How to Survive the Political Game of Musical Chairs

Posted on:

When Illinois Attorney General, Lisa Madigan, announced she was going to run for reelection instead of Governor, it sent a full ripple effect down the ballot, as candidates had spent months jockeying for different offices fully expecting her to run for Governor.

Two Democrats in particular, were most affected by Madigan’s decision: Kwame Raoul and Shelia Simon; both were eyeing a run for Attorney General. Instead they were both left to make hard decisions about their political futures. Here’s an example of when push comes to shove, money can help delegate your next seat in the political game of musical chairs.

Sheila Simon was not going to give up her statewide ambitions and with her already abandoning her position as the 46th Lieutenant Governor, she was left to decide between running for Comptroller and Treasurer.

Sheila Simon & Duffy Blackburn (and their spouses) after Blackburn announced he was suspending his campaign. source: Duffy Blackburn Facebook Page

Sheila Simon & Duffy Blackburn (and their spouses) after Blackburn announced he was suspending his campaign. source: Duffy Blackburn Facebook Page

While both offices had other Democrats eyeing those positions, when looking at the money, the choice was clear for Simon. The path to the Democratic nomination for Comptroller looked strategically easier than to Treasurer. While there were other reasons Simon made this decision, one key reason was money. Duffy Blackburn the Democrat running for Comptroller had only about $25,000 on-hand, Mike Frerichs running for Treasurer had nearly $650,000.  It can be said that Simon’s chances for Comptroller were a lot higher since her opposition (Blackburn) had low fundraising support.

Money played a role for both the futures of Frerichs and Blackburn. Frerichs had a built a large war chest which would serve as a firewall to protect him from new challengers. And for Blackburn, it was a demonstrated weakness that Simon was able to take advantage of. Once Simon sat back and looked at the D2’s of her potential primary opponents, it was an easy choice.

Kwame Raoul – Simon’s decision to run for Comptroller was an easy one compared to Raoul. Raoul went on a fundraising tear at the end of June and reportedly raised $462,000 over the previous three-month period. Raoul had the same options as Simon, but apparently has also much more ambition.

State Senator Kwame Raoul. Source: Kwame Raouls' Facebook page

State Senator Kwame Raoul. Source: Kwame Raouls’ Facebook page

Raoul is now weighing running for Governor, which is something he will likely announce in the next week. His impressive fundraising haul is playing some role in the buzz surrounding a potential campaign. Even though he raised only half of what Quinn and Daley raised, he was able to raise enough to be taken seriously by the Democratic players in this state.

This game of musical chairs played by the candidates help reinforce something I tell clients all the time, “If you have money then you have options and power.” Simon chose to take on a much financially weaker opponent in Blackburn, and because of Raoul’s fundraising successes he has some real options to consider.

By Nick Daggers, Vice President, Fundraising

Benefits and Inequalities of Matching Funds

Posted on:

crowdfunding2

In 1977, New Jersey became the first state in the nation to implement public financing for gubernatorial elections.  According to New Jersey’s Election Law Enforcement Commission, the program “allows persons of limited financial means to seek election to the State’s highest office and to conduct campaigns free from improper influence.”   The statement evokes two clear goals of NJ’s matching funds program: 1) greater equality among competitors, and 2) less “improper influence.”

I am sympathetic to these goals, and find these programs difficult to reject on normative grounds. However in my opinion they are practically unworkable, and thus, impossible not to reject on practical grounds.  The key reason being that these programs do not work as intended and if anything, lead to less equality and a greater degree of “improper influence.”  I discuss my reasoning below.

Greater Equality?:

Because “elections aren’t won with prayers,” the reality of the political economic environment necessitates the use of money to translate political ideas into political speech.  Without an option of public funding, federal candidates must rely on wealthy donors, interest groups, and political parties (or themselves) for resources and financial support.  The outcome is that some candidates will inevitably have more resources than others.

Matching funds seeks to bridge the gap. Yet because of a Supreme Court case in 1976 (Buckley v. Valeo) that rendered campaign-spending limits unconstitutional, states may not compel candidates to participate in public programs, which almost always have caps on how much a candidate may spend.[1]  As long as candidates have this de facto “opt-out” alternative, the practical reality is that the only candidates that will use the public funds are the ones that need to.

The best example of this is New Jersey’s gubernatorial race.  There is little reason for Chris Christie to willingly limit his spending in order to participate in the public funds program, when he can raise money so quickly and easily.  On the other hand, his opponent, Barbara Buono, is all but forced to participate in the matching funds program. With a more limited fundraising operation, it is her best shot of maximizing the amount of campaign resources.

Of course, this is only a disadvantage to participants in matching funds programs if they shoulder some kind of significant burden that non-participants do not. Do they?  In a word, yes.  In order to receive the matching funds in New Jersey, the campaign must submit reports to the state every two weeks (accelerating to every week as the election nears).  These reports must include:

  • Donor name
  • Address
  • Employer & Occupation
  • Address of donor’s employer
  • Copy of the original check
  • Copy of the deposit slip (before depositing),
  • Copy of a stamped receipt of the deposit slip (after deposit)

In the case that the contributor was an LLC, then it must also be accompanied by a signed letter stating what individual the contribution should be attributed to.   In the case of credit card contributions, the campaign must obtain an original signature from each contributor, regardless of amount.  In case all this were not enough, all of this information needs to be submitted via proprietary database software that allows for one scan at a time, comes with many bugs, and will reject transactions for including full words such as: “avenue,” “street,” “boulevard,” “road,” “post office box,” “organization,” “committee,” and my favorite, “New Jersey”…plus approximately forty others.

In short, the fact that participants in matching funds programs are held to such high expectations in order to receive funds not only substantially increases their workload, but also engenders intense budget uncertainty, as it seems transactions can get rejected for nearly anything.   In New Jersey, this law that was intended to promote greater equality has led to an outcome whereby quite literally, the two major general election candidates are being held to different standards and expectations, and the underdog is far worse off.

Improper Influence?:

The second noted reason for implementing matching funds programs is to mitigate those seeking to influence politicians. …Influence politicians how exactly?  Pre-eminent scholars of campaign finance cannot agree on how money actually influences politics.  Let’s assume that “influence” means “to affect legislative policy in a way that without such influence, would otherwise have been different.”  This is the conception employed by political scientists Wayman and Hall (1990), who argue that money mobilizes legislators to write more favorable policy.  Taken to its greatest logical extent, this type of relationship between money and politicians can lead to bribery and corruption.

Yet more contemporary scholars observing the same outcomes arrive at far different conclusions.  Esterling (2007) argues the reverse – that PACs contribute to members that he calls the “workhorses” in Congress; those that write more policy, have greater leadership qualities, and value policy substance over style.  This conception of money in politics, as a reward for good work, undermines those that are based on the assumption that money is inherently corrupting.

Let’s assume that the term “influence” does not mean “to affect legislative policy or decisions of legislators.” Rather let’s assume “influence” means “some degree of donor representation.” And again, let’s use the example of New Jersey.  New Jersey’s matching funds program matches qualifying contributions 3:1.  It is not limited to individuals and organizations in New Jersey.  Rather, it includes contributions from any American individual, corporation, PAC, union, etc. from all 50 states.  It is not far-fetched to say that with Chris Christie up for re-election, that this race may attract national interest. For a campaign in a small state like New Jersey to be attracting national attention, it is not unfathomable to imagine a scenario where a substantial portion of contributions comes from out-of-state PACs, individuals, and organizations. This presents a thorny question: how is it that a program that could grant out-of-state interests three times as much “influence” as they would otherwise have, possibly lead to greater representativeness for the citizens of New Jersey?.[2]

MisMatched:

While money may be a necessary component of affecting political outcomes, it is in no way synonymous with, or by itself sufficient to achieve influence. Moreover, there is little evidence that matching funds programs leads to greater equality. This article did not touch on how matching funds programs has the potential to significantly widen the fundraising gender gap I discussed last month.  Nor does it discuss the costs of implementing the programs. Tangential benefits, such as greater voter participation, are also questionable. After implementing the public matching funds program in NYC, most recent mayoral election of 2009 witnessed the lowest voter turnout its had since the 1960’s.   In short, matching funds programs need to be seriously reconsidered. Legislating policy based on untested assumptions and before thinking through the potential outcomes is unwise at best and dangerous at worst.



[1] Note: spending limits are not the same as contribution limits, or how much a candidate can receive.

[2] I discuss this topic in greater detail here.

 

By Erinn Larkin, Compliance Director, PACs and Parties

 

Is Reform Coming to Illinois?

Posted on: No Comments

I read the news today and oh, boy…another Illinois politician is under investigation.

The Chicago Sun Times reports an FBI investigation underway on Chicago Alderman Joe Moore (49th Ward) for firing two employees, who had allegedly complained about doing political work while on city time.

It’s no secret that Illinois has had its fair share of ethical discrepancies toward the conduct of business in the political arena.

However, some believe that the culmination of political scandal over the recent years may have finally reached its tipping point, which begs the question: Will Moore’s case be the final straw that breaks the camel’s back?

Many wonder if the feds will come down hard on Moore. But will more instances like this finally make Illinois voters realize the need for a near complete overhaul of our states ethics and good government laws?

I don’t know but I do know is that in 2014, voters may finally have the chance to vote on one of the largest and most sweeping reforms in over 30 years. Yes for Independent Maps is currently gathering signatures to place a constitutional amendment on the ballot to reform our state legislature’s redistricting process by creating a non-partisan redistricting commission similar to California, Arizona, Missouri, Florida, and a handful of other states.

An amazing first step towards saving Illinois from a handful of corrupt elected officials would be to create an independent mapping process.  Why?

gerry-mander-gif

First, simply changing the way that state legislative districts are drawn will create an unprecedented level of transparency. It will also create more competitive districts. If it is successful, we will see like-minded communities protected rather than split apart for political purposes.

Secondly, if this amendment passes it will send a deafening boom to elected officials all over the state of Illinois and hopefully open the door to more good government policies.

The deafening boom of this amendment becoming law will remind elected officials how important integrity and ethics are to the people of Illinois.

CFO Consulting is proud and excited to be working with Yes for Independent Maps and to be helping them raise the money they will need to pass this amendment. We believe that reforms like this bring great transparency to the political process and help to create a better government that is capable of serving its citizens.

To learn more about the work we are doing with Yes for Independent Maps visit them at www.independentmaps.org.

By Nick Daggers, Vice President, Fundraising

Is it a Problem that the Vast Majority of our Electoral System is Financed by Men?

Posted on: No Comments

mad_men_cover_1

A significant amount of journalistic attention is devoted to examining how campaign contributions influence who we elect to the U.S. Congress.  Such concern over the potential for “special interests” to exert inordinate amounts of power on our elected officials is clear; it is  antithetical to the notion of the “common interest” that underlies the foundation of our democracy (previously discussed here).   However, while it is often the case that special interests are presumed to be narrow interests  (i.e. “big oil,” unions, corporations, etc.), there is relatively less attention paid to how our campaign finance system affects groups that are too broad or cross-cutting to be called “special interest,” but may nevertheless be significantly impacted by the current campaign finance system. Specifically, the question I address here is whether it is possible that the campaign finance system is contributing to the gender disparity in Congress.  Is it a problem that the vast majority of our electoral system is financed by men?

Why the Gap?  How does the campaign finance system contribute to the problem?

Those that argue overt discrimination against women is a thing of the past note that women perform just as well as men in general elections. For example, no one was shocked this past April when Robin Kelly was elected in a special election to fill the seat previously held by Jesse Jackson Jr. in Illinois.  However it is also true that women generally have to raise more money to perform as well as men at the polls, while at the same time women perceive fundraising to be more difficult than men.  But why?

I suggest two reasons.  The first is the undisputed gender gap in resources: men make up a larger percentage of the work force and earn a higher income on average.  They therefore have more resources at their disposal to contribute to campaigns than women do.  The second, less obvious reason has to do with a particular FEC regulation governing the rules of “Separate Segregated Funds”  (SSFs), which comprise the vast majority of PACs that contribute to candidates and include corporations, membership organizations, unions, etc.  The regulation specifies that the only members of a company or organization that can be limitlessly asked to donate to the PAC are its executives, stockholders, and notably – their spouses.

While the 2012 Fortune 500 “boasted” a record number female CEOs, the grand total came to 18, just 3.6%.  The reality is that the majority of executives and stockholders are male, that in essence, are able to make contributions on their own accord as well as on behalf of their spouses. Taken to its furthest logical extent, the result is that a greater number of men enjoy de facto doubled contribution limits.

Gender of Contributor and Preferences Toward Male/Female Candidates

Of course for any of this to matter to gender fundraising disparity, it must be the case that women prefer female candidates and men prefer male candidates. To see whether there was any evidence for this, I took a sample that included 2975 individuals who made contributions to a subset of eight pairs of freshman candidates (one male and one female in each pair) within the critical first 100 days of the start of their respective campaigns.[1]

The table below presents the results of a quick analysis. I classified contributors that do not have employers and that list occupations such as “homemaker,” “self-employed,” “mother,” and “volunteer” as “working inside the home.”  Unsurprisingly, males constitute a higher proportion of overall contributors. When I exclude contributors (both male and female) that work inside the home, the average contribution for females declines substantially while the average contribution for males increases just slightly.  It also results in a decrease in the percentage of female contributors to 26%.  It is interesting to note that this percentage roughly corresponds to the percentage of women in Congress. (While this does imply causal relationship, it is nevertheless a fun number…not unlike Romney getting 47% of the popular vote in 2012).   Lastly, it is evident that females seem to prefer female candidates and males seem to prefer male candidates.

Does the Discrepancy Matter?

Arguably, the gender imbalance in Congress is only relevant insofar as it has an independent effect on legislative output that cannot be explained by other factors, such as partisanship.  In other words, if gender has no impact on an elected official’s behavior, then an imbalance, however disproportionate, may be functionally irrelevant.  Yet studies show female legislators devote more time and energy to what are informally referred to as “women’s issues,” including healthcare, children and families, women’s rights, gun control, and others.  Stylistically, women demonstrate more cooperative legislative strategies and collaborative approaches, while men tend to prefer more competitive, hierarchical tactics.  Thus it is reasonable to posit that a change in the proportion of women in Congress would have an impact on the nature and type of legislative output.

Particularly in a political time in which fundraising continues to grow in importance, it is important to be aware of how seemingly non-discriminatory formal institutions, such as the campaign finance system, may nevertheless result in discriminatory outcomes.

Contribution Statistics by Gender

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1165 (58%)

870 (42%)

2035

68%

$899

Female

448(47%)

492 (53%)

490

32%

$920

Excluding Contributors Working Inside  Home

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1150 (57%)

867 (42%)

2017

74%

$911

Female

336 (46%)

382 (54%)

718

26%

$799

Gender and Work Status of Contributor and Gender and Party of Recipient Candidate

Total

Mean

Work Inside

Average

Work Outside

Average

Males

To Male Democrats

801

$869

15

$582

786

$875

To Female Democrats

598

$857

3

$1525

595

$852

To Male Republicans

364

$1091

0

$0

364

$1094

To Female  Republicans

272

$901

0

$0

272

$901

Females

To Male Democrats

316

$1028

70

$1493

246

$874

To Female Democrats

379

$791

82

$972

297

$727

To Male Republicans

132

$1219

42

$1591

90

$942

To Female  Republicans

113

$795

28

$1019

85

$692


[1] The eight pairs, or sixteen total candidates, consist of individuals competing for Congressional office for the first time.  All chosen candidates won their elections in 2008 and subsequently were sworn-in during the 111th Congress.  The pairs were chosen based on the similarity of their ideology, district qualities, and partisan orientation.

 

By Erinn Larkin, Compliance Director, PACs and Parties

Choosing the Right Lt Gov can be a Game Changer

Posted on:

game changer

Over the next 17 months, there will be 37 governors who will either be elected or reelected. In many of these states the candidates running for governor will have to choose a Lieutenant Governor candidate. One of the key factors to consider is the fundraising support they can add to the ticket.

Here is my analysis of what kind of candidates might exist out there for a gubernatorial candidate to help maximize his or hers’ fundraising potential heading into a general election.

  • The Millionaire – any candidate who has the ability to self-fund can instantly change the fundraising ability of a gubernatorial candidate and his ticket. This would likely be the best match for a candidate who needs cash fast in order to level the playing field. Any Lt Gov who can quickly infuse a few hundred thousand into a close race could be a game changer.
  • The War Chest – some politicians have been around for years stockpiling huge sums of cash. Anyone that has done this would be a great person to add to the ticket as instantly bring cold, hard cash ready to be used. Only a few potential candidates have significant war chests that could make them a good candidate.
  • The Instigator – in recent years we have seen many politicians become very successful fundraisers by always being at the center of controversy. “Wingnuts” as many of them are referred to as; usually make great fundraisers but terrible candidates. Think Michelle Bachman, Alan Grayson, or even Sarah Palin.

While there are many, many ways for a good Lieutenant Governor candidate to add to their tickets fundraising successes these are just a few categories that they might want to consider before deciding on who to slate with them for next election.

By Nick Daggers, Vice President, Fundraising

 

What is the Point of Campaign Finance Reform?

Posted on:

campaign-finance-reform-free-speech-1

Adam Lioz’s recent article titled “Half a Step Forward and a Full Step Back: Can Connecticut Maintain its Leadership on Money in Politics?” calls attention to the on-going trend of weakening campaign finance regulations across the country.  His argument included a litany of potential policy options aimed at reversing this trend. Some of the suggestions included eliminating spending caps for publicly funded candidates, a greater ratio of matching funds, and tax credits that incentivize more people to contribute.

While the policy alternatives put forth have interesting implications, an expansion of them is beyond the scope of what I seek to achieve today.  Rather, my purpose here is to discuss the critical flaw imbedded within various calls for reform (including this one), which is that there is a conspicuous absence of any specific goals that reformers hope to achieve through policy change.

First, the foundational arguments upon which progressives pursue campaign finance reform continue to be unclear.  For example, the author first speaks of Connecticut’s Citizens’ Election Program as welcomed solution to the “scandal and malfeasance” within Connecticut state politics in the early 2000’s.  He then goes on to proclaim, “the point of the Citizens’ Election Program is to give ordinary citizens and not wealthy donors the power to control who runs for office and who wins elections—so that elected officials will be accountable to their voting constituents, not a separate class of “cash constituents.” The difference between these two purported goals are subtle, yet profound. The former purports strict campaign finance regulations to be a means of mitigating corruption and malfeasance.  The latter professes notions of equality and constituent representation to be the primary goals of regulation.

Context also needs to be addressed. As the author notes, the Connecticut laws arose as a reaction to crisis. Thus it seems reasonable to assume that a decade later, it might be necessary to reevaluate the law to determine whether the changes were effective.

Lastly, the author refers to Senator Chris Murphy and his characterization of campaign fundraising as “soul-crushing.” Many officials have made similar complaints – often in reference to the time and energy they necessarily have to devote to raising money for their campaigns. I would agree with the author that this is problematic. However it remains unclear to me how a system by which officials are forced to spend a greater amount of time and effort in order to attract lower dollar contributions from individuals less likely to want to contribute is an efficient means of solving the problem.

Until there is agreement on specific goals that can be attained through policy change, I feel the general public will be unwilling to listen to their arguments, and will remain unconvinced that reformers are not fundamentally motivated by their own bias. For example, there was little complaint about notions of equality from progressives regarding the vast fundraising discrepancy between presidential candidates John McCain and Barack Obama.

As I noted on this topic in December, my criticism of progressive calls for reform is not to suggest that it is an unworthy cause or that it should be abandoned. Rather, it is a plead for reformers to eliminate fuzzy objectives that could best be described as “better government,” in favor of clear, established goals. Only then will reformers be able to demonstrate precise ways in which their policy proposals solve specific problems.  And only then will they have a chance of garnering public support for their cause.

By Erinn Larkin, Compliance Director, PACs and Parties

Cities Look to Water for Innovation

Posted on:

Cities Look to Water for Innovation

Cities across the world are going through a major shift from agrarian and rural living conditions to dense urban living.  As of 2011, for the first time in the history of man, more than half of the world’s population lived in cities.  Though there are many benefits to humans living in cities, there are also many challenges.  One of these challenges is a growing water scarcity problem in many urban areas.  How can cities provide ever-drinking water and  sanitation services  fit to meet the expectations of an ever-growing middle class? Innovation is the answer.  Nationally, cities such as Milwaukee and Chicago are leading the charge by thinking of creative and innovative ways to use the water they possess with greater efficiency.

Milwaukee sits along the shores of Lake Michigan, at the convergence of three rivers — the Menomonee, the Kinnickinnic, and the Milwaukee. The lake provides approximately 1 billion gallons of fresh drinking water each day.  Access to such large amounts of water has lead the Milwaukee Water Council, a nonprofit organization that brings together the region’s water industries and universities, to dub Wisconsin as the “Silicon Valley” of fresh water.

Indeed, innovative ideas for the use of water are taking off in Milwaukee.  The eleven county area is already home to 194 water-related companies that work on everything from aquaponics, a method for farming fish year-round on land, to innovative ways of managing storm-water runoff.  “There is nothing else like this in the United States at all,” says Dean Amhaus, president and CEO of the Water Council. “The goal is create a world hub that grows companies and entrepreneurs [focused on] developing ways to use water more efficiently and return it at a high quantity and quality.”

Chicago is another city that is providing a blueprint for the rest of the country in water innovation.  In May of 2011, the U.S. Environmental Protection Agency sent a forceful letter to the State of Illinois stressing that the state should adopt new water quality standards for major stretches of the Chicago Area Waterway System, including the Chicago River. The EPA indicated that portions of the Chicago and Calumet Rivers must be upgraded to protect the health and safety of people who use these waterways for recreation.

Enter Debra Shore; the Commissioner of the Metropolitan Water Reclamation District of Greater Chicago.  Under Shore’s leadership, the rivers are much cleaner now than they were years ago, largely due to the Metropolitan Water Reclamation District’s innovative use of ultraviolet light or chlorination to kill more of the bacteria, viruses, and other pathogens in treated wastewater.  The MWRD has also placed considerable effort in capturing combined sewer overflows in the Deep Tunnel and reservoirs to treat storm water before releasing it into the waterways.

In the future, Shore hopes to promote green infrastructure through the use of rain barrels.  Rain barrels can be used to capture rain off roofs and then reused to irrigate gardens stays in the natural hydrologic cycle and out of the sewers. The MRWD plans to distribute 15,000 55-gallon rain barrels in the next few years. They’ll capture 825,000 gallons in each quarter-inch rain event.

Can the City of Providence be the next great water innovator?  Brett Smiley, the Providence Water Supply Board Chairman & President of CFO Consulting Group, LLC, certainly hopes so. “One of our great assets is that we have adequate fresh water; the dilemma is we have unequal distribution,” Smiley said. “Northern Rhode Island is water-rich and southern Rhode Island is water-poor.”  That is why Smiley and the Providence Water Supply Board, which services a majority of Rhode Island water customers, is proposing that Rhode Island move to a more regional system of governance of its water supply.  This ability to pool resources, which is based on best practices now employed in many other states, will improve service delivery, foster efficiency and reduce costs.

The Providence Water Supply Board is proposing, through legislation proposed in May of this year, the creation of the Ocean State Water (OSW) – a new publicly managed and resourced water authority. OSW will be a new entity, separate and apart from any existing water authority or supplier. OSW, through its regionally-representative board, will produce, distribute, and sell water.

CFO Consulting Group is looking forward to seeing the State of Rhode Island become one of leaders of water innovation in the country by enabling and supporting companies to invest in Rhode Island.  CFO hopes to help Rhode Island become a world leader in evolving field of water innovation with the creation of this new regional authority which will provide the modern governance structure essential to protecting Rhode Island’s water supply and ensuring safe drinking water in the long-term.

Campaign Finance Regulation Needs a Home

Posted on:

securities-and-exchange-commission-photo-thanks-to-flickr-user

The Federal Election Commission can no longer be considered the sole federal agency tasked with regulating federal campaign activity.  As a recent New York Times article suggests, the Securities and Exchange Commission may soon require publicly traded corporations to disclose the names of individuals who contribute to various so-called Super PACs.  Not surprisingly, the measure is strongly opposed by business organizations such as the Chamber of Commerce, which argue that such measures would infringe on the group’s right to free speech. The Internal Revenue Service has also been highlighted recently for its alleged overreach in targeting tax-exempt 501(c)(4) organizations associated with the conservative Tea Party.

These latest events highlight just how thorny of an issue campaign finance regulation has become.  Agencies that are not normally tasked with any kind of campaign regulation have found themselves forced to overcompensate for a seemingly ineffectual FEC.

In international relations, the term “proxy war” is used to describe a situation in which two opposing parties utilize a substitute, or a third party, as an alternative to fighting each other directly.  What Citizens United seems to have engendered, is a proxy war between liberals and conservatives in which government agencies are being used as reluctant battlegrounds.   As we have witnessed this past week, the results are at best messy, and at worst, damaging to the overall legitimacy of the federal government.

The longer both sides continue to battle one another over procedural matters in multiple agency arenas, the more distant they become from their purported fundamental purpose for being, which is to engage in political advocacy.  Not to mention, of course, the more contributor money they waste in the process. But is there any alternative?

These organizations might benefit from looking back to 2004 and the similar issues brought forth by so-called “527” organizations and their apparent exemption from the recently passed Bipartisan Campaign Reform Act of 2002 (also known as McCain-Feingold).  The crucial similarity between the battles being waged today, and those of the past, boil down to one thing: the definition of a “political committee” as defined in the FEC Act.

The difference between the strategies implemented today versus 2004, is that in the latter, watchdog groups and political parties funneled all their complaints and fought all their battles in one arena – the FEC.  Both sides filed complaints and the FEC came down hard on 527’s, primarily for failing to register as political committees.  As a result, America Coming Together was fined $775,000, the Media Fund was fined $580,000 and the Swift Boat Vets and POWs for Truth were fined $299,500.

A strategy that devotes resources to one specific arena (namely, the FEC) could be particularly beneficial for liberals and other proponents of increased disclosure.  The Supreme Court unambiguously upheld disclosure laws as constitutional.  If disclosure is the bottom line, then liberals and supporters need to bring the fight back to the FEC where they maintain a home turf advantage. Otherwise, they risk undermining their cause by fighting procedural battles in agencies that have little interest in regulating campaign activity and little incentive to become enmeshed in a political battle as contentious as campaign finance.

 By Erinn Larkin, Compliance Director, PACs and Parties

 

Free Advice: Start Raising Money Yesterday

Posted on:

fundraising_21

Whenever an aspiring candidate asks the question, “when do you think I should start raising money?”  my answer is always the same – yesterday!

I cannot begin to count the times I have joined a campaign right before a critical fundraising deadline. And yet there are countless reasons why raising money early on can be pivotal.  For example, in order to build a successful fundraising operation you must first create a good infrastructure of data and lists. Moreover, early money can create other opportunities that will give you the greatest chance at success.

A good fundraising operation can very easily built if the campaign has a good base of data. Almost any good fundraising operation will start by organizing and sorting (hopefully) hundreds of personal contacts of the candidate. This step can take a considerable amount of time, in many cases candidates will hand their fundraiser a stack full of business cards, their holiday list, (and my favorite) cocktail napkins with notes scribbled on them. Deciphering this data can take a great deal of time and detective work. Usually, this work can be done months before a candidate is ready to announce his or her candidacy. Once some sort of manageable list is in order, the candidate is ready to hit the phones!

By getting a head start on fundraising, the candidate do things other than just spend hours in a dark room on the phone. Many candidates quickly grow tired of call time and want to get to meet voters and campaign for office. However, if they cannot do this until they hit some of the early fundraising benchmarks. By buckling down early and spending hours of the phone can definitely free up the candidates schedule to spend a few more hours a week shaking hands and kissing babies.

Finally, the greatest reason a candidate should start raising money sooner than later is that it will give them the greatest chance at victory. This should be reason enough to convince candidates to start raising money in April instead of June, but that is not always the case. The facts do not lie in many cases the candidate who jumps in early and raises money the fastest can have a greater chance at victory. Early money is a demonstration of strength to both potential opponents and pundits. An early start will also give you a chance to jump out to an early cash advantage, that in some cases your opponent might never be able to catch.

Every candidate could use some free advice, so to those of you thinking about running for office in 2014, 2015 or even 2016, remember it is never to early to start fundraising. An early fundraising start will give the opportunity to build a solid infrastructure, allow the candidate more time to campaign, and most importantly give you the greatest chance at victory.

By Nick Daggers, Vice President, Fundraising

Payday Lenders Moving From the Storefront to the Internet

Posted on:

Screen Shot 2013-05-22 at 2.14.50 PM

For the past year, CFO Consulting Group has been pushing for tighter regulation of the Payday Loan industry within the state of Rhode Island.  Nationally, storefront payday lenders are facing tighter regulations across the country. Twenty-five states currently have pending legislation that pertain to payday lending regulation.

As storefront payday lenders are coming under intense scrutiny in some states, another form of usury is flying under the radar.  Faced with the prospect of storefront payday businesses becoming unprofitable under new regulations, many payday lenders are moving their operations to the shadowy, unregulated world of the internet.  A growing number of the lenders have set up online operations in less regulated states in the U.S. or foreign countries like Belize, Malta, and the West Indies in order to avoid statewide caps on interest rates.  There are a few differences between the traditional storefront payday loan system and the payday loans available online.  Via the internet, there is an immediate approval system, which enables customers to get in touch with numerous “expert” lenders and receive cash deposited directly into their accounts.  This allows lenders to have direct access to borrowers’ bank accounts.

Sadly, major banks have become enablers of internet-based payday lenders.  A recent New York Times article states that while large banks  – including Bank of America, and Wells Fargo among others –  do not make the loans, they are a critical link for the lenders. They enable the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. This is a practice that has been flourishing on the internet for years.  However, there has been some movement within the United States Congress and some of the major banks to help combat this issue.

JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts can be accessed by the online payday lenders more power to halt withdrawals and close their accounts.  Within the United States Congress, Senator Jeff Merkley of Oregon introduced a bill in January to further rein in payday lending.  The bill, S. 172, or better known as the SAFE Lending Act, would crack down on the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans.  As of March, the bill is sitting in committee.

CFO Consulting Group is looking forward to seeing the United States Senate & House of Representatives vote in favor of the SAFE Lending Act to successfully bring to an end the predatory practice of payday lending in internet and storefront locations nationally.

By Brett Smiley, co-founder of  CFO Consulting Group