National Donors Pick Winners in State Elections

If money is influence, the Republican Governors Association wielded more of it than anyone else last year in state elections nationwide.

The group, led in 2014 by New Jersey Gov. Chris Christie, gave roughly $69 million to candidates, political parties and independent groups — more than double its Democratic counterpart — as it tried to elect Republicans to the top office in as many states as possible. The group gave more than any other donor to state-level elections last year — from races for governor to legislator to supreme court justice.

The association applied an effective strategy that’s becoming more common: giving money using multiple paths to circumvent limits on campaign contributions to candidates and parties, a Center for Public Integrity analysis has found.

In addition to the money it spent directly on TV ads and other campaign efforts, the group gave about $14 million to candidates including Illinois’ new Republican Gov. Bruce Rauner. It also gave more than $3 million to state parties, including those in Texas and Maine.

The bulk of the checks it wrote, however, totaling about $50 million, went to other political groups that in turn spent the money on state races.

Its efforts largely paid off. Republicans gained four governorships in 2014 and only lost two, leaving them holding the reins in 31 states.

The group “was designed to supplement what candidates could do on their own in the states,” said Dick Thornburgh, a former Pennsylvania governor who turned the association into a powerhouse in the mid-1980s. “Obviously, it’s grown beyond that.”

Its competitor, the Democratic Governors Association, gave $32 million and ranked second among the sugar daddies of 2014, according to the Center for Public Integrity’s analysis. The group only picked up one new governor’s mansion, with Pennsylvania’s Tom Wolf defeating incumbent Republican Tom Corbett. (Alaska’s Republican incumbent was beaten by an independent, Bill Walker.)

Together, the two governors’ groups and other national political organizations gave significantly more than political parties, unions, multimillionaires or corporations that also contributed heavily to influence state-level campaigns. The donations went beyond races for governor. The funds made their way into lower-ballot contests such as attorney general, state supreme court justice and state legislator.

The national groups also cropped up on the lists of the biggest donors in most states, outgiving homegrown political players in a sign that all politics may now be national.

In all, the top 50 political givers spread more than $440 million to the people and groups pushing candidates for state office, the Center for Public Integrity found. The list is thick with billionaires such as former New York City Mayor Michael Bloomberg, unions such as the American Federation of Teachers and corporations such as telecom titan AT&T Inc.

They also were more successful in backing winners than most donors, becoming the de facto kingmakers of state politics.

“It’s an amazing amount of power concentrated in a handful of organizations,” said Ed Bender, executive director of the National Institute on Money in State Politics that collected some of the data used for the analysis. “If people want to understand why government is dysfunctional, you don’t have to look much farther than this list.”

The Citizens United effect

To identify the kingmakers, the Center for Public Integrity looked at donations given to 2014 state candidates and political parties during 2013 and 2014, as tracked by the National Institute on Money in State Politics. Reporters also collected state and federal contribution records for 140 independent organizations that aired political TV ads during 2014 state elections.

The analysis does not include funders of groups that don’t disclose their donors to any state or federal agencies — so-called “dark money” groups. And it does not total overall contributions, because some donors received money from other donors on the list. [More details on the methodology.]

The findings paint a picture of independent groups playing a bigger role in financing state-level elections than even political parties or the candidates’ campaigns, one effect of the landmark U.S. Supreme Court case Citizens United v. Federal Election Commission. The 2010 ruling allowed many groups to accept and spend unlimited amounts of money from corporations, unions and wealthy patrons to influence elections as long as they did not coordinate with the candidates. Thus, they could bypass limits on giving to a candidate or political party and leapfrog ahead.

The top 50 donors identified by the Center for Public Integrity gave more than 40 percent of their contributions to independent political groups, surpassing what they gave to either candidates or political parties.

The strategy allows donors to multiply their influence, said Larry Noble, former general counsel of the FEC who now works as an attorney at the Campaign Legal Center.

“You give the maximum to the candidates, but then you want to give more,” he said. “You give to the party committee that’s also going to support the candidate. You give to outside groups that are also going to support the candidate.”

The mega-donors thus control more of the political messages that determine which issues are central to the campaign — roles previously played by candidates and political parties. And in exchange, they may expect the newly elected officials to dance with the ones that brought them.

Behind the curtain

National political groups have their own heavy-hitting donors. But because the groups function as the middlemen of political giving, voters often don’t know the original source of the cash behind a politician’s election.

The Republican Governors Association, for one, served as a conduit for billionaires and corporations looking to influence governors’ races.

The five largest contributors behind the group’s gargantuan giving power all appear separately on the Center for Public Integrity’s top 50 donor list: Las Vegas casino magnate Sheldon Adelson; billionaire David Koch, who runs the Kansas-based Koch Industries with his brother; electricity giant Duke Energy; investment firm ETC Capital, whose founder, Manoj Bhargava, also founded the company behind the 5-Hour Energy drink; and billionaire hedge-fund manager Paul Singer, according to IRS records from 2013 and 2014.

Meanwhile, four of the five largest contributors to the counterpart Democratic Governors Association were also familiar names from the top 50 list: Michael Bloomberg and branches of three labor unions — the American Federation of State, County and Municipal Employees, the National Education Association and the Service Employees International Union.

The Republican and Democratic governors’ associations employ another common strategy that both amplifies and obfuscates their giving: contributing to “an outside group with a good-sounding name” to make support of a candidate look more diverse and to help attract different constituencies, Noble said.

For example, state records collected by the Center for Public Integrity show that the Democratic Governors Association gave more than $6 million to a group called Making Colorado Great, while the Republican Governors Association gave nearly $5.5 million to Grow Connecticut. The Colorado and Connecticut organizations then spent millions airing TV ads in their states’ respective gubernatorial contests.

“It’s name branding,” Noble said. “If you were a teacher and you see an ad from a teachers union, you’re going to give it a lot more credibility than an ad from the DGA.”

Diverse giving becomes trendy

All but a handful of the top 50 mega-donors used more than one avenue to spread their gifts. And most gave money to influence races in more than one state.

Billionaire hedge-fund manager Kenneth Griffin, for example, gave more than $4.6 million before the election to the campaign committee of Rauner, the Illinois Republican gubernatorial candidate, according to data from the National Institute on Money in State Politics.

Worth about $5.5 billion, according to Forbes, Griffin and his soon-to-be ex-wife Anne also gave at least $2.2 million to independent political groups that backed state candidates, such as the Republican Governors Association, and more than $500,000 to state GOP parties in Illinois and Florida.

A representative for Griffin declined to comment.

Some of the top donors also gave widely. Sixteen of the top 50 contributors gave to 50 or more state-level candidates running in 2014.

Getting what they paid for

Nearly 85 percent of the candidates backed directly by the top 50 donors won their elections in 2014, a far better success rate than the typical political contributor, who backed winners only 52 percent of the time.

Duke Energy, for example, had a 94 percent success rate after supporting 381 different candidates.

For corporations, in particular, political giving is a way to ensure a seat at the table once a lawmaker is elected, said Loyola Law School Professor Justin Levitt. Giving across the aisle improves their odds of having an ally in office come January.

“They’ll give to the incumbent and also the challenger just in case the challenger wins,” Levitt said. “They’ll give more to leadership positions because leadership positions are gateways to access for committees, for legislation, for broader regulation.”

Mass media giant Comcast picked winners in 93 percent of the more than 1,000 candidates it backed. It gave nearly $1.7 million directly to candidates, spreading it widely in 36 states.

“The contributions that the company makes are because we operate in a highly regulated industry,” said Comcast spokeswoman Sena Fitzmaurice, adding that most candidates backed are incumbents. “The decisions that are made by legislatures control our business.”

In addition to its national giving, the Philadelphia-based Comcast gave heavily in its home state. Top recipients were Gov. Tom Corbett and running mate Jim Cawley, both Republicans, who together raked in $107,000 from the state’s top broadband provider but lost re-election. Hedging its bet, Comcast also gave $1,000 to Wolf, who won the governorship from Corbett.

Duke Energy, another company regulated by states, divvied up more than $500,000 among the hundreds of candidates it backed, many of whom ran for office in North Carolina, where the company is headquartered.

Additionally, the electric utility donated more than $210,000 to the Republican Party of Florida, according to the National Institute on Money in State Politics. Duke Energy may have been trying to boost its support in the Sunshine State, where it has faced massive criticism for charging customer fees for nuclear plants that do not — and may never — provide power. Florida’s governor and legislature are responsible for naming the members of the commission that regulates the utility and allows such fees.

“We do not make contribution decisions on single issues,” Duke Energy spokesman Chad Eaton said. “Our employee-led PAC considers an array of issues before any decisions are made.”

In general, he said, Duke Energy donates to candidates who demonstrate “support for public policy issues that are important to our business, customers and communities” in the six states where it provides electricity.

The International Brotherhood of Electrical Workers, meanwhile, gave nearly $2.7 million to 568 candidates in 34 states and had a 64 percent win rate. It contributed more than half million dollars to Democrat Pat Quinn’s failed bid to retain the Illinois governorship, but saw more success with the $410,000 it gave to Wolf’s successful run for governor in Pennsylvania. In both states, the Republican opposition had supported scaling back public pensions or preventing unions from deducting union dues directly from members’ paychecks.

Money does not always guarantee a win, of course, and a lack of funds doesn’t necessarily foretell a loss.

In Maryland’s governor’s race, former Lt. Gov. Anthony Brown, a Democrat, outraised Republican Larry Hogan several times over yet lost in one of the biggest upsets of election night. Brown was hurt by low popularity ratings that no giant war chest could fix, according to Todd Eberly, a political science professor at St. Mary’s College of Maryland. And because Hogan accepted public funds for his campaign, he was limited on how much money he could spend yet also freed up to spend time on the campaign trail, not the fundraising one.

And some of the top benefactors saw little return on their campaign investments.

Billionaire physicist Charles Munger Jr., son of the Berkshire Hathaway executive of the same name, gave nearly $300,000 to 45 Republican candidates in 2014. Only 13 won for a 29 percent success rate.

The nation’s largest teachers union, the National Education Association, also fared poorly when backing candidates directly — only three of their 13 candidates won.

Allies in office

Most of the more than 6,300 state officials elected in November began work this month, shaping and creating policy across the country in 50 governors’ mansions and 99 legislative chambers — 11 of which flipped from Democratic to Republican control in the 2014 election.

For some big donors, that means the candidates they backed can now fight for their causes in state office. Or they might just be more willing to take a phone call from a benefactor who has a legislative wish list.

Noble said candidates typically know which donors they have to thank for their success — even when patrons filter their donations through independent groups.

And now, for some top givers, the real campaigning is about to begin.

Rauner, the newly sworn-in Republican governor, for one, is already gearing up for battles with the veto-proof Democratic-controlled legislature in Illinois as he pushes his stated goals of plugging the state’s budget deficit and strengthening ethics laws. He isn’t just counting on good will or smooth talking to win over potentially reluctant legislators. He’s counting on cold, hard cash to help make the case.

Rauner and two top donors, Griffin and shipping supply magnate Richard Uihlein, poured $20 million into the governor’s campaign committee in the final two days of 2014, which Rauner reportedly plans to use to back other candidates who support his policies.

Rauner’s new war chest will enable the new governor to be in a state of “perpetual campaign” — to air commercials aimed at persuading state legislators or to donate to other lawmakers’ re-election campaigns in exchange for support of Rauner’s agenda, said Christopher Mooney, director of the Institute of Government and Public Affairs at the University of Illinois, Springfield.

In the past, a governor might have promised state legislators financial backing for development projects in their districts or helped them acquire contracts or new jobs.

“Instead of building somebody a playground in the school, he’ll be able to donate money to their campaign,” Mooney said.

And if they don’t do want he wants? “He’ll be able to fund an opponent,” he said.