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D.C. Fundraising Firm Takes Big Cut of Contributions

If you want somebody to raise hundreds of thousands of dollars on your behalf and spend almost all of it, the Washington, D.C. direct-mail fundraising firm BMW Direct is the company for you. That, at least, is the track record laid out in yesterday's Boston Globe piece, which focuses on the firm's habit of consuming through fundraising costs more than 90 percent and as much as 96 percent of the money it has raised for Republican candidates and committees.

Credit: Flickr User: Tracy O/BMW DirectCase in point is the doomed candidacy of Charles Morse, who ran against Rep. Barney Frank (D-MA) in 2006. Despite the fact that Morse dropped out after winning only 145 votes in the Republican primary, BMW Direct continued raising money through its mail solicitations. 75 percent of contributions to Morse's campaign came from small donors out of the state, and the overwhelming majority listed retired as their occupation, according to CQ Money Line.

$200,000 of the more than $700,000 the firm raised for his campaign came after he'd dropped out of the race. When contacted by the Globe, Morse was "really amazed" at that total -- and the fact that the firm had continued raising money in his name after he'd dropped out. Unwitting donors to his defunct candidacy contacted by the paper were no happier. 96 percent of contributions to Morse's campaign were consumed by the firm or its affiliates and contractors.

It's not the first time the firm has come under scrutiny. Earlier this year, Roll Callreported ($) that 95 percent of the $1.1 million donated over the past four years to Freedom's Defense Fund, a political action committee operated by the firm, has gone to expenses. To both the Globe's and Roll Call's queries, representatives from the firm explained that a lot of money is spent early on in a campaign compiling a donor list. One firm representative faulted Morse for dropping out to reap the benefits. A firm executive told Roll Call that Freedom's Defense Fund would be spending "a lot more money" on actual political activities this November. We shall see. TPMmuckraker reports on another of BMW Direct's clients, Deborah Honeycutt, who was trounced by 38 points in 2006 bid for Georgia's 13 District seat and suffered from a similarly high overhead. Honeycutt has refused to comment on her dealings with the firm.

It's hard to tell just how unique BMW Direct's practices are, but there is a precedent. The Washington Postreported last summer on a number of political action committees run by Linda Chavez, a former Reagan administration official, and her family. "Of the $24.5 million raised by the PACs from January 2003 to December 2006, $242,000 -- or 1 percent -- was passed on to politicians," the paper reported. Chavez closed down the groups a few months later.

While it's clear that spending such a high percentage on costs is beyond the industry norm -- a campaign finance expert at the Campaign Legal Center told the Globe that the average direct-mail fundraiser takes about 30 percent to cover costs -- doing so doesn't seem to violate any rules. Which means that it's up to reporters to highlight such practices so that donors might make an informed decision on whether to give.

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