Conventions enjoy big loophole in soft money limits

Minnesota Republican leaders are using a loophole in campaign finance rules to solicit millions of tax-deductible corporate dollars for the Republican National Convention this summer, promising CEOs access to high-ranking government officials in return, according to a report issued Wednesday. In Colorado, Democratic Party leaders are doing similar fundraising in behalf of the Democratic National Convention to be held in Denver, said the report by a nonpartisan organization in Washington, D.C. In both cases, the party's are using local host committees as conduits for the corporate donations, the report said. The host committees are expected to pay for as much as 80 percent of the expenses for the convention.

The Campaign Finance Institute, which describes itself as a nonpartisan, nonprofit institute affiliated with George Washington University, says that both the Federal Election Commission and the Internal Revenue Service have permitted a vast expansion of host committee fundraising on the grounds the committees are nonpartisan "charities" or "business leagues."

Ordinary political contributions and lobbying expenses are not tax-deductible and are disclosed quarterly. However, donations to host committees, because they are considered charities, are tax-deductible and disclosed only after the conventions.

But the money is solicited and given for mainly partisan purposes, the report suggests.

The report found that fundraising efforts for the Republican Convention are being spearheaded by Republican Gov. Tim Pawlenty and Republican U.S. Sen. Norm Coleman, with the Democratic mayors of both St. Paul and Minneapolis playing little role.

Similarly, six Democratic leaders in Denver have done virtually all of the fundraising for the Democratic Convention, according to the study.

The report is based on documents received from requests to the governors and mayors in Colorado and Minnesota under the Freedom of Information Act, the institute said.

Access offered

The Minneapolis St. Paul Host Committee defended the fundraising system, saying that the convention is an opportunity to showcase the Twin Cities and without the private donations, the burden of paying for the convention would fall on the cities and state.

The committee's CEO Jeff Larson said in a statement that it has a "rigorous compliance program in place" to make sure all its activities comply with all applicable fundraising, tax and campaign finance laws. The money raised and spent will be detailed in reports to the FEC , which will also audit its books as required by law, Larson said.

The institute's report said that at a fundraising breakfast for Minnesota CEO, Pawlenty's "talking points" to donors included a statement that they would have the opportunity to "connect with influential government officials (Cabinet, President, next President)."

The report said that during his national search for money, Pawlenty's staff asked him to have New York Republican Gov. George Pataki contact Koch Industries' CEO on his behalf. The report says four Koch-controlled firms are sponsoring the convention.

It says that after the committee got negative publicity in the summer of 2007, it deleted three of of those events while continuing other political access opportunities for contributors, such as sponsoring state delegation parties and obtaining top venues for corporate hospitality.

Pawlenty's talking points for Minnesota CEOs stated, "We plan to have various events with Cabinet/VP and other elected officials to thank donors."

Rules have evolved

Stephen Weissman, author of the institute's report, said in an interview that the rules have evolved since 1979 when the Federal Elections Committee first allowed host committees to accept donations from local retail businesses in amounts proportionate to the added revenue they might expect during the convention.

In 1994, the FEC said local donors could give unlimited amounts, rather than proportionately. It said the donors need not be retail and need not be headquartered in the community but only have an office there. In 2003, the FEC said contributors need not have a local presence.

Brian McClung, Pawlenty's spokesman offered his own response to the report. "Hosting a national political convention is a unique opportunity to showcase the Twin Cities and Minnesota to the rest of the nation and the entire world," he said.

"Organizers expect 15,000 members of the media to attend, five times as many as go to the Super Bowl. Gov. Pawlenty, Sen. Coleman, Mayor Rybak, Mayor Coleman and others have helped raise funds, consistent with all regulations and laws, in order to ensure that the convention is well-run and provides an opportunity for people around the country and world to learn more about our fantastic community and state."

LeRoy Coleman, Sen. Coleman's press secretary said that "the civic commitment that companies make to invest in their communities as a part of the national conventions of both political parties is to be commended, not criticized.

"Whether these companies contribute to the Democrat, Republican or both national party conventions, we should be proud that their efforts will ensure a successful exercise of democracy, as well as provide millions of dollars of positive economic impact for the communities where these conventions are being held."

The report's description of Rybak's involvement in host committee fundraising was accurate, said Jeremy Hanson, the mayor's spokesman. "Although Mayor Rybak has not been leading the host committee's fundraising efforts, he has been involved in raising funds for the host committee, primarily for CivicFest, which is an official host committee convention event.

Erin Dady, director of convention planning for the city of St. Paul said the host committee is playing by the rules set out by the FEC.

"The mayor has very little role in fundraising but the mayor is supportive of the host committee's efforts," she said. "The host committee raises money from the generous corporate community and they are really protecting taxpayers" she said, because taxpayer money was not used for the event.

She noted, however, that St. Paul received a $50 million federal appropriation to pay for convention security.