Business Groups Sidestep Unpopular PACs With New Giving Avenue

Business and lobbying association PACs have two big problems: They’re stuck with contribution limits set in the 1970s, and more lawmakers are refusing their cash.

An online fundraising company, Democracy Engine, says it offers a workaround, giving business interests a more politically palatable route for directing campaign cash to favored lawmakers.

“The more people who are giving, the more people are participating, the more people who are engaged, the better for our democracy,” said Democracy Engine founder and CEO Jonathan Zucker, a former executive director and board member of ActBlue, the Democratic online fundraising platform.

Heading into the 2024 elections, his company is on pace to process more individual donations for business, association, and union political action committees than it has previously, according to statistics the company shared first with Bloomberg Government.

These donations flow outside of industry PACs but enable them to pitch allies to donate to candidates directly and to capture real-time data about where the money is coming and going. It’s a potential way for industry lobbies to harness the rise of online, often small-dollar contributions, while circumventing the increasing number of lawmakers and candidates who refuse business PAC money.

Photo illustration by Seemeen Hashem

Jonathan Zucker’s company Democracy Engine has developed a way for business PACs to steer individuals’ donations directly to candidates and lawmakers.

It also gives these PACs another avenue of driving donations outside of their limits, frozen at $5,000 per election to candidate committees. Individual donation limits adjust for inflation. In the 2023-2024 campaign cycle, an individual may donate $3,300 per election to each congressional candidate. That means two people can contribute more than a corporate PAC.

Clients using the platform include lobbying group PACs connected with the National Association of Realtors, the National Retail Federation, American Israel Public Affairs Committee, as well as No Labels, GiveGreen, the Teamsters, and Crowdpac, among others. Zucker said the company would work with most nonpartisan and bipartisan groups or corporations but would decline certain issue organizations, such as the National Rifle Association. Some of these groups and others also retain robust PACs.

Highly Regulated PACs

Jason Straczewski, the National Retail Federation’s vice president for government relations and political affairs, said his group started using Democracy Engine tools this year as a “supplement” to its federal PAC.

“There’s been a push away from traditional PACs,” Straczewski said, which are “highly regulated, very transparent and extremely limited.”

Association PACs, like that of the retailers, may only solicit for their own coffers from specific members of the association who have given prior approval. Company PACs, also, are limited to raising money from a restricted group of executives. All such PACs take in personal dollars and then contribute them to candidates. Those contributions are publicly disclosed.

Straczewski said the retailers group can show a campaign committee the number of donations given through its web portal, which highlights 31 lawmakers, from both parties, dubbed retail champions.

Among those listed as champions are Reps. Lance Gooden (R-Texas) and Zoe Lofgren (D-Calif.), who recently introduced a measure that aims to give retailers more options for networks to process credit card transitions. Senate sponsors of the bill, including Peter Welch (D-Vt.) and Roger Marshall (R-Kan.), are also among the industry champions, according to the online donation page, which has a button for a $5 donation (though donors may give any amount within the individual limits).

“A lot of the political parties are leveraging smaller dollar donations, campaigns are leveraging smaller dollar donations, so why shouldn’t the US retail community leverage its collective voice,” Straczewski said.

Retailers and other clients of Democracy Engine’s tools can put together a report to share with campaigns about how many donations came from its site.

Zucker, who started the company in 2009 with the Human Rights Campaign, the gay rights group, as its first client, said he’s long thought that Democracy Engine’s fundraising tools would be a good match for corporations, unions, and trade associations.

“And I think that we’re just starting to see uptake of that,” Zucker said.

Waning Influence

The uptake comes as business PACs, seeing their influence wane, look for ways to stay relevant. Some are trying to get in on the action of online individual donations, a major focus of modern fundraising, as candidates face bigger and bigger campaign price tags.

This election cycle, donors have given $17.9 million through Democracy Engine, according to a memo first shared with Bloomberg Government. Of that, $9.5 million went to current lawmakers’ re-election committees, across the partisan spectrum. Senators who sit on the Commerce, Science and Transportation; Finance; and Banking, House and Urban Affairs panels received the most donations, in that order, according to Democracy Engine data.

House members on the Appropriations, Financial Services, and Ways and Means committees hauled in the most donations through Democracy Engine, the memo said.

In the 2022 cycle, Democracy Engine’s clients used the platform to raise more than $83 million “by engaging grassroots stakeholders, major donors, and the general public without the encumbrance of prior approval or restricted class requirements,” the company’s memo said. Democracy Engine gets paid fees for processing the donations and providing software for the websites.

Zucker said that he views opening up the donor pools associated with the business groups, otherwise limited to select executives, as part of a “democratization of campaign finance.”

“Speaking personally, I’m very left of center. I would love to live in an environment of strict spending limits by campaigns and strict donation limits or no donation limits because everything’s publicly financed,” Zucker said. “But that is not the nature of our campaign finance environment.”

More Donors

In the current system, he said, the more donors, the less likely that any elected officials would feel beholden to any specific group of donors.

The donations processed through Democracy Engine typically don’t specify on public disclosure forms that they were driven by any particular group or company. While not available to the public, such data can find its way to campaigns.

An advisory opinion last year from the Federal Election Commission said a company, association, or union PAC may solicit the general public, including employees or members of a group, for contributions to specific candidates or committees and can provide data tracking those donations, even though they are not run through the PAC.

Carol A. Laham, an election law partner with the firm Wiley, represented Democracy Engine in its request to the FEC for the Advisory Opinion. “What’s really new and wasn’t really on the record before, in my view, is that the PAC could get real-time data about the contributions,” Laham said.

That allows the groups using Democracy Engine’s tools to see what fundraising appeals work, or don’t work, and to take credit with candidates for driving a certain amount of campaign cash to their coffers.

“I do think it’s a way for there to be more individual money in the system, and nobody seems to have any complaints about individual money in the system,” Laham said.

Seemeen Hashem in Washington, DC also contributed to this story.

To contact the reporter on this story: Kate Ackley at kackley@bloombergindustry.com

To contact the editors responsible for this story: George Cahlink at gcahlink@bloombergindustry.com; Bennett Roth at broth@bgov.com