White House hopeful Bernie Sanders is raising "extremely serious concerns" about how the Democratic National Committee and Hillary Clinton's presidential campaign are spending the millions they've raised through the loophole mechanism known as a "joint fundraising committee."
In a letter (pdf) sent Monday to Democratic National Committee (DNC) chair Debbie Wasserman Schultz, Sanders campaign attorney Brad Deutsch details "serious apparent violations" of campaign finance laws on the part of the national party apparatus,
"While the use of joint fundraising agreements has existed for some time," said Jeff Weaver, Sanders' campaign manager, "it is unprecedented for the DNC to allow a joint committee to be exploited to the benefit of one candidate in the midst of a contested nominating contest."
Weaver further elaborated on MSNBC on Monday:
As the Center for Responsive Politics (CRP) explained on its blog last week, "JFCs allow star fundraisers to spread their wealth around the party. The donors can't get around individual contribution limits—but they can get creative." According to the Center, no more than $2,700 of a donor's gift, per election, can go to any specific candidate, no more than $33,400 per year to a national party committee, and no more than $10,000 per year to any state party.
Citing the U.S. Supreme Court's 2014 McCutcheon v. FEC decision, CRP wrote in February:
Hillary Victory Fund—a joint fundraising effort between the Clinton campaign, the DNC and thirty-two state parties around the nation—provides the starkest picture of that decision’s effect. It reported taking in $26.9 million during 2015 and has thus far transferred $7.4 million to the participants. The largest single contributions to this joint effort are not $86,000 (which would have been roughly the limit had the rules not been struck down) but rather $358,400—including $2,700 to the Clinton campaign for the primary and $2,700 for the general along with $33,400 to the DNC and as much as $320,000 to state party committees.
These contributions would seem to have improved the financial health of many state party organizations that would never have received support from many of their donors without the JFC process.
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But the way the contributions were used tells another story. Virtually none of the $1.86 million given to state parties so far spent more than one night with its designated recipient. In nearly every case, all of the funds given to state parties by the Hillary Victory Fund were immediately sent to the DNC. This structure has allowed a small number of elite Democratic donors to give hundreds of thousands of dollars to the DNC for the purpose of affecting the presidential campaign.
Indeed, the Washington Post reported earlier this year, "Even as it has bolstered the DNC, the Hillary Victory Fund has had striking success bringing in new donors to support Clinton's fight to beat Sanders for the Democratic nomination. The committee spent more than $4 million prospecting for small-dollar contributors through direct mail and online ads that resemble official campaign material, down to the signature 'I'm with her' tagline. The net proceeds raised for the campaign: $3.24 million through the end of 2015."
While legal experts are divided on whether Sanders' claims have merit, a closer look at JFC contributions sheds light on the fundamental divergence between the Vermont senator's and Clinton's fundraising bases.
As the Center for Responsive Politics wrote on Friday:
Unsurprisingly, the industries giving to the Hillary Victory [Fund] closely track with industry donors to her supportive super PACs. Securities and investment — Wall Street — has given the most to that committee, nearly $3.5 million. Wealthy individuals who list a foundation or nonprofit as their employer, who together make up part of the non-profit institutions industry, have given $1.6 million.
That makes Clinton’s JFC like the super PACs that support her: Clinton can claim popular support for her campaign from law firms and the education industries, but a look at her big-money groups shows Wall Street and the wealthy dominate the giving.
"The Clinton campaign is bending campaign finance rules to their breaking point all so Wall Street fat cats and people like Alice Walton can contribute 130 times the legal limit to support her campaign. All to defeat us in the primary," Weaver wrote in an email to supporters distributed soon after the letter to Schultz was released.
"So, this is distressing, but it's probably to be expected," he said. "The Clinton campaign has raised the majority of its money from people giving the maximum amount of money under the law and her super PACs have raised more than $15 million from Wall Street alone."