributions to the Hillary Victory Fund are likely to enjoy special access and other perks from a President Hillary Clinton.

And regardless of whether she wins or loses on Election Day, Clinton’s joint fundraising operation will have a legacy of redefining the roles of such groups in presidential elections.

Matthew Sanderson, a Republican lawyer at the Washington, D.C., firm Caplin & Drysdale, predicted that there will be “more and more advertisements” structured in a fashion similar to how the Hillary Victory Fund designed its barrage of online videos this year.

He said candidates have a “a natural inclination” to find ways to spend funds directly out of a joint fundraising operation, especially as they have “ballooned in size.”

Ryan, of Common Cause, agreed.

“My prediction is that these joint fundraising committees will become bigger and more sophisticated,” he said.

“Super joint fundraising committees raising six-figure checks,” Ryan added, “are now the new normal in presidential campaigning.”

He continued: “I think we’re seeing just the beginning of the tip of the iceberg.”

Chris Zubak-Skees contributed to this report.

A version of this story was co-published with NBC News.

This story is part of Source Check. Click here to read more stories in this series.

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Copyright 2016 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.