November 25, 2022

Consulting firms double down on political candidacies and raise over $1 billion

Consulting firms employed by candidates and party committees are simultaneously raking in huge sums working on the same races for independent political groups, according to a new report.

Why is this important: The Supreme Court’s Citizens United decision authorized unlimited campaign spending by groups that do not coordinate with national candidates or parties. For major political providers working on high-profile races, this means a huge new revenue stream.

  • These vendors can work for both campaigns and political support groups that they are legally prohibited from coordinating with, as long as they establish internal firewalls separating that work.
  • For companies that do major ad buying and messaging efforts for party committees and high-value campaigns, that means an entirely separate pool of potential customers — with plenty of cash on hand.
  • President Biden and congressional Democrats are pushing for legislation that would restrict the practice.

By the numbers: A new report from the Public Citizen group finds significant overlap between vendors employed by “regulated” political entities – such as campaigns and party committees – and “unregulated” groups, which include super PACs and 501(c) nonprofits (4), often referred to as “dark-money” groups.

  • Suppliers who worked for both categories of groups in the same races, alone or through affiliated companies, were collectively paid approximately $1.4 billion for this work during the 2018 and 2020 election cycles. according to the report.
  • Much of that money was for ad buying services, meaning the companies didn’t just pocket the funds. The sum, however, shows the extent of supplier overlap.

Between the lines: Public Citizen says the arrangement raises potential legal red flags.

  • Political consultants are well placed to align messaging and spending strategies between super PACs and regulated political committees, facilitating coordination even if super PAC leaders do not communicate with campaign or party leaders,” says The report.
  • A network of seven affiliated companies, which the report names the Slaters Lane Entities, is at the center of an ongoing lawsuit alleging the National Rifle Association and a pair of GOP campaigns used these vendors to circumvent coordination rules.

Be smart: This sort of endgame around federal campaign finance laws is a concern, but companies that work on both sides of the campaign-super PAC divide are usually careful to erect internal firewalls.

  • While there is an obvious legal incentive to do so, it also allows them to tap into pools of resources that by law must be allocated independently of each other.
  • It is common for vendors to rely on affiliated but legally separate entities for their campaign work and super PAC work.
  • Democrat GMMB has set up a pair of ad-buying affiliates, Waterfront Strategies and Great American Media, in part to “maintain clear lines between staff and various projects while fully complying with all regulations,” according to Eric Conrad, spokesperson for the company.
  • Together, the GMMB companies raised nearly $450 million from campaigns and party committees in the 2018 and 2020 cycles. They pulled in an additional $483 million from independent spenders working on the same races.

What they say : “GMMB, Waterfront and Great American Media are separate companies with a strict firewall policy between them that is designed by legal counsel to comply with the letter and spirit of the law,” Conrad told Axios. in an email.

  • “In addition, relevant staff are undergoing training from legal counsel to further ensure scrupulous compliance with regulations.”
  • The other vendors identified as the most prolific double divers declined to comment or did not respond to Axios’ requests for comment.

The big picture: Super PACs can collect and spend unlimited amounts, including from corporations, unions, and nonprofits. But they typically pay higher rates for TV ads, and coordination restrictions can make them cumbersome political vehicles.

  • Their unique characteristics mean that providers working with these groups employ different tactics than they would use with campaigns or party committees.
  • Vendors large enough to do both, or who have affiliates with specialized expertise, are poised to profit from both sides.
  • Of the $1.4 billion in payments to shared vendors identified in Public Citizen’s report, nearly all of it — about $1.3 billion — went to the 10 highest-earning companies.

Look forward: Sweeping electoral reform legislation currently in the Senate would significantly restrict the split-supplier arrangement.

  • Under the Freedom to Vote Act, super PACs would be prohibited from paying a vendor for expenses on behalf of a candidate if the vendor worked with that candidate in the previous two years.