Political Parties See Dramatic Decline in Fundraising

In the wake of a recession, months of falling stock markets and a marathon campaign that endlessly taxed donors, political party committees find themselves racked by declining revenue and mounting debt.

Democrats have seen a dropoff in contributions from the frenetic small-dollar online donors who fueled President Obama’s campaign, while Republicans have seen a dramatic decline in activity from the kind of big-ticket donors who were loyal contributors to the Bush White House and its pro-business agenda. Combined donations from individuals to the six major party campaign committees have fallen by more than 26 percent from a similar period two years ago, according to filings with the Federal Election Commission.

Strategists cautioned that the dropoff may be only a temporary fundraising hiccup caused by “donor fatigue,” but they worry that if the economy does not recover by early next year, their budgets for the 2010 campaign may have to be slashed.

“People are feeling it,” said  Rep. Chris Van Hollen (Md.), chairman of the Democratic Congressional Campaign Committee, which assists Democrats running for the House. “This is something that hits all sides. It’s based on people’s economic situations.”

Republicans, without any perch of power in the capital for the first time since 1994, were already girding for a longer-term shift in political giving, but that has been doubly complicated by the recession.  Sen. John Cornyn (R-Tex.) recently received a stern message from the chief executive of an Oklahoma energy company after the senator came calling for a contribution: “Call me back when the price of natural gas goes up; maybe I’ll be able to help you then.”

Fundraising generally declines in the early months of odd-numbered years after presidential or midterm congressional elections. The party committees, which have hundreds of employees during peak campaign season, usually go through a restructuring of leadership and staff.

But this year’s early fiscal decline for the Democratic and Republican national committees, as well as the four congressional campaign committees, is steeper than in recent years and suggests that something more than fatigue is behind the dive.

At the DNC, donations from individuals are down by a third for the first months of 2009 compared with the same period in 2007, while the RNC has seen individual contributions halved from early 2007…

… The drop in individual donations is most stark when compared with the most recent post-presidential-election period. In January and February 2005, the six national party committees collected a total of almost $49 million in individual contributions, according to an analysis of FEC records. In the first two months of this year, those same committees collected $30.7 million, a drop of nearly 40 percent.

Individual candidates will not report their campaign finances until next month, but strategists expect to see incumbents with cash-on-hand totals lower than expected in advance of a midterm election season that could field potentially competitive races in many large and expensive states, including Florida, New York, Illinois and Pennsylvania.

The trouble is particularly acute for House Republicans. After losing 21 seats in November, the National Republican Congressional Committee raised less than half as much from individuals this year compared with the first two months of 2007.

The NRCC held its annual spring gala Tuesday at the National Building Museum — a $2,500-per-ticket event that raised $6 million and featured a headline speech from rising GOP star  Bobby Jindal, the governor of Louisiana. NRCC officials say they surpassed their goal of $5 million, but in a sign of the times, that goal was set $1 million lower than two years ago…

… One GOP fundraiser, who spoke on the condition of anonymity to talk freely about the party’s internal fundraising dilemma, said “reorganization challenges” at the RNC have also tamped down fundraising, because new Chairman Michael S. Steele has largely turned over the staff since his selection in mid-February. The fundraiser also noted that “the largest Republican donors” tend to be real estate developers, who have been suffering acutely since the housing bubble burst.

A different industry could be troublesome to Democrats: The financial sector, based largely in New York and New Jersey, has donated heavily to the party in recent years. But House and Senate Democrats have been in the vanguard of a fierce attack on banks and financial institutions, particularly after revelations about seven-figure bonuses to executives at firms receiving federal bailout assistance. The combination of the industry’s collapse and Democratic efforts to impose strict penalties on the executives has dried up funds there, according to a senior party strategist.

This depleted fundraising comes as Democrats face massive debts because of huge loans taken out last fall in an effort to take advantage of the favorable political climate. The party’s congressional committees have a combined debt of more than $26 million and cash holdings of about $6 million, meaning that a large chunk of donations over the next year will go first toward paying off last year’s debts.

The lone bright spot is the NRSC, which has seen total receipts soar 40 percent compared with two years ago at this stage. Individual donations have climbed 73 percent compared with two years ago.

Cornyn, the NRSC chairman, acknowledged that his pitch to donors has been well received largely because the GOP is in such misery otherwise. The party’s 41 senators are the last stand against complete Democratic domination of Washington, Cornyn tells donors, a message that has proven fruitful even if it discourages donations to other Republican committees.

“The one place where we have the most opportunity for relevance is in the Senate,” Cornyn said.
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