09/07/2012 04:54 pm ET Updated Sep 08, 2012

DNC Funding: Corporate Cash Ban Changes Face Of Democratic Convention

Barack Obama steamrolled into Denver in the summer of 2008, vowing to change the very nature of American politics as a four-day celebration coronated him the Democratic nominee for president. The entire affair, give or take a few bucks, was brought to you by corporate America and the 1 percent.

Three-quarters of the funding for the $61 million Democratic National Convention that year came from donors who individually gave more than a quarter million dollars, according to a study by the Campaign Finance Institute and the Center for Responsive Politics. One-third of that money came from a dozen contributors -- companies, rich folks and unions who gave at least a million each. Half of the big donors gave to the conventions of both major parties. Only 5 percent of the money came from people who gave less than $100,000.

At a typical convention, corporations get what they pay for: the type of informal access that is highly prized when it comes to building lasting relationships.

"The convention was a great way to build relationships with members. People are usually in a good mood. The whole thing, you feel like it's historic, it's once every four years, you remember the people and the parties," said one top Democratic lobbyist who requested anonymity so he could speak openly about these relationships without damaging them. "For my clients and for me, it's really about access and building a relationship, having the ability to go in and meet with a member or meet with an office."

This lobbyist, who works with a variety of corporate clients, had considered skipping the Democratic convention in Charlotte, N.C., the first he would miss in three decades.

That's because Obama vowed during his 2008 campaign that if he won the White House, the next convention would be, if not an all-volunteer effort, at least less of a corporate show. The promise was part of an anti-lobbying effort that has also barred lobbyists from donating to his campaign and working in the White House. While corporations aren't lacking for influence on politics in general, and plenty of lobbyists have received waivers to work in the administration, the convention reform has been surprisingly effective.

By changing the rules under which the 1 percent contributes, Democrats altered the balance of power at their convention. For the 2012 gathering, Obama banned all contributions from corporations and lobbyists and capped individual donations at $100,000. Unions, meanwhile, were still welcome to kick in generously.

Lobbyists threw a fit. For a few months before the convention, they took to Roll Call and Politico, two publications read closely by their colleagues, to complain about the new restrictions and fret over whether to attend at all.

"The level of access of Members [of Congress] is not there anymore," one banking lobbyist griped to Roll Call.

The new self-imposed restrictions had a real effect on the makeup of the convention donor base. Suzi Emmerling, a spokeswoman for the Charlotte in 2012 Host Committee, said her organization has pulled in 70 times more individual donors than in 2008. (Who are those donors? Democrats won't say. You'll have to wait until the Federal Election Commission compels disclosure of their names.)

While the two parties often compete for corporate cash, when it comes to the convention, Democrats have created what appears to be a genuine difference. The organizers of the GOP convention accepted unlimited corporate and lobbyist money.

Rounding up smaller-dollar support for a presidential nominating convention is no easy feat. The event costs tens of millions of dollars to put on, and since the outcome is predetermined, it's all theater -- not the kind of thing someone with limited income is eager to fund.

Paying for the entire shindig with low-six-figure contributions made for a challenge that Democratic lawyers rose to meet. The party's attorneys worked overtime to figure out how companies and their executives could chip in without violating the ban. A document circulated in Washington over the past few months, created by the Charlotte host committee, offers some clues. A source who was given the document by convention officials and later provided it to The Huffington Post said he was told that the lawyers had succeeded.

The document laid out six alternatives under the heading "Who can contribute to Committee for Charlotte 2012":

Charlotte 2012 accepts contributions from the following entities:

• Individuals: up to $100,000

• Foundations: up to $100,000

• LLPs: up to $100,000

• LLCs (that file with the IRS as a partnership): up to $100,000

• Corporations: in-kind contributions only

• 501(c)(3): unlimited

Donations from "any corporation that received TARP or other bail-out funds that have not been repaid in full" were prohibited, according to the document, which added that foundations affiliated with for-profit corporations were also disqualified. An in-kind contribution is a donation of products or services rather than cash.

The list of allowable contributions makes it clear that Democrats weren't ready to go cold turkey on corporate cash. Coca-Cola, for instance, funded both the Republican and Democratic conventions but in different ways. Republicans made no financing reform effort, despite the call to do so by Sen. John McCain (R-Ariz.), so Coca-Cola was free to give money directly to support the GOP convention. To foot the Democratic bill, however, the soda and bottled-water seller funneled money through New American City Inc., its sister nonprofit, Roll Call reported. Per the rules, Coke could also give its beverages out free as in-kind contributions.

Democrats also employed the time-tested convention fundraising strategy of encouraging contributions by locking down venues across Charlotte. A lobby shop or public relations firm that wanted to host an event during the convention would have had a hard time finding a bar or restaurant that wasn't working with the host committee. Only by ponying up $50,000, or in most cases much more, could an influence peddler rent space to hobnob. The money, though, couldn't come from a registered lobbyist.

A GOP source who met with the Charlotte convention's fundraisers in an attempt to secure venue space for clients said that the money harvesters pointed to the variety of ways that funds could be funneled to the convention without breaking the rules. But even in private, the fundraisers stuck to the spirit of the reform, refusing to promise that a $100,000 pledge would lock down a specific venue. "We want people who raise $10,000 and $100,000 to have the same seat," he said he was told by a convention official.

While corporate cash might not have found a welcome home in the host committee's treasury, there was still plenty sloshing around Charlotte. Several lobbyists told HuffPost that their corporate clients were funneling contributions to events put on by state parties or governors, outside the critical eye of Obama's convention planners.

"The ones that have business with states and governors feel the obligation to go. The others feel like they got a pass," said the Democratic lobbyist, who bemoans the end of the free-for-all era but has enough access to carry on just fine. "People say, 'Aren't you insulted they won't take your money?' I say, 'No, why should I be?' I have to write a $32,000 check to the [Democratic Senatorial Campaign Committee]. Do I really wanna write a $32,000 check to the DNC for a convention [too]?'"



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