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Big-money donors demand larger say in party strategy



The Republican donors who have financed the party’s vast outside-spending machine are turning against the consultants and political strategists they once lavished with hundreds of millions of dollars.

In recent months, they have begun holding back checks from Republican super PACs like American Crossroads, unsatisfied with the groups’ explanations for their failure to unseat President Barack Obama or win back the Senate. Others, less willing than in the past to defer to the party elders and former congressional staffers who control the biggest groups, are demanding a bigger voice in creating strategy in exchange for their continued support.

Donors like Paul Singer, the billionaire Republican investor, have expanded their in-house political shops, building teams of loyal advisers and researchers to guide and coordinate their giving. And some of the biggest contributors to Republican outside groups in 2012 are now gravitating toward the more donor-centric political and philanthropic network overseen by Charles and David Koch, who have wooed them in part by promising more accountability over how money is spent.

"People are really drawn to the Koch model," said Anthony Scaramucci, a New York hedge fund investor and Republican fundraiser, who attended the Kochs’ annual donor conference near Palm Springs, Calif., in January. "It’s adaptive, data-driven, and they are the most propitious capital allocators in political activism."

The quiet revolt signals a broader shift in the world of big money. Clubs of elite donors in both parties are taking a more central role in shaping policy and campaigns, displacing party leaders and the outside-spending organizations they helped create after the Supreme Court’s Citizens United decision in 2010. And the sheer scale of their spending is almost certain to rewrite the playbook for political campaigns this year, as candidates reckon with the strongly held views of some of the world’s wealthiest people.

The phenomenon is not limited to the right. Super PACs blessed by Democratic congressional leaders have posted strong fundraising over the last year, bolstered by victories in 2012. But those organizations are now being overshadowed by donors like Thomas F. Steyer, the billionaire who is raising a $100 million political fund with other wealthy environmentalists to battle politicians deemed hostile to climate regulation.

Parties have "lost the ability to control the process," said Jim Nicholson, a former chairman of the Republican National Committee, partly because of legislation that cut the flow of money to party committees. "The party can’t coordinate with these super PACs and neither can the campaigns, so there’s a lot more chaos and disequilibrium in the campaigns. And the party structure clearly has a diminished role because they don’t have the resources they used to have."

Rob Stein, a founder of the Democracy Alliance, one of the largest club of donors on the left, agreed.

"The devolution of the two-party system has begun," Stein said. "Money is leaving the parties and going to independent expenditure groups. These now are fracturing the ‘big tents’ of our old two-party system into independent, narrow and well-funded wings."

Last year, Singer began organizing meetings of other big Republican donors. In June, he poached Angela Meyers, then the finance director of the Republican National Committee, to assist with the efforts.

The goal is to share assessments of Republican candidates and coordinate campaign contributions to the most promising, according to participants, rather than to advance any particular issue. Through the end of last year, Singer and close to 60 other donors involved with the meetings provided about $528,000 to Republican candidates for the U.S. Senate.

Those candidates – Rep. Tom Cotton of Arkansas and Dan Sullivan, a former Alaska attorney general – appeared at a private meeting of Singer’s group in Aspen, Colo., on Friday and Saturday. So did Elise Stefanik, who is running for an upstate New York congressional seat and whom many of the donors regard as an up-and-comer who can help broaden the party’s appeal to women.

An official at another super PAC, who asked for anonymity to discuss internal conversations, said the group had seen an uptick in commitments after pledging to give donors more input in spending decisions.

"We don’t want people to write a check and disappear," the official said. "We’re getting good ideas."

Freedom Partners, a trade association composed of about 200 business executives and entrepreneurs, most of whom attend the Kochs’ twice-yearly conferences, has emerged as the dominant club on the right. It is focusing not on candidate contributions but on political nonprofit groups that do not disclose their donors.

Unlike most Republican outside groups, which are controlled chiefly by former party officials, Freedom Partners is overseen by a board of current and former Koch aides, who advise donors on where to commit their funds and provide strategic guidance to grantees.

Another advantage, donors say, is that, unlike the advertising-focused super PACs and nonprofits with party ties, clubs like the Democracy Alliance and Freedom Partners fund a wide array of causes. Freedom Partners alone funds dozens of organizations, including groups that focus on long-term grass-roots organizing, political data and Hispanic outreach – all areas in which conservative donors have clamored for greater investment after the 2012 debacle.

Most appealing, say members of the group, is the involvement of the Kochs themselves. The two brothers – who together run the second-largest privately held corporation in the country – are regarded by other donors as successful peers who share their libertarian worldview and have withstood heated criticism from Obama, other prominent Democrats and the news media. The Kochs have worked to personally court potential donors to their political efforts, emphasizing their own background in business and focus on accountability.

"The reason I give to Charles and David is because I look up to them," said Scaramucci.

At January’s conference, held at the Renaissance Esmeralda golf resort in Indian Wells, Calif., the Kochs and their aides met some of the biggest donors to Crossroads and other Republican super PACs, some of whom could become far larger contributors to Freedom Partners. A schedule of the meetings was published by Mother Jones, a liberal magazine.

Among those scheduled to sit down with Charles Koch were John W. Childs, an investor who gave $1.75 million to the Karl Rove-founded American Crossroads in 2012, and Richard Gilliam, the coal executive, and his wife, who gave a combined $1 million to Crossroads and Restore Our Future, a super PAC that backed Mitt Romney.

One person who attended the conference, which has strict secrecy rules – mobile devices are not permitted at presentations – said that "they really emphasize that you are spending time with Charles and David."

It remains to be seen whether greater donor involvement will make any of the groups more effective at winning elections: Virtually every large right-leaning, outside-spending organization posted a losing record in 2012, regardless of who sat on the board.

Moreover, because many of the recipients are political nonprofits, it is difficult to assess precisely how much different groups are raising and spending. And even Rove’s rivals expect the Crossroads groups to play a substantial role in the 2014 campaign in the months ahead, especially as television advertising campaigns heat up.

But the early battles to define the campaign suggest that Koch-backed groups are spending freely, while organizations closer to party leaders are carefully husbanding their resources.

Americans for Prosperity, executives of which met with a number of top Freedom Partners donors at the January conference, has spent roughly $30 million on advertising against Senate Democrats in recent months. Groups that played a major role in previous cycles, including Crossroads and the American Action Network, have spent a small fraction of that amount.

"The Karl Rove thing is out," said one donor, who asked for anonymity because he did not want to offend Rove. "The Koch thing is in."

Nicholas Confessore, New York Times

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