The Boston Globe
Scott Helman and Chase Davis
June 11, 2006
Governor Mitt Romney is financing the early stages of his potential presidential campaign with a novel, multistate fund-raising operation that is allowing him to maximize legal donations, outflank top Republican competitors, and minimize public scrutiny.
Since July 2004, Romney has set up affiliates of his political action committee, the Commonwealth PAC, in five states. By having donors spread their contributions across the various affiliates, Romney has been able to effectively evade the $5,000-per-donor annual contribution limit that applies only to federal committees, which most presidential aspirants set up to build initial support for their candidacies.
The multistate system is helping Romney raise money quickly from relatively few contributors, and foster valuable political relationships around the country. It also is a strategy several potential opponents for the Republican nomination cannot use: Federal office-holders, under new campaign finance rules, are barred from operating such state affiliates.
That means possible 2008 competitors such as Senators John McCain of Arizona and George Allen of Virginia have to rely solely on their federal PACs and thus cannot accept more than $5,000 from any contributor each year.
“I think it’s a brilliant strategy,” said Rich Bond, a former Republican National Committee chairman and a McCain supporter. “It’s fully compliant with the law, yet allows Romney to deploy political assets in a comprehensive fashion.”
A review by the Globe of Commonwealth PAC campaign finance filings indicates that more than 100 donors have given a total of $1.6 million to Romney’s various PAC organizations over the past two years. It is a relatively small amount compared to what Romney would need for a presidential campaign — President Bush raised $273 million in 2004, for example — but the creation of a fund-raising network will help establish Romney in monied circles that will be crucial if he decides to run for the White House.
A few supporters and their families have given roughly $100,000 or more to Commonwealth PAC, but many donors have made large contributions to several affiliates at a time. On March 30, for example, Florida investment adviser Lee Munder gave $5,000 to Romney’s federal PAC, $18,250 to his Iowa affiliate, $18,250 to the one in Michigan, and $3,500 to the one in South Carolina, campaign finance records show.
The Commonwealth PAC is a so-called leadership PAC, which politicians often establish in advance of their official candidacies to finance cross-country travel, maintain a staff, and distribute tactical campaign contributions to local politicians in key states. The money these committees raise is far less than what it takes to mount a formal presidential campaign, but the committees are crucial to building name recognition and a network of donors early on. (Candidates cannot use leadership PAC money to finance their campaigns once they officially declare.)
Romney’s multistate strategy, made possible by a campaign finance law that McCain helped write, was crafted by the governor’s former advisers Mike Murphy and Trent Wisecup, “and a smart lawyer or two,” according to a person with knowledge of the plans.
One of those lawyers was Benjamin L. Ginsberg, who was a top lawyer for the Bush-Cheney presidential campaigns in 2000 and 2004.
The 2008 presidential election cycle is the first full cycle in which the new campaign finance rules apply, and Romney appears to be taking advantage of them more than other potential candidates. New York Governor George Pataki, a Republican, and former Virginia governor Mark Warner, a Democrat, each have state affiliates of their PACs, but only in one or two places.
“It’s been well-documented that being a governor is an ideal office from which to seek the presidency, and the McCain-Feingold law has just magnified that,” said FEC chairman Michael Toner, adding that such a system is “a potential leg up for office-holders such as Governor Romney that their federal counterparts do not have.”
Romney has PAC affiliates in Iowa, Michigan, South Carolina, New Hampshire, and, formerly, in Arizona. Particularly beneficial to Romney are the affiliates in Iowa and Michigan, where there are no limits on how much an individual can give. (Donors can give up to $3,500 in South Carolina and up to $5,000 in New Hampshire.)
But the multistate setup is not necessarily helpful to voters, who have to hunt down public campaign finance filings in several places to see who has given to the Commonwealth PAC, said Massie Ritsch, communications director for the Center for Responsive Politics, a Washington, D.C., nonprofit that tracks money in politics.
“Setting up individual committees in multiple states makes it hard for the public to learn who’s supporting a campaign financially,” Ritsch said.
Asked about how Romney’s fund-raising strategy differed from those of other potential candidates, Spencer Zwick, who oversees Commonwealth PAC finances, wrote in an e-mail, “I’m not familiar with how other political leaders structure their political action committees. Furthermore, all of our fund-raising and donation activity, whether it’s in connection with a state or the federal PAC, is fully disclosed and available for public inspection.”
Romney said last week he was “very pleased” with how PAC fund-raising was going, but he played down the amount of money he was taking in, saying it pales in comparison to what would be necessary to run for reelection as governor.
“There’s no particular reason to raise vast amounts,” he said. “This is being used to support Republican candidates around the country, and it’s not something where you’re trying to create records or large numbers.”
Zwick said he would not discuss fund-raising targets with the media. He said in an earlier e-mail that their focus for the first half of the year was raising money and the focus in the second half will be distributing it.
It is evident Romney has recently been raising money at quite a clip: He hosted at least three PAC fund-raisers last week, in Michigan, Utah, and California, and plans to host another tomorrow in Logan, Utah.
The Globe’s review of campaign records offers a glimpse into the early donors Romney is attracting. They come from more than a dozen states — one met Romney at a cocktail party and has backed him since, another hails from a family that’s known his for almost 100 years, and others know him from his days as a venture capitalist.
Kem Gardner is a Utah developer who, along with family members, has given more than $100,000 to the Commonwealth PAC, records show. Gardner said he has known Romney since both lived in Belmont in the 1980s, and that he and many other supporters stand ready to do much more.
“We just hope he gives us an opportunity to work for him,” said Gardner, who calls himself “a good, mainstream Democrat.” “He can count on my support in a big way.”
Another leading contributor is Jon M. Huntsman, a fellow Mormon whose father-in-law, David Haight, grew up with Romney’s father, George, in Oakley, Idaho. Huntsman and his sons have contributed more than $130,000, records show.
“I’ve pushed him and encouraged him and done everything that I think our family could to move [him] to the next level and be an actual candidate,” said Huntsman, whose son, Jon Jr., is governor of Utah.
Together, Gardner and Huntsman represent two important fund-raising bases for Romney as he eyes the presidency: Utahns and fellow members of the Church of Jesus Christ of Latter-day Saints.
Romney is well known in Utah chiefly because he ran the 2002 Winter Olympics in Salt Lake City, which was widely seen as headed for disaster until he took over. Utah residents have given more than $680,000 to his PAC affiliates, more than any other state. Romney is also one of the best-known members of the Mormon church, which has about 5.7 million members in the United States.
Another Romney donor, Robert Lichfield of Utah, is a controversial figure as the founder of the World Wide Association of Specialty Programs and Schools, which runs boarding schools for struggling teens. At least seven of the organization’s schools have closed following allegations of child abuse, the Associated Press reported in October. Lichfield, a frequent Republican contributor, has given Commonwealth PAC $25,000, according to records.
Some political specialists caution that potential presidential candidates cannot be too dependent on a small group of big contributors. That’s because once candidates officially declare their intentions, they are permitted to accept only about $2,000 from individuals for the primary cycle and another $2,000 for the general election.
“You can’t rely on big donors, because running for president you’ve got to have a strong network of people around the country who are willing to go out to their friends and neighbors and ask them to join them in the effort,” said Jack Oliver, who was finance director for Bush when he first ran for office in 2000.
Romney also recently revamped the Commonwealth PAC website (www.thecommonwealthpac.com) to allow online contributions. Contributors also can print out a document to send in with checks; it asks that donors first give to the federal PAC; then it lists the state affiliates, noting any contribution limits.
Possible opponents such as McCain and Allen have their advantages, too. Both have already raised money for federal office that they could transfer to a presidential campaign. In McCain’s case, he has broad name recognition from his presidential run in 2000.
Craig Goldman, executive director of McCain’s PAC, Straight Talk America, said that while his group is aware of Romney’s multistate strategy, McCain’s PAC has raised $4 million by soliciting checks from $5 to $5,000.
“We’re very happy where we are fund-raising,” he said.
Allen’s campaign manager, Dick Wadhams, said Allen has been focused on his reelection to the Senate this year and has not devoted that much attention to his leadership PAC, Good Government for America. Told of Romney’s strategy, Wadhams said, “Wow. Well, that’s pretty creative, no doubt about it.”