With loophole, many campaign donors remain anonymous

Millions raised through 'lump sum' donations

May 14, 2011|By Julie Bykowicz, The Baltimore Sun

A loophole in state campaign finance laws allowed contributors to Maryland candidates and political groups to pump $4.3 million into the 2010 election cycle while remaining anonymous — denying citizens a thorough look at the money that flows into politics.

The State Board of Elections discourages candidates from using the "lump sum" label on campaign finance reports, and Maryland Attorney General Douglas F. Gansler has taken issue with the practice. But it remains legal and has been used by Democrats and Republicans alike, enabling some local candidates to finance their races without disclosing large numbers of donors.

Critics say that grouping contributions together rather than itemizing them runs counter to the campaign finance system's intent to provide transparency.

"It's a loophole that's being abused by people," said Susan Wichmann, director of Common Cause Maryland, a good-government group that pursues campaign finance reforms. "It needs to be closed." Candidates who rely heavily upon lump sum reporting, Wichmann said, are "using it as a way to hide their donors."

But candidates who use the lump sum designation say it is a convenient way to report small donations.

A Baltimore Sun analysis of data from the State Board of Elections found that while most candidates refrain from marking any contributions as lump sums, some report large amounts of money that way. The top dozen users in the last election cycle reported a total of $318,602 in contributions without any donor information.

Among the findings:

•Republican former Gov. Robert L. Ehrlich Jr. led the pack with $71,917 in contributions from unnamed political clubs for his campaign last year against Democratic Gov. Martin O'Malley. Although O'Malley noted some small lump sums in earlier elections, he does not appear to have collected such payments during the recent cycle.

•House Appropriations Committee Chairman Norman H. Conway was another heavy user. The Eastern Shore Democrat reported $38,257 in lump sum contributions — mostly, he said, from ticket sales to a chicken-and-dumplings dinner held each January before the start of the legislative session.

•Frank Conaway, the clerk of Baltimore Circuit Court and a candidate for the Democratic nomination for mayor, reported $27,570 in lump sum contributions, nearly 40 percent of the money he raised during the cycle. A political slate he shares with three family members raised $6,250 in unitemized donations, or 86 percent of the contributions it received.

Overall, lump sums accounted for 3 percent of the campaign contributions in the January 2007 to December 2010 election cycle.

State Board of Elections officials call the lump sum designation difficult to verify and problematic for transparency.

"The preferred practice is always to disclose," said Jared DeMarinis, director of candidacy and campaign finance for the board. "You have the option to use lump sum, but if you're audited and your records don't match up, you've got a problem."

Under the law, an individual who donates less than $51 need not be issued a receipt. And any donations that do not generate receipts can be lumped together and reported as a single sum.

When a donor reaches $51 in contributions through a series of transactions over four years, the individual's identity must disclosed to the board. There's no limit on how much a candidate can report as a lump sum.

Elections officials acknowledge that the laws and policies on lump sums can seem confusing. The original intent of the designation, which has been allowed at least since 1978, was to make it easier for candidates to report nominal donations at campaign events, such as raffle tickets. Political action committees, including those for the Fraternal Order of Police, often label small fees collected regularly from members as lump sums.

But while they are not required to disclose such contributions, candidates and political organizations are supposed to collect and retain information for every donor.

Critics of lump sum reporting say that because candidates must keep the data anyway, the public should be allowed to review it.

"The whole purpose of disclosure is to make it so that a person can quickly and readily determine who is giving to whom and how much," said Gansler, who convened a group last year to study campaign finance. "There ought to be a requirement that anyone who contributes, whether it is $1 or $4,000, be identified in public reports. It goes to the heart of transparency."

Maryland is one of 49 states that allow candidates to report contributions of a certain amount without disclosing who gave the money, according to the National Institute on Money in State Politics. Only Florida requires that every dollar donated to a candidate be itemized, the group says.

On the federal level, a similar reporting designation, called "bundling," has attracted the attention of good-government groups pushing for more disclosure.

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