Democratic convention benefits from corporate cash

Associated Press

CHARLOTTE, N.C. (AP) – Shortly after last year’s high-profile announcement that the 2012 Democratic National Convention would be the first in history not to rely on special-interest money, organizers in Charlotte quietly set up a nonprofit entity to rake in corporate cash.

Bank of America, Wells Fargo and Duke Energy have all sent checks to New American City Inc., a non-profit entity being run by top officials on the convention host committee. Corporate money is bankrolling operations in direct support of the convention, including paying the salaries of the 41 full-time host committee employees, their health insurance and for the offices where they work.

Corporate money is also paying for parties for Democratic delegates and donors, the media welcome bash and the Labor Day street festival kicking-off the week’s events. Corporate supporters will also provide transportation for convention delegates, including buses and a fleet of courtesy cars.

Convention organizers said last week they are keeping true to the self-imposed ban because none of the corporate money will be spent on events inside the sports arena and stadium where President Barack Obama will accept his party’s nomination for a second term.

“I guess it comes down to how you define `the convention,'” said Dan Murrey, the executive director of the host committee, Charlotte in 2012. “The distinction we’ve drawn is that there are official convention activities that are in the program, that are gavel-to-gavel, have minutes, the whole bit. And then there is all the stuff that happens outside of that.”

The amounts and sources of the corporate donations to New American City are being kept secret until well after the September convention is over, though a few companies have confirmed they are providing support.

Special interests such as corporations, lobbyists and political action committees have historically underwritten the costs of the host committees for the nominating conventions of both major parties, as is allowed under federal law. Organizers of next month’s Republican National Convention in Tampa have made no secret about raising millions from special interests.

But in the first presidential election since the Supreme Court’s decision in the Citizen’s United case loosened restrictions on political giving and spending, President Obama’s campaign is struggling to keep pace with the flood of money flowing to Republican-allied groups. As part of a broader strategy painting Mitt Romney as the favored candidate of Wall Street wealth, Democratic organizers want to draw a clear distinction between themselves and the opposition.

“This convention will be different,” U.S. Rep. Debbie Wasserman Schultz, the chairwoman of the Democratic National Committee, said in Charlotte last year. “We will make this the first convention in history that does not accept any funds from lobbyists, corporations or political action committees. This will be the first modern political convention funded by the grassroots, funded by the people.”

The core convention events in the Time Warner Cable Arena and Bank of America Stadium are overseen by the Democratic National Convention Committee Inc., a Washington-based nonprofit corporation affiliated with the Democratic Party.

The DNCC’s operations are funded with $18 million provided by American taxpayers who check the $3 political donation box on their federal tax returns. Security for the convention is funded by a $50-million grant from the U.S. Department of Homeland Security. The Republican convention received identical government grants.

To raise money for costs beyond what taxpayers provide, the DNCC contracts with Charlotte in 2012, a North Carolina-based nonprofit corporation. The non-partisan host committee is co-chaired by Charlotte Mayor Anthony Foxx and North Carolina Gov. Beverly Perdue, both Democrats.

Under the DNCC’s master contract with Charlotte in 2012, the host committee must raise $36.7 million from individual donors to provide “goods, facilities, equipment and services” to the convention, including millions to rent and renovate the sports venues and build the stages where Obama and other prominent Democrats will speak.

Records show members of the host committee incorporated New American City on April 4, 2011, about two months after the Democrats announced the ban on corporate cash, to raise unrestricted money to “defray administrative expenses incurred by the host committee organizations.”

New American City is run out of the Charlotte in 2012 offices, located in a high-rise office tower in space provided rent-free by the building’s primary tenant, Duke Energy. The largest electricity provider in the country is also providing the office space used by DNCC staff, located on another floor.

Mayor Foxx is also the president of New American City. Murrey, who’s on leave from his orthopedic surgery practice to run the host committee, doubles as treasurer.

“The bottom line is that there are tons of corporations that understand this is a great opportunity for our community to be in an international spotlight, and they want to help us make sure we make the most of it,” he said.

Some of Charlotte’s largest employers _ Bank of America, Wells Fargo and Duke Energy _ all confirmed giving cash donations to New American City, though spokespeople declined to say how much. A spokesman for Coca-Cola confirmed the company’s “support.”

With only six weeks left until the convention, organizers won’t say how close they are to raising the required $36.7 million, other than to say that fundraising is “on track.” Raising this money from individual donors likely wouldn’t be possible without the corporate funds paying the fundraisers’ salaries and phone bills.

If they fall short, the host committee has a $10 million bank line of credit guaranteed by Duke Energy. The host committee maintains this account does not violate the corporate fundraising ban, though Murrey refused to discuss whether corporate money could be used to retire any debts that might remain after the convention.

Host committees are required to disclose details about their donors and spending to the Federal Election Commission within 60 days of the close of the convention. A commission spokeswoman said she could not comment on whether New American City has to follow the same guidelines.

Murrey said New American City will disclose its donors after the convention, at the same time as the host committee.

As a non-profit, New American City is also required to disclose its fundraising totals on its tax returns, which are public records. New American City has not yet filed its 2011 return, after filing for an extension.

Asked about the extensive use of corporate money, DNCC spokeswoman Joanne Peters stressed that the Democrats’ fundraising rules are self-imposed. She said the free office space provided by Duke Energy doesn’t violate the DNCC’s ban on corporate giving because it is an in-kind donation, rather than cash, which is allowed under the rules they’ve set up for themselves.

“We’ve gone further than any convention in history, and much further than the Republicans, to change the way conventions are planned and funded with the goal of empowering more Americans to participate,” Peters said.

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AP writer Jack Gillum in Washington contributed to this report.

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Follow AP writer Michael Biesecker at twitter.com/mbieseck

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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