See How They Fund

Election '04

One year ago, conventional political wisdom held that the Democratic presidential nominee would be in trouble right now. After spending all his cash in a tough primary battle, the thinking went, the candidate would have to spend April through June scrambling to raise money for the general campaign. In the meantime, Bush's team would be free to use that three-month window to define the Democrats' front-runner through attack ads the latter couldn't afford to counter.

Things turned out differently: the attack ads flung at Senator John Kerry have not gone unanswered. In fact, in addition to Kerry's own ads, more than $15 million of political advertising has run in the past three months, most of it bashing Bush, most of it in key battleground states–without costing the Kerry campaign a dime. The ads have been created and paid for by organizations known as "527s," named for the tax-code section that defines them. These groups do not fall under Federal Election Commission (FEC) regulations, as long as they limit their activities; most significantly, they cannot support a candidate directly or coordinate their efforts with a candidate's campaign.

They can, however, accept contributions of unlimited size, from anybody. Depending on your perspective, this is either an unsavory back-door maneuver around campaign-finance reform, or an exciting new outlet for political discourse.

Either way, it's probably a big reason why John Kerry entered July in a dead heat in the polls despite the tens of millions of dollars spent on negative advertising against him–and one of the reasons why Bush's favorability ratings are at an all-time low.

The best-known of these 527s is probably the MoveOn.org Voter Fund, formed last September by the progressive California-based MoveOn.org; its most recent television ad, running in Ohio, blames George W. Bush for losing American jobs to outsourcing. The most ambitious group, however, is an interrelated trio planning to spend more than $100 million on this election: Americans Coming Together (ACT), the Media Fund, and Joint Victory Campaign 2004, all operating out of Washington, DC. Its TV and radio ads include "No Oil Company Left Behind" and "Bush and Halliburton."

Another Washington group, New Democrat Network, is taking in and spending about a million dollars a month. Among its projects is an effort to recruit Hispanic voters into the Democratic Party. For the young and hip, there's Music for America and PunkVoter. Several well-known political-action committees, or "PACs," have started separate 527s (such as EMILY's List Non-Federal Fund, and Sierra Club Voter Education Fund). And there are issue-specific 527s, including one focused on labor (Voices for Working Families), one devoted to decriminalizing marijuana (Marijuana Policy Project Political Fund), and several committed to environmental issues (League of Conservation Voters, Environment 2004, State Conservation Voters Fund). In all, more than a hundred 527s filed a quarterly report with the IRS by the July 15 deadline.

The people funding these 527s, with millions of their own dollars, are arguably the Democrats' 2004 MVPs. Yet with the exception of financier George Soros, who has contributed a total of $12,481,250 in the past 18 months and who has been called to task in no uncertain terms by the GOP, they remain surprisingly unknown to the public and uncovered by the media.

The Phoenix has compiled a list of 12 donors (see below) who chipped in more than $1 million each during the first 18 months of the current campaign cycle–the start of 2003 through the end of June–to Democratic-leaning 527s. Collectively, this dozen has donated just over $50 million.

They include a range of people, from the business elite (George Soros, Lewis Cullman) to the glitterati (Stephen Bing, Susie Tompkins Buell), from the well-born (Anne Getty Earhart, Alida Rockefeller Messinger, Linda Pritzker) to the self-made (Andrew Rappaport, Marcy Carsey, Agnes Varis). There's even a drug-reformer billionaire (Peter Lewis)–and an environmentalist (John A. Harris).

Thanks largely to their largesse, 527s are, and will continue to be, major players in the 2004 campaign.

"The 527s are independent. I'm not familiar with what their plans are," says Democratic heavy-hitter Alan D. Solomont, of Boston, a major fundraiser for the Kerry campaign. "What they're doing, I think is terrific."

Congress created 527s 30 years ago, in the wake of Watergate. But only in the mid '90s did nonprofits (both liberal and conservative) begin to take advantage of them, according to Public Citizen, a public-interest watchdog group, and it took Congress until 2002 to require 527s to fully disclose their donors.

Today's 527 fever, which is predominantly liberal, is driven partly by anger with the Bush administration, but it's also been pushed by what former Massachusetts lieutenant-governor candidate Chris Gabrieli calls a "privatization of political activity." He's referring to the McCain-Feingold campaign-finance law that greatly reduced the amount of money individuals can give to party PACs–and what those PACs can do with the cash. Although 527s had existed previously, most large-money donors preferred to give directly to the party until that law passed in 2002.

"With the advent of McCain-Feingold, suddenly the [political] party wasn't running the kind of soft-money ads they had in the past," says Deb Callahan, president of the League of Conservation Voters, which operates a 527. "So donors are actively seeking out organizations like mine."

But that means donors must entrust their money to independent groups, many with no history or track record. That's why Cambridge social activists Greg and Maria Jobin-Leeds, for example, ended up hiring political consultant Mike Folgerberg to help them sort through the dizzying array of 527s before they gave $100,000 to Progressive Majority in January. "There are a lot of them, and almost all of them are new," Maria Jobin-Leeds says. Progressive Majority, founded in 1999, is positively ancient among 527s; dozens have been created in the last 12 months.

Steve Grossman, former co-chair of Howard Dean's presidential campaign and onetime candidate for governor of Massachusetts, says he's had three meetings with 527 executives. He's decided to work with the Kerry campaign instead, but he likes what those groups are doing. "At the beginning of this campaign, the Republicans thought they would have a three- or even five-to-one money advantage," Grossman says. "The 527s grew out of a deep concern that the values of the Democratic Party couldn't compete."

Grossman had to choose between Kerry and the 527s, because 527s are absolutely not allowed to coordinate their activities in any way with the Democratic Party. But how much coordination do you really need? "Anybody with any brains knows where the battleground states are, and where to spend the money," Grossman says.

Besides, these organizations aren't run by hicks–a lot of their leaders are former party insiders, like Harold Ickes at the Media Fund. Former Kerry campaign manager Jim Jordan is a strategy consultant for the Media Fund and America Coming Together. Or, take the New Democratic Network (NDN). Its president, Simon Rosenberg, is a veteran of the Democratic National Committee and former adviser to the Bill Clinton and Michael Dukakis presidential campaigns. Senior vice-president Maria Cardona is a former Democratic Party communications director. The NDN advisory board includes former chairs of the Democratic National Committee, Democratic Congressional Campaign Committee, and Democratic Leadership Council, as well as a former White House chief of staff and a former White House press secretary.

These organizations are sophisticated enough to have found a way to wriggle out of a legal straitjacket, a rule requiring 527s to spend less than half their money on federal campaign activities. They move the money around. The Media Fund runs advertising campaigns that are considered federal spending; its sister 527, Americans Coming Together (ACT), does "grassroots" polling and voter registration that counts as state and local spending. The Media Fund gives just over half its contributions to ACT, which counts as spending on local activities, and thus complies with the rule. Contributions to Joint Victory Campaign are split between Media Fund and ACT.

Needless to say, campaign-reform advocates, such as Common Cause, call this money-laundering, a dirty scheme for getting around the law. Republicans, meanwhile, had been caught napping; their success with "bundled" fundraising (in which "pioneers" reap rewards for soliciting contributions from many other individuals) led them to overlook the potential in 527s. This is one time liberals seem to have outfoxed the right. Thus far, the Republicans' vigorous legal efforts to stop 527s have failed, and now they're scurrying to set up their own.

To those who dislike the fact that 527s can accept limitless donations, supporters like Callahan point out that givers are cut off from the candidate completely, and thus cannot be involved in any sort of quid pro quo or pay-for-access arrangement. That claim's a stretch–a half-million donation to a Democratic-leaning 527 surely has more value to John Kerry than $2000 given to his personal campaign. But in reality, the wealthy have always given huge sums to progressive organizations–through 501(c)(3) organizations, which are your common, everyday foundation.

Even so, with such large amounts of money involved, the question remains whether these mega-donors are in the game to advance their own self-interest. Grossman, who knows "some of the individuals" on the $50 million-Dems list, says that the ones he knows give based purely on ideology. "They have a passionate belief in America, a passionate belief in inclusion, and a passionate belief that people should participate in a democracy," he says. "I have an enormous respect for what they are doing."

So does Scott Klinger, co-director of Responsible Wealth, a Boston-based organization through which rich people lobby against their own financial interests–in favor of the estate tax, for example. "People giving to 527s, they're not looking for a payoff," Klinger says. "George Soros has enough money, he could buy a small island and never deal with any of us again."

Corporations have been known to cover their bets by contributing to both the Democratic and Republican Parties, but the donors on our list are not playing both sides. Not one of the 12 has given to a Republican or conservative cause in this election cycle.

For their trouble, these big givers are setting themselves up as targets for the right wing. So far, Soros has been the only one publicly hit: the National Republican Senatorial Committee has labeled him an "out-of-touch, left-wing radical" with an "extreme agenda." Ickes says he has had meetings with people who would like to give, but don't want that kind of public grief. "They're not naive–when you weigh in against this president, that's what you'll get."

And lastly, remember that the jaw-dropping chunks of cash listed below should be viewed in context. A few years ago, Peter Lewis bought a yacht for $16.5 million; that he is willing to spend as much on the future of the free world should perhaps not be so surprising.

The $50 Million Club
The following list of a dozen donors contributed a total of $50 million to "527" organizations in the last 18 months.

1) Peter B. Lewis, Chair, Progressive Corp., Cleveland, Ohio


$7,750,000
Joint Victory Campaign
$2,995,000
America Coming Together
$2,500,000
MoveOn.org
$485,000
Marijuana Policy Project
$250,000
Young Democrats of America
$50,000
PunkVoter
$14,030,000
Total contributions to 527s
$8,000
Total hard money contributions
$14,038,000
Total election-cycle contributions
Lewis is chair of Progressive Corp., the automobile-insurance company, which he took over from his father in 1965. Lewis, 68, has a net worth estimated by Forbes at $1.1 billion. A lover of art and architecture, he has given huge sums in the past to museums and other institutions. Political giving, and progressive causes in particular, seem to be a more recent avocation. In the late 1990s, Lewis donated relatively small amounts to candidates of both parties. In the last presidential contest, he gave $500 to George W. Bush and $2000 to Ralph Nader. Apparently, his mind has changed.

2) George Soros, Chair, Soros Fund Management, New York City
$5,000,000 America Coming Together
$4,550,000 Joint Victory Campaign
$2,500,000 MoveOn.org
$300,000 Campaign for America's Future
$50,000 New Democrat Network
$12,400,000 Total contributions to 527s
$81,250 Total hard money contributions
$12,481,250 Total election-cycle contributions
International financier George Soros, worth an estimated $7 billion, according to Forbes magazine, has been the most visible face of the 527s. In the past, Soros's philanthropy has been relatively apolitical, but voluminous: he gives $450 million a year through his Open Society Institute to promote freedom worldwide, according to his spokesperson, Michael Vachon. The Bush administration's foreign policy, which Soros took to task in his recent book The Bubble of American Supremacy: Correcting the Misuse of American Power, seems to have driven his desire to influence the upcoming election. "Soros has never given to Democrats before," Ickes says. "He is very outspoken and articulate about his deep, deep concern about where George Bush is taking this country, both abroad and domestically."

3) Stephen Bing, Writer/producer, Encino, California
$6,964,846
Joint Victory Campaign
$971,427
MoveOn.org
$150,000
Americans for Progress and Opportunity
$100,651
Campaign for America's Future
$8,186,924
Total contributions to 527s
$23,500
Total hard money contributions
$8,210,424
Total election-cycle contributions
Grandson of New York real-estate mogul Leo Bing–and heir apparent to a reported $600 million–39-year-old Stephen Bing has led a Hollywood-playboy life that includes a tabloid-cover child-support battle with Elizabeth Hurley and dueling lawsuits with Sean Penn. His film credits include directing the forgettable 1993 Judd Nelson thriller Every Breath, writing the screenplay for 2003's Kangaroo Jack, and producing 2004's The Big Bounce. This is not Bing's first political plunge; in 2002 he gave $8,675,000 to the Democratic Party in soft-money donations, making him the second-largest giver (behind Mighty Morphin' Power Rangers TV producer Haim Saban) during that election cycle. Bing also gave $900,000 to John Edwards's New American Optimists PAC in 2002.

4) Linda Pritzker, Investor, Houston, Texas
$4,000,000
Joint Victory Campaign
$4,000,000 Total contributions to 527s
$5,000 Total hard money contributions
$4,005,000 Total election-cycle contributions
This reclusive 50-year-old daughter of Robert Pritzker is heir to a good portion of the Hyatt hotel fortune, estimated at $15 billion total. She has given $900,000 to the Joint Victory Campaign (JVC), but the Washington Post has reported that she is also the person behind the little-known Sustainable World Corporation, which has given an additional $3.1 million to JVC since appearing out of nowhere last December. Pritzker has made no public comments about her contributions, which appear to be her first foray into direct political activism.

5) Andrew S. Rappaport, Partner, August Capital, Redwood City, California
$1,450,000 New Democrat Network
$1,300,000 Music for America
$200,000 Democrats 2000
$50,000 America Votes
$3,000,000 Total contributions to 527s
$54,000 Total hard money contributions
$3,054,000 Total election-cycle contributions
Venture capitalist, director of tech companies such as Silicon Image and founder of the Massachusetts Center for Technology Growth, Rappaport jumped aboard the Howard Dean bandwagon and now funds 527s that encourage left-leaning voter participation, particularly among the young. At 46, and with three teenage daughters, Rappaport is taking a "venture philanthropy" approach to his political giving. "I've been doing start-up companies for 20 years," Rappaport says. He and his wife, Deborah, along with former Nirvana bassist Kris Novoselic, make up the Music for America board of directors. That 527 organization is funding a variety of efforts aimed at engaging young voters, something he says the Democratic Party has failed to do. "We asked party people in 2000 and 2002, why they weren't doing outreach to young people," Rappaport says. "They said, 'Old people vote.' We said yes, but they also die."

6) Lewis Cullman, CEO, Cullman Ventures Inc., New York City
$1,000,000 Joint Victory Campaign
$500,000 Americans Coming Together
$100,000 MoveOn.org
$50,000 Americans for Jobs
$1,650,000 Total contributions to 527s
$114,500 Total hard money contributions
$1,764,500 Total election-cycle contributions
Cullman's autobiography, which came out this April, is titled Can't Take It with You: The Art of Making and Giving Money, which sums up what you need to know about him. Cullman has made a fortune through leveraged buy-outs (he owns the At-A-Glance company that makes those ubiquitous day planners), and with his wife, Dorothy, has given away millions through philanthropy–the couple was once cited as the third-biggest giver in the country by Slate. Last July, Cullman co-sponsored a newspaper ad with George Soros decrying the Iraq war, and he has continued to spend money to oppose Bush.

7) Agnes Varis, President, AgVar Chemicals, New York City
$1,155,000 Joint Victory Campaign
$1,155,000 Total contributions to 527s
$112,750 Total hard money contributions
$1,267,750 Total election-cycle contributions
"Agnes is just appalled by the Bush agenda," says Ickes. Varis is a long-time Democratic Party contributor and philanthropist. (The only Republican she has funded is John McCain.) Her MAKK Foundation supports animal shelters, and she has for years backed the Tufts University School of Veterinary Medicine. In 2000, she endowed a chair in science and society at Tufts with a $2 million gift.

8) John A. Harris IV, Retired, Berwyn, Pennsylvania
$978,000 League of Conservation Voters
$160,000 State Conservation Voters
$28,000 Sierra Club
$28,000 Defense of Wildlife
$20,000 Progressive Majority
$10,000 MoveOn.org
$1,224,000 Total contributions to 527s
$19,000 Total hard money contributions
$1,243,000 Total election-cycle contributions
Harris, a retired investment banker and an heir to the Standard Oil fortune, is a long-time contributor to environmental organizations, but not previously much of a player in partisan politics. "He's a very private person," says Callahan, of the League of Conservation Voters. "He does politics because he wants environmental results."

9) Alida R. Messinger, Trustee, Rockefeller Family Fund, New York, New York
$500,000 Americans Coming Together
$500,000 League of Conservation Voters
$133,000 State Conservation Voters
$1,133,000 Total contributions to 527s
$44,000 Total hard money contributions
$1,177,000 Total election-cycle contributions
The "R" stands for Rockefeller. A major donor to conservation and environmental groups, financial backer of the Center for Public Integrity, Messinger also made big, big contributions to Democratic Party committees until those donations were capped. Hence the half-mil to ACT. Callahan calls her a "committed environmentalist, focused on philanthropy and raising her family."

10) Susie Tompkins Buell, Founder, Susie Tompkins Buell Foundation, San Francisco
$1,000,000 Joint Victory Campaign
$10,000 EMILY's List
$1,010,000 Total contributions to 527s
$58,225 Total hard money contributions
$1,068,225 Total election-cycle contributions
Buell founded the Esprit de Corps clothing company, which she left in 1996. Through her foundation, she funds projects to empower women and girls; she also gives to the arts and other philanthropies. She is a stalwart Democratic Party funder and certified Friend of Bill Clinton.

11) Marcia L. Carsey, Co-owner, Carsey-Warner Productions, Los Angeles
$1,000,000 Joint Victory Campaign
$1,000,000 Total contributions to 527s
$65,500 Total hard money contributions
$1,065,500 Total election-cycle contributions
After you create The Cosby Show, you're pretty well set for money. The 59-year-old South Weymouth native is a solid Democrat who agreed to pony up a cool million to the Joint Victory Campaign. She is also a founding member of Women's Enterprise Development Corporation, Women Incorporated, and the Center for Cultural Innovation.

12) Anne Getty Earhart, Investor, Corona del Mar, California
$1,000,000 Joint Victory Campaign
$1,000,000 Total contributions to 527s
$7,000 Total hard money contributions
$1,007,000 Total election-cycle contributions
Granddaughter of J. Paul Getty, she inherited $400 million when Texaco bought Getty Oil, in 1986. Very low-profile, she has contributed to environmental causes in the past, and occasionally to campaigns, including Barbara Boxer's. This appears to be her first major political contribution.

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