New Sources of Campaign Funds Sought : Politics: Spending limits and the lack of big-money contributors are causing mayoral candidates to court small, individual donors.

Although the spotlight so far has been on multimillion-dollar spending limits and the influence of Big Money, small donors have a chance to figure more prominently than ever in bankrolling this year’s Los Angeles mayoral campaign.

A unique combination of economic, legislative and demographic factors point in that direction, at least for the wide-open April primary contest, say campaign managers, political experts and some large contributors.

In a race expected to set records in mayoral campaign spending, several forces are reshaping the landscape, including:

- The traditional heavy-lifter of local campaign finance--the real estate industry--has collapsed under the weight of the recession. “A lot of companies on campaign contribution lists probably don’t exist anymore,” said Dick Wirth, director of a state council of large building interests and a key fund-raising contact for candidates. “You are looking at anywhere from a 50% cut on up in what you would normally see these (developers) giving.”

- For the first time, the city’s new ethics law is offering candidates hundreds of thousands of dollars in public matching funds, but only for contributions by individuals. Corporate, union and political action committee donations will not be matched. Similar public financing incentives in New York and Seattle significantly increased small donations and enticed politicians to broaden their fund-raising appeals, studies show.

- The crowded and diverse field of potentially strong contenders is spawning more niche fund raising and small events to draw new donors among ethnic groups, gays, suburbanites, women and environmentalists.

Several candidates and their aides are touting their efforts to draw fresh, small contributors into the money mix.

“There are a lot of new faces,” said Vicky Rideout, Councilman Mike Woo’s campaign manager. “You’re talking thousands of new contributors, not just the (typical) donors.”

Peter Taylor, campaign manager for Assemblyman Richard Katz (D-Sepulveda), said: “We’re targeting individuals. We’ve mainly done smaller fund-raisers” in the San Fernando Valley and on the Westside. “Most of our money, to be honest, is individuals--(about) 78%. . . . That is a very impressive ratio.”

Just how much candidates wean themselves from traditional special interests--lobbyists, lawyers, developers, concessionaires and public works contractors--that do business with government remains to be seen. The first detailed donor reports will not be filed until later this month.

“It will never be the ideal . . . that you are going to drive the money changers out of the temple,” said Herbert E. Alexander, a USC political science professor and expert on campaign finance reform.

But Alexander said the emphasis on small donors could be significant, particularly in the initial campaign to sort out the 26-candidate mayoral primary. Once the field narrows in an expected June runoff, special-interest donations are more likely to flow, he said.

“People with an interest will continue to play in the system,” he added.

That could prove especially true if contribution limits are raised as a result of candidates--such as multimillionaire lawyer-businessman Richard Riordan--dumping large sums of their own money into the race.

More uncertainty about the potential influence of the matching funds was added Friday. The City Council on a split vote tentatively agreed to deny public funds to any candidate who exceeds a $2-million campaign spending limit--a change that could affect the top tier of candidates if enacted into law.

Even so, the signs point to a greater mix of campaign contributors, and watchdog agencies say that is needed.

“I have hopes. The incentives are there . . . to expand the base of participation in campaigns,” said Dennis Curtis, president of the Los Angeles Ethics Commission.

Part of the hope is that candidates will spend more time courting individual donors--in effect bringing the city’s fund-raising and voting bases more into sync and diminishing the clout of fat cats.

“That’s healthy. They don’t keep going back to the same pool of people,” said Mara Neville, spokeswoman for the New York City Campaign Finance Board.

Partly because of public matching funds, small contributions from individuals have nearly doubled in New York City campaigns since 1989. The amount of the typical donation also tumbled by 50%.

“Candidates have told us that they have had to spend increasing amounts of time shaking hands,” meeting voters at house parties and “selling themselves, issues-wise” to rake in matchable contributions, Neville said. The long-term hope is that such campaigning will draw more voters back to local elections, she said.

In Los Angeles, the new law matches individual donations dollar-for-dollar up to one-half of the contribution limits. In other words, the first $500 of any individual’s contribution in the mayor’s race, where the maximum contribution is $1,000 per person, may be matched with public funds--up to $667,000 per candidate.

Several candidates are gearing their fund raising toward qualifying donors.

Former Los Angeles Deputy Mayor Tom Houston, an attorney, is building a network of small house parties among friends, legal community colleagues and activists who share a special interest in environmental issues.

“These are people who’ve never given a political contribution before in their lives,” Houston said. “My goal is to raise $600,000 and get a substantial chunk of public financing.”

The matching fund incentive dovetails with other new realities.

Recession-ravaged developers, who used to fill tables at fund-raisers, are waving candidates off, campaign and industry sources say.

Among development firms that have not gone broke, “a significant proportion . . . don’t have any projects (and) are unable to project when they will have any in the foreseeable future,” said Doug Ring, a politically active attorney who represents developers.

Development interests typically account for the largest share of donations in City Hall races--often 30% or more, computer analysis by The Times has shown.

This year, developers are begging off or buying only one or two tickets to a fund-raiser rather than volunteering to hit up associates, subcontractors and others to fill entire tables, say builders and campaign managers.

“I don’t know a single developer who doesn’t have a cash crunch and isn’t laying off employees,” said a well-established Los Angeles developer and longtime campaign contributor.

The hunt for small donors also is being driven by the diverse field of contenders. The prominent candidates include two African-Americans, two Latinos (one a woman), two Jews, a Chinese-American, a Greek immigrant and two white lawyers.

The candidates all are working to reach across ethnic and other dividing lines.

But as the multiethnic political coalition centered around retiring five-term Mayor Tom Bradley unravels, there are signs of Balkanization in the contribution chase.

Bradley’s financial backers “are all over the lot” in the current race, said downtown businessman Bruce Corwin, a Jewish community activist who served as Bradley’s campaign treasurer for many years. Corwin is backing Katz, who is Jewish.

“There’s a whole group of Westside Jewish, involved citizens who will align themselves with Richard,” Corwin said. “I think that’s a strong base for him.”

In addition to targeting the Jewish community here, Katz has traveled to New York to raise money in the Jewish community there.

Another prominent Jewish businessman, garment industry leader Stanley Hirsch, is raising money for Councilman Joel Wachs, who also is Jewish.

Woo, the council’s first Asian-American member and widely regarded as one of the stronger contenders, has held more than 20 gatherings, mostly smaller events in the Asian community, said campaign manager Rideout.

Other fund-raising gatherings have been held with Asian-American activists and professionals in other cities, including Chicago, San Francisco and San Jose, Rideout said. Additional forays are in the works for New York and Washington, she said.

Former Los Angeles school board President Julian Nava is appealing to small donors, particularly Latinos, via a toll-free telephone number. His goal, Nava said, is to “democratize” fund raising in the mayoral race and to “encourage more people to get involved at a level they can afford.” The number will be promoted in Los Angeles and other cities with large Latino populations, such as San Diego, Bakersfield and Las Vegas, he said.

Another candidate, Deputy Mayor Linda Griego, is expected to compete with Nava for Latino donors, as well as to concentrate on niche fund raising among women professionals, a potent force in the recent elections of California’s two first female U.S. senators.

And RTD Board President Nick Patsaouras, a major fund-raiser among Greek-Americans for former Democratic presidential candidate Michael S. Dukakis, hopes to tap that community for his mayoral campaign. In addition to soliciting Southern California business people of Greek and Armenian descent, he plans to travel to San Francisco, Boston, New York and New Jersey for small fund-raising events.

Of course, the niche fund-raising efforts cross ethnic lines. In addition to African-American groups, Councilman Nate Holden, who represents Koreatown, has been successful in working that community for contributions.

And, like Woo and Patsaouras, Riordan, an Irish-American Catholic, has allies in the Westside Jewish community who are helping to raise funds there.

Riordan also has attracted key business sector backers, including such corporate titans as Arco Chairman Lodwrick Cook, who helped fill seats at a major Union Station fund-raiser in December.

But even among that well-heeled crowd, Riordan aides contend that there were many new faces and non-traditional givers.

“It was not the crowd you see at typical political fund-raisers,” said Bill Wardlaw, Riordan’s campaign manager. “They were Dick Riordan’s friends.”

Whether it is friendship, ethnic ties or ideology, the candidates will be forced to “reach out to people they never reached out to before,” said Wirth, the building industry representative. “It’s going to be somewhat exciting.”