(Bloomberg) -- The Democratic National Committee has a money problem. And that could hurt its nominee’s chances of beating President Donald Trump in 2020.
In the first four months of 2019, the party spent more than it raised and added $3 million in new debt. In the same period, its Republican counterpart was stockpiling cash.
Democratic donors overall have been generous, pouring three times as much into their party’s presidential and congressional campaigns in the first quarter of the year than Republicans gave to their national office-seekers. But the DNC isn’t benefiting from the same donor enthusiasm, putting at risk its ability to help the nominee take on Trump, donors said.
Whoever wins the party’s nomination will rely heavily on the DNC in the general election for organizing, identifying voters and getting them to the polls. That will ultimately cost hundreds of millions of dollars by election day, but the party needs to spend early to prepare, which is why it’s been borrowing money. It’s also sending out fundraising appeals under the presidential candidates’ names, something it’s never done before.
"It’s trouble, it’s going to affect us," said Allan Berliant, a Cincinnati-based Democratic bundler, who says the party needs to open offices and get boots on the ground around the country. "All of that starts with fundraising," he said.
Party officials and fundraisers blamed the deficiency on several factors, and chief among them is competition from the 23 Democrats who are running for president and vacuuming up contributors’ cash. Giving to the party isn’t as compelling as supporting the presidential hopefuls, said John Morgan, an Orlando-based trial attorney and Democratic fundraiser.
“Do you want to fix up the barn or do you want to bet on the horses?” he said.
But major donors also pointed to the perception of some contributors that the national party is disorganized -- a hangover from the 2016 election. The growing schism between the old-guard establishment and the younger, activist wing could be discouraging donors, too, they said.
By the end of April, the DNC had collected contributions of more than $24.4 million, but had spent $28.4 million, according to the latest disclosures. It had $7.6 million cash on hand, $1 million less than in January. It posted $6.2 million in debt, including bank loans and unpaid invoices to vendors, Federal Election Commission records show.
That compared with the Republican National Committee, which thanks in part to Trump’s non-stop fundraising since winning the White House had $34.7 million in the bank and no debt. It raised nearly $62 million so far this year, two-and-a-half times the DNC’s haul.
Typically the party with the incumbent president seeking reelection raises more money than the opposition, FEC records show. The DNC, for example, outraised the RNC by more than $20 million in 2011 when President Barack Obama was in the White House.
DNC officials said they aren’t worried, pointing out that the party has raised $3.7 million more this year than it had at the same time in 2015. Campaign-finance rules, however, disallow spending most of that on voter turnout or messaging and limit it to legal expenses, the national convention or the DNC headquarters.
Democratic rainmakers said contributions should pick up as the crowded field of presidential hopefuls thins. "We will have the largest and most enthusiastic fundraising machine that the Democrats have ever seen," said Chris Korge, a longtime Democratic bundler who took over the party’s fundraising operation in May. The Miami-based attorney and investor said he’s educating donors on how the party is investing its funds, and said money won’t be a problem, even if Republicans outraise it.
Democratic donors elsewhere have been generous. From January through March, 16 presidential candidates collectively raised $77 million, or $3 million more than Trump’s committees and the Republican National Committee combined. That follows the 2018 midterms in which Democratic committees of every type spent $525 million more than Republicans, according to the Center for Responsive Politics.
The national party has been overshadowed by other Democratic organizations on a number of fronts. The Democratic Congressional Campaign Committee, which supports House candidates, says it has to protect the House majority that Democrats won in 2018. Its Senate counterpart, the Democratic Senatorial Campaign Committee, is aiming to end Republican Majority Leader Mitch McConnell’s tenure.
Both messages resonate with donors, bundlers say. The DCCC has raised more than $40 million this year, besting the DNC’s totals each month. The DSCC has raised $18 million.
The DNC is also competing with super PACs, which can accept unlimited amounts from companies, unions and individuals but can’t coordinate with candidates. Priorities USA, the main super PAC for supporting the party’s presidential nominees, counts among its donors some of the biggest Democratic givers, including billionaire investor George Soros and hedge-fund operators S. Donald Sussman and James H. Simons.
"There’s a lot of competition for dollars right now," said Jamie Ansorge, a member of the DNC’s finance committee who focuses on young professionals in the New York City area.
For the first time, the party is sending fundraising pitches from its presidential candidates to its vast donor list -- and splitting the contributions evenly. Campaigns get another set of donors to pitch to, and the party gets to cash in on the crowded field. For example, the party has emailed solicitations for former Texas congressman Beto O’Rourke, New Jersey Senator Cory Booker, South Bend, Indiana Mayor Pete Buttigieg and California Senator Kamala Harris.
“The Democratic nominee for president will need a strong Democratic Party,” O’Rourke’s email said. Booker cited the financial advantage Trump and the GOP have in the early going, and the need to keep up.
The DNC isn’t sharing in the money bonanza in part because of the perception that it hasn’t recovered from 2016’s self-inflicted blows, fundraisers said. Emails hacked by the Russians and published by WikiLeaks showed that it was working to help Hillary Clinton defeat Bernie Sanders for the nomination even though it was publicly pledging neutrality. That led to the resignation of DNC chairwoman, Debbie Wasserman Schultz, on the eve of the Democratic Convention in Philadelphia.
“Debbie Wasserman Schultz really destroyed a lot of confidence in the DNC for a lot of people and for a lot of different reasons,” said Morgan, the Orlando-based fundraiser. Her favoring of Clinton and mismanagement of the party continues to give donors pause, he said.
When she stepped down, Wasserman Schultz cited the successes of her tenure, including aiding Obama’s reelection in 2012, strengthening partnerships with state parties and conducting the 2016 primary in a statement. Wasserman Schultz didn’t respond to a request for comment.
Some potential contributors would rather not support a party they perceive as dominated by establishment figures and their more moderate approach to issues, said one bundler who who has held fundraisers for the party, but asked not to be named because he’s not authorized to speak publicly on its behalf.
To compete in 2020, the DNC has acquired 100 million cellphone numbers during the midterms, allowing the party to make contact with voters via text message. This summer, it will train about 1,000 college juniors who will be ready to hit the ground running next year and is stressing those tactics with donors.
Tom Perez, who took over as chairman in 2017, in a recent email solicitation highlighted the effort to train college students and warned it might be scaled back if its fundraising goal wasn’t met.
“When we fall short,” the email said, “the critical work that needs to be done in order to elect Democrats can’t happen, because the money simply isn’t there.”
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