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Convention Contributions Down and More Discreet

This article originally appeared in the CQ Weekly 2012 Republican Convention Guide.

When the 2012 Tampa Bay Host Committee pledged to raise $55 million to cover the cost of staging the Republican National Convention, organizers expected much of the money to come from companies hoping to capitalize on five days of almost unfettered access to America’s political elite.

But the sluggish economy combined with anti-corporate sentiment have led some would-be sponsors to reconsider their engagements. General Motors Corp., Citigroup Inc. and other big companies that played a significant role in past national party gatherings have scaled back, either by giving less to host committees, canceling parties and advocacy events or scuttling plans to attend altogether.

This year, the political costs of making a big splash in Tampa seem to outweigh the benefits, according to more than a dozen lobbyists and consultants representing major outfits.

“You’re not going to see the Rainbow Room with Alaskan crab legs,” says Darrell Henry, a partner at GOP Convention Strategies, a consulting firm that helps such companies as Novo Nordisk and groups such as the National Association of Manufacturers plan convention activities.

“I’m not sure why corporations would give to either party’s convention given the negative press you get,” says one Republican lobbyist, who has close ties to Mitt Romney’s presidential campaign. “A lot of lobbyists are counseling their clients not to spend a lot of money hosting parties because of the optics.”

Of course, some trade groups and industry players remain undeterred. The Edison Electric Institute, the Nuclear Energy Institute and the American Gas Association are sponsoring nightly beach parties near Hidden Harbour with $1,000-a-head admission, while Norfolk Southern Corp., and other transportation heavyweights are feting members of the House Transportation and Infrastructure Committee at Stumps Supper Club, with tickets ranging from $5,000 to $20,000 a pop.

But such events may prove to be more the exception than the norm with lower entertainment budgets and fewer corporate lobbyists in attendance.

The phenomenon is partly connected to Democrats’ new restrictions on donations at their convention next week in Charlotte. The Democratic host committee pledged to reject all corporate, lobbyist and political action committee cash. Individual donations may not exceed $100,000.

The self-imposed limits, intended to highlight President Obama’s stated commitment to take money out of politics, made it harder for the Charlotte committee to come up with the $36.7 million it needed to support the event. The limits also posed a challenge for companies that want to contribute evenly to both parties.

Ken Jones, president and chief executive of the Tampa host committee, says that the broader conversation about corporate influence in politics has deterred some companies from writing checks altogether. Add to that the effects of stubbornly high unemployment linked to the slow economic recovery and polling showing record public dissatisfaction with elected officials.

“Even though we are a charity and have nothing to do with electing officials, we get painted with that brush,” Jones says.

Corporate Branding

Still, weeks before the convention, Jones was confident that all costs would be covered by private contributions and corporation gifts. The committee isn’t subject to federal restrictions on donations to candidates or parties and can accept unlimited sums from anywhere except foreign companies. Even then, U.S. subsidiaries of foreign corporations can contribute.

Democrats and Republicans also received about $18 million each in taxpayer money to stage their conventions, paid for by the voluntary $3 check-off on income-tax forms that underwrites the federal public financing system. And there’s also a $50 million federal grant to cover security costs. In 2008, Democrats raised $55 million in private funding and Republicans raised $57 million on top of $16.4 million in public funding, Federal Election Commission records show.

Service-oriented companies such as Coca-Cola Co., AT&T Inc., Microsoft Corp. and United Parcel Service of America Inc. continue to view the conventions as powerful branding opportunities and are serving as official sponsors of the gathering in Tampa.

“Some companies get mileage out of this in terms of corporate branding,” Jones says. “They want to look good on the world stage in front of more than 15,000 members of the media. This is not about politics.”

Lobbyists for several of those companies insisted they were heading south for marketing purposes, not to influence the political conversation.

“My advice is go to a convention if you want to go to a convention . . . if you want to be a witness to this quadrennial political event,” says Scott Segal, a lobbyist at Bracewell & Giuliani. “Don’t go if you’re thinking of doing business in any appreciable way.”

Coca-Cola plans to send at least three lobbyists from its Washington office, as well as several state-based lobbyists, to both conventions. The company also has made a financial commitment to the Democratic convention through an affiliate of the host committee, New American City Inc., that decided to accept corporate contributions earlier this year.

Other companies made their commitments and planned their convention budgets a year or more ago and were reluctant to make last-minute changes, lobbyists say.

In 2008, Citigroup contributed $350,000 to the Minneapolis-St. Paul host committee for the Republican convention and $250,000 to the Denver host committee for the Democratic gathering, according to FEC figures. This year, the bank wrote a modest check just to the Tampa committee. Citigroup declined to discuss its contribution.

Biotech giant Amgen Inc. gave the Tampa committee $250,000. In Charlotte, Amgen is supporting health care and innovation policy forums hosted by outside liberal and centrist groups, including Third Way and Business Forward.

The Tampa and Charlotte host committees aren’t required to disclose their donors to the FEC until Dec. 15 – a source of frustration for government transparency advocates.

The watchdog group Public Citizen submitted Freedom of Information Act requests to the mayors of Tampa and Charlotte as well as to the governors of Florida and North Carolina, requesting the release of a donor list before Oct. 15. Those requests were denied.

The host committees function much like a political campaign, raising money up to the start of the event. As of early August, Jones estimated that less than half of the money came from in-state donors and that the split between individual and corporate donors was about even.

Being openly identified as a donor carries certain risks. The advent of social media and hand-held cameras has upped the ante, allowing campaign operatives and trackers from groups like American Bridge 21st Century to capture and share instantly video of lawmakers hobnobbing with lobbyists.

“For a lot of companies, if you’re on the host committee, it probably means the Obama guys have a hold of it, and who knows the way they operate?” another Republican consultant says.

Avoiding Publicity

Some companies have chosen to stick to informal engagements, sending their lobbyists but avoiding the publicity that comes with major contributions or flashy parties.

General Motors, for example, gave $200,000 to each party’s host committee in 2008 and sent 735 cars to the two events combined, according to data compiled by the Campaign Finance Institute. This year, the automaker, still struggling after receiving billions of dollars in a government bailout, is sending only four lobbyists, a spokeswoman said.

It’s a similar story for companies slammed by the 2008 market meltdown. “The financial services industry – like many industries – has become more cognizant of the bottom line,” says one lobbyist for banks. “That’s why folks are really scrounging around to get folks to come down.”

Defense contractors also are loath to rack up extra expenses with the prospect of $55 billion in automatic cuts to the Pentagon budget early next year. Many companies are focusing on protecting themselves from the cuts.

“They are all looking to cut costs across the board,” says one Republican defense lobbyist who is not attending his party’s convention. “They are not even attending some key trade shows, so they are even more reluctant to spend resources on the conventions.”

The changed landscape might make it harder for corporations to justify spending on future political gatherings, unless they can show the access has a bottom-line impact, according to lobbyists and other political players.

“It’s the criminalization of engagement,” says the Republican lobbyist close to Romney’s campaign. “The optics are so bad that you’re better off not going. … If your goal to influence the political process and be part of it, don’t bother.”