Ron Paul failed to translate an impressive fundraising operation into widespread support for his 2008 bid for the presidency, but the Lake Jackson Republican still may end up hitting pay dirt.
To further Paul's Libertarian-leaning agenda, his campaign is exploring a novel way to use millions of dollars in leftover donations: setting up a for-profit publishing company that would focus on free-market economics and personal liberties — causes the Texas congressman holds dear.
Political finance experts say such a business venture funded with some $4 million in political cash would test the bounds of federal campaign finance regulations.
"I've never heard of anyone taking their campaign money and putting it into a for-profit corporation," said Fred Wertheimer, president of Democracy 21, an organization that advocates campaign finance reform.
FEC guidelines
A Federal Election Commission spokesman said that former office-seekers have some leeway in using leftover campaign money, as long as they don't benefit financially from the venture.
"There's a provision that says you can use the funds for any lawful purpose, so long as it's not personal use for the candidate," said FEC spokesman Bob Biersack.
But the election watchdog agency cannot enforce its own rules because a majority of its board seats are vacant, the result of a partisan stalemate on Capitol Hill.
A supply of donors
Political professionals say Paul's mailing list is a potential gold mine if he rents those names to interest groups or other campaigns.
Jesse Benton, a spokesman for Paul, said the campaign has the names of 160,000 donors who have given an average of about $100 each. Add the number of people who have signed up to receive campaign information, but have not donated money, and the e-mail list grows to 400,000.
On the market, the list of 160,000 donors would probably fetch about $135 per 1,000 names for each use, or about $21,600 a pop, estimated Kevin Shuvalov, a partner in Olsen & Shuvalov, an Austin firm that does fundraising and voter contact mailings, including for Rudy Giuliani's presidential campaign.
It may not sound like a lot, but Stephanie Catina, director of list services for Response World, a Richardson, Texas, list-services company said that good lists can be rented over and over.
For example, the list of American Heart Association donors has been passed around for years, she said. In the political arena, Bob Dole's 1996 presidential campaign list remains on the market.
Bigger and better.
The Paul presidential campaign already has rented its list twice — once to his Texas congressional re-election committee, which raised $1.4 million, according to CQ Moneyline, a site that tracks FEC records; and once to incumbent Rep. Walter B. Jones, R-N.C., who serves with Paul on the Republican Liberty Caucus, a group of Libertarian-minded lawmakers.
Benton said the campaign is being careful with its list because of the level of trust Paul has with his donors.
Presidential lists, such as Paul's, are attractive because they include donors from across the country. Because Paul has brought so many new participants into the presidential process, his list also would offer candidates a chance to expand their money network to nontraditional givers.
Additional options
Despite single-digit polling in the majority of primary states, Paul is sitting on about $4 million in campaign cash, Benton said.
The campaign is evaluating what to do with the extra money. Benton said options include supporting like-minded candidates through Paul's Liberty PAC; donating leftover money to Paul's FREE Foundation, the 501(c)3 organization that publishes his newsletter; trying to influence public policy through a 501(c)4 nonprofit group; or creating "something inventive and entrepreneurial" like a for-profit corporation to produce publications.
Federal guidelines stipulate that campaign funds can't be used for the candidate's personal use, specifically things such as vacations, mortgage, rent or household items. Funds also can't be used to seed a for-profit corporation that benefits an individual or shareholder.
However, that might not preclude Paul from creating a carefully structured for-profit corporation specifically designed for educational purposes.
And even if someone were to file a complaint against a candidate for misusing campaign funds, the FEC is hamstrung because it lacks sufficient members to take any action.
