Philly-area candidates benefit from fund-raising strategy that critics say bypasses donation limits

A political fund-raising strategy that critics say increases mega-donors' influence, strengthens parties' power, and skirts contribution limits — one calls it "legalized money-laundering" — is on the rise in the Philadelphia region.

Nationwide, groups known as joint-fund-raising committees have raised more money this year than in any previous midterm election cycle.

These committees allow donors to give money to multiple candidates, groups, and parties at once, essentially bundling what would normally be multiple small donations into one large sum. A 2014 U.S. Supreme Court ruling removed previous caps on how much total political money a donor could give each year, paving the way for larger checks than ever before.

In New Jersey and Pennsylvania, current congressional candidates have received nearly $5 million through the committees since 2017.

With joint-fund-raising committees, big donors can legally cut checks for hundreds of thousands of dollars and more, even though federal campaign finance laws limit donors to $2,700 per candidate and $10,000 per state party.

"The reason we have those contribution limits in place is because of corruption," said Brendan Fischer, federal reform director at good-government group Campaign Legal Center. "A candidate is going to owe a massive debt of gratitude to a donor who writes a generous check to a campaign — and a joint-fund-raising committee allows a candidate and a donor to bypass those limits."

Joint-fund-raising committees have exploded in growth thanks to the 2014 Supreme Court decision. Before then, the committees allowed candidates and political parties to do as their name implies: raise money together and then split the proceeds. But they could grow only so large, because donors could contribute only  $123,200 in total to all candidates and political parties every two years under the law.

In McCutcheon v. Federal Election Commission, the Supreme Court struck down those contribution limits — donors now can give to as many candidates as they want, without an overall cap. That enabled joint-fund-raising committees to become larger than ever before, in some cases bringing together dozens of candidates and parties.

For instance, individuals can give up to $2,700 to a candidate per election. If a joint-fund-raising committee features 10 candidates, donors can give it $27,000. Or if it has 100, it can collect $270,000 from each donor.

One of the better-known joint-fund-raising committees to emerge in the wake of the Supreme Court decision was the Hillary Victory Fund, which raised nearly $530 million and split the money between the Hillary Clinton campaign, Democratic National Committee, and dozens of state parties.

Campaign finance experts and good-government groups said that joint-fund-raising committees encourage a mega-donor environment where a small handful of the wealthiest contributors give massive amounts to the parties and campaigns, ingratiating themselves with policymakers at the highest levels.

Writing one massive check is more powerful than making scattered, smaller donations that add up to the same amount, said Daniel Weiner, a lawyer at the Brennan Center for Justice at New York University who focuses on money in politics. The recipients know that their money is coming from a much larger donation, and that increases the power of those funds.

"It's a convenient way to signal that you're not just your average wealthy contributor, you're actually someone they actually need to pay attention to," Weiner said.

Some of the big donors to joint-fund-raising committees in the 2017-18 election cycle include Cynthia Simon Skjodt and Deborah Simon, heirs to a major commercial real estate company, who contributed more than $3.2 million to the Democratic Grassroots Victory Fund. On the GOP side, casino magnate Sheldon Adelson and Robert McNair, owner of the Houston Texans of the NFL, and his wife, Janice, both gave more than $370,000 to the pro-GOP group Protect the House.

Parties and campaigns defend joint-fund-raising committees, arguing that they are efficient and allow candidates up and down the ticket to support each other.

"It is incredibly important for the candidates to help build the party in so much as they are part of our overall mission and reliant on the critical role we play in every election from deploying field staff, sharing information, and providing support," said Jason Gottesman, the spokesman for Pennsylvania's Republican Party.

Nationally, nearly $340 million has been given to the committees this midterm cycle, according to the Center for Responsive Politics. That's roughly the same total these committees raised in the previous three midterm election seasons, 2006, 2010 and 2014 — and 2018 isn't even over yet.

Most local congressional candidates don't receive any money through them, but they can be a significant funding source for those who do: U.S. Sen. Bob Menendez (D., N.J.), U.S. Rep. Brian Fitzpatrick (R., Pa.), and first-time House contender Chrissy Houlahan, a Pennsylvania Democrat, got more than 10 percent of their campaign funding from joint-fund-raising committees as of June 30, the latest date that the information was available. U.S. Sen. Bob Casey has received more money through joint-fund-raising committees than any other local candidate: more than $1.26 million of $14.7 million as of June 30.

Political observers said joint-fundraising committees have become an important tool for building parties' infrastructure during campaigns, especially once the Supreme Court cleared the way for massive amounts to be donated at once.

In cases where a joint-fundraising committee is run by or strongly affiliated with one particular politician, it can also be used to grow that politicians' clout, Weiner said. Distributing large sums to other elected officials is a sure way to earn loyalty.

When Casey raises money for the joint-fundraising committee known as the Keystone Victory Fund, it supports him, a PAC he controls, and the Pennsylvania Democrats together. "It's helping the whole state," Casey said.

"While these are, of course, important races, there are just as important elections taking place at the state level where the state committee plays an integral role," said Brandon Cwalina, press secretary for the Pennsylvania Democratic Party.

Experts warned of returning to a past era of big party bosses in backrooms with too much power: "I'm not sure now there's a ton of a functional difference between what's going on now and what was going on then," Weiner said.

In 2016, the first presidential campaign since the McCutcheon decision, political parties took advantage of a legal loophole that allows them to transfer unlimited amounts of money among national and state parties.

Even though an individual donor is capped in how much she can donate to each national and state party, money received by the state parties in the 2016 campaign was then funneled right back to the national parties. This became an issue when state parties were accused of using this method to channel $84 million to the Clinton campaign.

"So in effect, the combination of McCutcheon and joint fundraising if not eliminated, then substantially reduced limitations to political party contributions," Weiner said. In some cases, he said, it's had the effect of turning "many of the state parties to little more than bank accounts used to funnel cash to the national parties."

That doesn't appear to be happening very much outside of presidential elections, the experts said — at least not yet. That could change in the future, even this campaign season as the election heats up.

Some experts, including Weiner and Fischer, said  limiting the amount of money that state and national parties can give each other would help prevent joint-fund-raising committees from being used for what Fischer has called "a form of legalized money laundering." Weiner also proposes limiting the number of candidates, PACs, and parties that can join together.

Otherwise, Fischer said, the political system will continue to tilt "toward the handful of individuals who have the resources to write six-figure checks."