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Friday Roundup: Should we be concerned about offshore fundraising?

Obama Vs Romney.

Obama Vs Romney. Photo Courtsesy Malwack, CC BY-SA.

On a trip abroad meant to boost his foreign policy credentials, Mitt Romney is also fundraising for his election campaign. Last night, he held a fundraiser in London, which drew attention this week because former Barclays PLC CEO Robert Diamond was originally signed on as a co-host of the event. Romney will also hold a fundraiser while in Israel. President Obama has likewise engaged in the practice and will hold another fundraiser with George Clooney in Geneva in August. So, should we be concerned about the money being raised from abroad? Two interrelated issues might draw our attention: the rising trend of international fundraising and transparency regarding the sources of that funding.

Using Federal Election Commission data, a 2010 research article in the Overseas Vote Foundation newsletter by Sarah Starkweather found that contributions by Americans with a foreign address increased by 1,925% from the 1992 election to the 2008 election. According to Starkweather’s analysis: in the 1992 election, 760 contributors gave $509,615; in the 1996 election, 1,094 contributors gave $779,354, in the 2000 election, 1,862 contributors gave $1,354,467; in 2004 election, 2,993 contributors gave $2,729,783; and in the 2008 election, 9,540 contributors gave $10,319,470. A Boston Globe analysis of campaign finance reports finds that so far in this election, President Obama alone and jointly with the Democratic National Committee has raised $3.1 million abroad. Meanwhile, Romney alone and jointly with the Republican National Committee has raised $1.3 million. Although funds from abroad are just a small slice of the pie, we might also want to pay attention to whether individuals abroad contribute more on average in this election than in previous ones.

As the candidates and campaigns increase their international fundraising efforts, transparency and accountability of sources should keep up with those trends. Like so many areas of campaign finance, international fundraising is murky. In principle, so long as the candidates are not raising money from foreign nationals, accepting donations from Americans living abroad, including from green card holders, is perfectly acceptable practice. But here is the rub: with that one requirement only, it might be easy to exploit the letter of the law. In this election cycle, the Federal Elections Commission has reminded both presidential candidates that fundraising from foreign nationals is prohibited. Online FEC information to candidates about fundraising abroad explains the origins and reason:

The ban on political contributions and expenditures by foreign nationals was first enacted in 1966 as part of the amendments to the Foreign Agents Registration Act (FARA), an "internal security" statute.  The goal of the FARA was to minimize foreign intervention in U.S. elections by establishing a series of limitations on foreign nationals. 

However, FEC enforcement of the law is difficult in practice. The campaigns can ensure that contributions come from Americans, but there is no way to guarantee that the Americans who wrote the checks didn’t receive money from foreign nationals. It’s a problem akin to the online fundraising that was raised in the 2008 election. Like fundraising online, I would argue that fundraising abroad is another area where the FEC and transparency advocates will need to monitor developments.

Fundraising abroad also raises a potential avenue of inquiry for political scientists and historians. While the emergence of candidate campaign fundraising during trips abroad on a more grand scale is a newer development, the political parties have engaged in building international organizations since the 1960s-70s. In the 1960 election, Americans living in Paris and London organized informally to support the candidacy of John F. Kennedy. Democrats Abroad, founded in 1964, now has committees throughout Europe, the Americas, the Middle East, Africa and Asia. Republicans Abroad was founded in 1978 and now has 50 chapters worldwide. These organizations register American voters living abroad, mobilize them to vote and also fundraise for the presidential candidates.  A developmental account would usefully illuminate how the parties and candidates have engaged in party building abroad and what the consequences of such efforts have been for domestic political outcomes.

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