Ethics of Influence: Political Consulting
How fraud on the part of political consultants has destroyed the integrity of the influence industry.
By Brian J. Wise
Democracy is lucrative, at least for those who know how to manipulate the system. Political consultants have always been attracted to the power and prestige of working for candidates and the committees who support them. A relatively new breed of consultants, however, is changing the way politics is played, and money is made.
With decisions such as Citizens United leading candidates and parties to embrace the power of third party organizations in recent years, a new type of political consultant has emerged, and is quickly destroying the integrity of a system that has historically led to strength and stability on both sides of the aisle.
This new political consultant focuses on developing short-term nonprofit organizations to raise money and purport to influence elections and public policy issues. The problem is that, for some, their motivations are focused on lining their pockets, rather than achieving results or influencing policy. Most importantly, the deceptive practices and empty promises consultants make to donors have led to a near universal distrust by political donors of all stripes, which has led to a decline in the ability for legitimate groups that effectively fight for worthy causes to receive funding.
Simply put, because of the actions of a few political heavyweights over the last 10 years, especially on the Republican side of the aisle, donors are not willing to invest as heavily in the types of efforts that can most effectively and efficiently influence the political and policy climate in the country. This has led to a degradation of the ability of legitimate candidates, or policy advocates, to build the support they need from third party groups to achieve their policy and political goals.
This is not about political contributions. Donors continue to give to political candidates and committees, and those entities provide valuable services to the candidates. But every election season, thousands of new nonprofits spring up, and consultants “go on the hunt” for donors with whom they have some relationship, or a colleague who might have a relationship to that high net worth individual. They then try to convince as many donors as they can to write six- to seven-figure checks to fund efforts that promise to influence the election. All the while, many of these consultants have as their main goal to make as much money for themselves and their friends, who are usually vendors of the new organization, before the donor realizes they have been hoodwinked.
The secret sauce is in how these consultants make their money. Most political consultants generate income in four ways. First, they will receive a monthly retainer from the organization, usually dictated by the consultant, and often pushing the maximum of what would be considered reasonable for their services by the IRS. Second, they receive a commission on the fundraising they bring in. This commission usually ranges from 8–12% of the total amount raised. Many times this will be paid to an LLC or another entity that the consultant owns. Third, the consultant will receive a commission on the ad buy, which typically amounts to 8–15% of the total ad buy. (One reason you see so many ads during campaign season, regardless of their effectiveness, is that they are a main source of income for the consultant class.) Lastly, the consultant commonly will receive finder’s fees or kickbacks (also called “rippers”) for contracts provided to vendors.
For instance, a consultant may have a friend who owns a website development company, and the friend may charge the organization $40,000 for a new website (that should cost $30,000), of which the consultant may make a $5,000–10,000 commission. With little oversight of these organizations, this can be a very lucrative business for America’s political consultants, and a difficult environment to navigate for political donors.
The scam of nonprofit “soft-money” fundraising has impacted political campaigns, but more importantly, it has left both parties, but especially the GOP, without the caliber of third party organizations, or the extensive network needed to effectively fend off policy and political threats from insurgent candidates and hot-button issues. Compounded with the fact that since 2008, there has been no single “kingmaker” within the GOP, the party is in a rudderless position that arguably it hasn’t experienced since the late 1970s. The Democratic Party is in a crisis of its own, with two kingmakers representing different interests within the party: the Clinton family and Senator Elizabeth Warren.
Many wealthy donors on both sides of the aisle have made valiant efforts to develop networks of influence, and many have had limited, targeted success. For the GOP, however, those successes on small policy battles are short-lived, because the structure of the party apparatus lacks the coordination and united power necessary to control the makeup of the party and its policy platform. On the Democratic side, the coordination is much more centralized and unified and, as was seen in the 2016 primary fight, is split in half along the lines of the followers of the two party leaders mentioned above. Contrast that with a Republican party with at least a half dozen factions, and even more donors, vying for control and competing against each other.
Networks of support take decades to build and require consistent and reliable funding. But the recent actions of groups that raise hundreds of millions of dollars promising results, and then fail to deliver, have stripped the GOP of the support critical to building an infrastructure for effective advocacy. More importantly, these efforts to bilk donors out of their cash lead to a culture of mistrust within the party, and lead to efforts that lack integrity and accountability.
Donors to conservative causes must focus on identifying trusted partners who offer transparency, accountability and integrity in return for their investment. More importantly, they should put pressure on consultants to deliver results. Contracts between organizations and consultants should incentivize effectiveness and reward results rather than further deteriorate donor confidence through failed endeavors. Oversight of the operations of nonprofit and political organizations, as well as a thorough vetting of the operations and standards of those organizations, are vital to the effective and efficient use of limited financial resources.
Brian J. Wise is the Managing Partner of Wise Public Affairs, a strategic advocacy firm that focuses on the use of third party organizations to influence public policy. He is also the President of the US Consumer Coalition and the Chairman of the Leading America Foundation, a charity designed to promote private philanthropy and restore integrity to the nonprofit community.