Small Donors Equal Big Bucks for State Party Coffers


State and local political parties are raking in cash at a record pace despite a new law banning unlimited contributions for federal campaigns.

Because of the new campaign-finance restrictions for federal elections, state and local parties increasingly are relying on small, individual contributions to pay for their presidential and congressional campaigns, putting new emphasis on direct-mail, telephone and Internet pitches to voters.

Donations to state and local parties topped $103.5 million in the first quarter of the year, 34 percent more than the $77.1 million raised at this point in the last presidential election and 6 percent more than the $97.6 million raised at the same point in the 2001-2002 campaign cycle, according to figures from the Federal Election Commission (FEC).

Unlike past elections, this year's amounts do not include "soft money" contributions more than $1 billion given to parties in the past two elections by wealthy individuals, corporations and political action committees, and now outlawed by the McCain-Feingold Act of 2002.

The FEC figures include only the state party money for federal campaign accounts, and are not the total amounts that state and local parties have raised for all campaign activities.

State and local parties, as well as their national counterparts, are making up the loss of soft money by reaching out to individuals who give $200 or less, said Larry Noble, director of the Center for Responsive Politics, a campaign-finance watchdog group. The big increase in small individual contributions is one sign that parties are thriving under the new limits of McCain-Feingold, he said.

Anthony Corrado, a visiting scholar at the Brookings Institution, says that national Democratic and GOP officials also are investing more in direct mail, telemarketing and Internet fund raising, with remarkable success.

"The [Republican National Committee], which for decades has had the largest donor base of any of the party committees, has added more than a million new donors to its rolls since 2001," Corrado wrote in a Brookings study. "The [Democratic National Committee] has increased its number of direct mail donors from 400,000 in 2001 to more than 1.2 million so far in 2004, and increased its number of e-mail addresses from 70,000 to more than 3 million."

As usual, state and local Republican parties lead the money race in 2004, having raised $63.6 million for the first quarter of the year, 1.8 percent more than the $62.4 million during the 2002 campaign.

But Democratic state and local parties have generated a 15 percent increase in individual donations since the last election cycle and have raised $39.1 million so far.

The increase in individual contributions is even greater for the national party organizations. The Democratic National Committee has more than doubled the $32.5 million in individual contributions from the last election cycle and has collected a total $72.3 million so far this year. The Republican National Committee has raised a total of $157.4 million in the first quarter; its $152.8 million in individual contributions is an increase of more than 66 percent compared to the 2002 election.

At the state and local level, new donors have been crucial in helping to replace the more than $1 billion of soft money that state and local parties raised in the 2000 and 2002 election cycles, Noble told reporters at a Washington, D.C., press conference on June 25.

In fact, national parties provided about 44 percent of the state and local soft money in the past two elections, according to a study by the Institute on Money in State Politics.

Because soft money could not be spent asking directly for voters' support, states often would spend soft money on so-called "issue ads" that would criticize a candidate's positions, without asking for a vote for or against a candidate, according to the Institute.

In exchange, state and local parties would transfer their limited "hard dollars" back to the national parties, which would directly ask voters to cast a ballot for their candidates.

Even with new restrictions, soft money is not gone from campaigns. Depending on individual state laws, some state parties still can raise unlimited soft money for state-level campaigns and party activities, but none of those contributions are supposed to be used for federal campaigns.

Illinois, Iowa, New Mexico, North Dakota, Oregon, Pennsylvania, Utah and Virginia have few if any restrictions on donations to state political parties or political action committees.

Individual soft money contributions up to $10,000 can go to any state party under the new law, but cannot be used for federal campaigns.

Contributions to political action committees, PACs, which are segregated campaign accounts usually run by politicians, corporations and unions, also are on the rise, the Center for Responsive Politics reported.

Another result of the new restrictions on soft money is the creation of several "527" organizations, named for the section of the federal tax code under which they are allowed. These non-profit groups can raise unlimited soft money for indirect campaigning, such as issue ads and voter registration.

But giving to the 527s and PACs has not yet matched the amount of soft money given to parties in the last election cycle, said Noble of the Center for Responsive Politics.


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