Saturday, April 19, 2008

Facing Obama Fund-Raising Juggernaut, Clinton Seeks New Sources of Cash

NYT

Senator Barack Obama is swamping Senator Hillary Rodham Clinton with television advertising in their prolonged battle for the Democratic nomination, putting fresh pressure on Mrs. Clinton’s fund-raising machine to find new sources of money to help her keep pace.

But her big-dollar fund-raising apparatus that was once the envy of the political world is encountering obstacles as many of those in its regular networks of donors have reached the maximum on their personal contributions or grown tired of the relentless press for donations.

The campaign is actively hunting for new wellsprings of cash, while tapped-out donors who want to give more are contemplating financing independent efforts on her behalf that are not bound by contribution limits. So far, however, the independent efforts have been halting at best.

The scramble for fresh resources comes as the money gap between the two candidates is growing. In March, largely because of a continued advantage in small donations given over the Internet, Mr. Obama was able to raise twice what Mrs. Clinton brought in, collecting $40 million compared with her $20 million. He has been spending it freely in Pennsylvania, hoping to stymie Mrs. Clinton in a contest that could determine whether she stays in the race.

In the weeks leading up to Tuesday’s primary, Mr. Obama has spent more than double Mrs. Clinton’s budget on television advertising — $8.1 million to her $3.2 million, according to the most recent figures available from the Campaign Media Analysis Group, which tracks advertising spending. And with two weeks before more primaries on May 6, Mr. Obama is spending four times Mrs. Clinton’s television budget in Indiana and double her North Carolina total.

The Obama fund-raising juggernaut has some of Mrs. Clinton’s most devoted supporters worried and searching for a new way to support her candidacy. Alan Patricof, a national finance chairman for Mrs. Clinton, said four people had called him in the past month to discuss starting a so-called 527 group — named for the section of the tax code the groups are organized under — on her behalf.

“These are people who have maxed out to Hillary and would like to do a lot more but know they cannot do it through the campaign and thus are looking for other legal ways to give and raise more money under a different status,” Mr. Patricof said. “As I have pointed out, once they do that, they can no longer participate in the finance committee calls and they have to do it outside and away from the campaign itself.”

Such groups are potentially attractive for affluent donors because contributions are not capped as they are for candidates. But campaign finance experts say 527s can be legally treacherous; hefty fines were levied against many of the groups after the 2004 election, and the rules that govern them remain hazy.

The groups are barred from coordinating with campaigns and explicitly calling for the election or defeat of a candidate; instead they are limited to advocating on issues. But exactly what they can say about candidates when they solicit contributions or spend them is sometimes unclear.

One such group, American Leadership Project, which on Wednesday began broadcasting commercials in Pennsylvania praising Mrs. Clinton on health care, offers an indication of how challenging it could be to raise money for an independent effort.

The group has raised only about $1.5 million so far. As a result, it spent only about $425,000 in Pennsylvania, after doling out about $750,000 for commercials in Texas and Ohio earlier this year. It intends to play a more substantial role in Indiana, its leaders said.

Some potential donors have been reluctant to support an effort that they feared could get them into legal trouble. Others wanted the group to attack Mr. Obama, a tactic the group’s leaders have resisted.

Almost all of the group’s money has come from two unions that have endorsed Mrs. Clinton, the American Federation of State, County and Municipal Employees, which has contributed $1.2 million, and the Machinists Union.

But the list of individual donors is telling in that eight of the nine people who gave $5,000 or more to the group had already given the maximum $2,300 donation for the primary to Mrs. Clinton’s presidential campaign.

Mrs. Clinton’s campaign is particularly affected by the limits on giving because high-dollar contributions remain a staple of her fund-raising. Although her campaign has done a much better job lately of raising money over the Internet, donations of $1,000 or more accounted for about a quarter of the money she raised in February. Nearly 8,000 of her donors appear to have given the maximum of $4,600 for both the primary and the general election, compared with about 2,400 for Mr. Obama.

Over all, contributions of $2,300 account for roughly 37 percent of Mrs. Clinton’s primary receipts, compared with about 24 percent for Mr. Obama.

Even so, Clinton fund-raisers said the amount they had been able to bring in from major donors had held fairly steady this year. Donations of $1,000 or more for the primary totaled about $6 million in January and $8 million in February.

It has become a daily challenge, however, for Clinton fund-raisers to scrounge up new names of people to ask for money or bundle campaign contributions.

Hassan Nemazee, a national finance chairman for Mrs. Clinton’s campaign, said he had been exhorting fund-raisers to “think outside the box.”

“The question we, as fund-raisers, are having to address is, ‘How do you continue the self-renewal when you are 14 or 15 months into a process and you have in many respects tapped your network dry?’ ” Mr. Nemazee said.

He recommends branching out to new geographic areas. “If you stay just focused on your geographic area, it’s very, very difficult to continuously find new people to expand your network,” he said.

The campaign has also been trying to be creative with its events. A recent concert in New York City with Elton John, for example, netted $2.5 million, with tickets from $250 to $2,300.

Beth Dozoretz, another top Clinton fund-raiser, said she initially fretted about finding still another pool of givers when she was asked by the campaign recently to pull together an event at her home in Washington.

But this time, she said, she did not ask for people to bundle contributions of $10,000, $25,000 or $50,000 at a time, as she had done in the past. Instead, she invited a broader circle of people who were asked to cobble together amounts like $3,000 or $5,000. She also opened the event to children, which resulted in mothers bringing their daughters. The event grossed $250,000, she said.

Discussions about independent efforts cropped up this year among Clinton backers, when the campaign found itself essentially in the red leading up to the crush of states that voted on Feb. 5, forcing Mrs. Clinton to lend her campaign $5 million.

Mrs. Clinton has not denounced the groups, though this year her campaign accused Mr. Obama of hypocrisy for what they said was his muted response to a 527 group advertising on his behalf after he had decried the influence of such groups.

The campaign’s fund-raising has since improved, driven by its own surge in online donations. But with Mr. Obama raising and spending so much, the conversations have surfaced anew.

“These are very smart people who are being very thoughtful about it,” said Ms. Dozoretz, a former finance chairwoman of the Democratic National Committee.

One idea considered by some Clinton supporters has been a 527 effort to press for the delegates to be seated in Florida and Michigan, but it has yet to get off the ground.

Despite a pre-emptive warning from Robert Bauer, a campaign finance expert and lawyer for Mr. Obama’s campaign, the organizers of the American Leadership Project have plunged ahead.

The group is filled with people who have ties to the Clintons: Roger Salazar, who worked in the press operation of the Clinton White House and is a political consultant in California, and Paul Rivera, another former Clinton White House staff member and senior political adviser for Senator John Kerry’s presidential campaign in 2004 who worked on Mrs. Clinton’s Senate campaign in 2000.

Jay Eisenhofer, a lawyer in New York who raised at least $100,000 for Mrs. Clinton, making him a “Hillraiser,” gave $50,000 to the group. Richard Ziman, another Hillraiser and Los Angeles real estate magnate, contributed $15,000, and William Titelman, a former Pennsylvania lobbyist and longtime Clinton fund-raiser who gave enough to spend a night in the Lincoln Bedroom, contributed $10,000 and has helped the group raise money.

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