Businesses Opening Wallets to Party Conventions--in a Big Way : GOP and Democrats raise record amounts despite laws aimed at limiting private funds in presidential politicking.

Corporate America may be downsizing and cost-cutting, but it is more eager than ever to spend millions of dollars on national political conventions.

A record amount of money from private sources--virtually all of it from businesses--is flowing into this summer’s Republican and Democratic gatherings. The contributions have come despite Watergate-era legislation meant to remove what was seen as the corruptive influence of such cash in presidential politics by instead using public money to underwrite conventions and campaigns.

The San Diego Host Committee for the GOP convention, set for Aug. 12-15, has raised more money from private sources than any such committee in history. Overcoming the disadvantage of not having a single Fortune 500 company headquartered in San Diego, the committee garnered $11.2 million nationwide; for the 1992 GOP convention in Houston, the host committee raised a mere $4.3 million.

Despite the San Diego committee’s success, convention organizers recently issued a plea for yet more cash. The host committee responded by promising to raise $2.1 million more.

And in a move that brought a protest from Democrats, Amway Corp. donated $1.3 million so the Republicans’ own coverage of their convention can be seen on cable TV’s Family Channel, whose primary owner is Christian Coalition founder Pat Robertson.

In Chicago, the host committee for the Democratic convention tapped a long list of major local companies (including 62 Fortune 500 headquarters) to quickly raise $9 million. No Chicago company refused a fund-raising plea by Mayor Richard M. Daley for the Aug. 26-29 conclave, according to fund-raisers.

Both committees benefited from a desire by many companies to contribute to both conventions. These included Abbott Laboratories, Anheuser-Busch Cos. Inc., Archer-Daniels-Midland Co., Chrysler Corp., Tenneco, AT&T; Corp., BankAmerica Corp., Lockheed Martin Corp. and United Airlines Inc.

Views differ on the motivations behind this largess.

Gerald L. Parsky, the former Los Angeles attorney who heads the San Diego Host Committee, sees corporate donations as a smart advertising maneuver, an adroit way to capitalize on the massive media coverage.

“The convention is a platform, properly used, to communicate about your company to a very, very wide audience,” he said.

Others offer a darker interpretation. With direct corporate contributions to presidential candidates banned, political watchdogs say donations to the conventions are a prime way for businesses to curry political favor.

“Clearly, people are buying influence and access,” said Ruth Holton, executive director of California Common Cause. “The parties are being sold to the highest bidder.”

Regulatory rulings have paved the way for the use of private money to help pay for conventions. For instance, the Internal Revenue Service ruled that contributions to nonprofit host committees are deductible as business expenses or charitable contributions.

The previous record for private contributions to a convention was $6.5 million for the 1992 Democratic gathering in New York; the money was raised by a committee headed by Robert E. Rubin, then-vice chairman of the Goldman, Sachs & Co. investment firm and now Treasury secretary in the Clinton administration.

This year, while Republicans raised the most from private sources, the Democrats amassed their formidable amount with considerably less effort.

While San Diego was casting its net nationwide, the Chicago host committee, called Chicago ‘96, was able to persuade 73 companies within a few miles of the city’s famed Sears Tower to donate $100,000 or more.

The original fund-raising goal of $7 million was exceeded easily and without dangling the kinds of inducements the San Diego committee offered to corporate executives: seats at the convention, spots at celebrity golf tournaments, seats at the racetrack, the chance for corporate logos to be prominently displayed.

“If I could have offered golf foursomes with [basketball star] Michael Jordan,” Chicago ’96 Executive Director Leslie Fox said, laughing, “I’d probably have reached our goal in just a few days.”

Chicago ’96 officials say their fund-raising was aided by a pent-up demand among businesses to help erase the stain left on the city’s image by its last convention, the 1968 Democratic gathering best known for the bloody clashes between police and anti-Vietnam War protesters.

The Watergate scandal--in which large amounts of unregulated donations to President Nixon’s reelection campaign financed a variety of illegal acts--spawned laws to limit private money in presidential politicking.

But two decades later, the Republican and Democratic parties are able to have their cake and eat it too, receiving millions of dollars in public subsidies while trolling for money from private sources.

Each party will get $12.4 million from the federal government to run its convention, up from $11 million in 1992 (and each presidential candidate will receive $62 million to run his fall campaign).

Both parties were also able to persuade their prospective host cities to outbid municipal rivals by offering millions of dollars in cash and in-kind services. In Chicago, the city government pledged about $10 million. In San Diego, the city government pledged $6.5 million and the convention center board another $6 million.

Still, the fastest growing segment of convention funding is from the private sector, much of it from industries and businesses that live and die by the regulations, government contracts and tax policies set in Washington.

The trend toward increasing amounts of private money to underwrite conventions was noted with alarm by political science professors Herbert Alexander and Anthony Corrado in their book, “Financing the 1992 Elections.” They concluded that “the development every four years of new means of introducing private money undermines the premise of the 1974 [reform] law that public funding would essentially replace private funds [in conventions].”

Initially, only local companies could contribute to host committees under the reform legislation. But the Federal Election Commission has broadened that definition, in effect, to include any company that sells its product or service within a host city’s limits, even though its headquarters or factory is elsewhere.

The $1.3-million donation from Amway to buy time on the Family Channel for what the party is calling GOP-TV was routed through the San Diego Convention and Visitors Bureau. Federal law prohibits corporations from buying television time for political parties.

Democrats say the Amway deal is illegal. Republicans say it is just an innovative way to harness corporate money. Since GOP-TV will also be touting the virtues of San Diego as a vacation site, convention bureau officials said they were glad to act as the conduit for the money.

During conventions, the generosity of private donors can extend to individual politicians. Congress exempted convention activities from its ban on gifts to legislators, clearing the way for a week of wining and dining.

The notion that there is too much money--private and public--in politics brings an unusually voluble response from GOP convention manager William Greener.

“The fact of the matter is that if you take all the money spent on parties, candidates, anything you can call political, it is less money than we spend on yogurt or fireworks on the Fourth of July,” Greener said.

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Big Money, Big Politics

The growth in private donations to national political conventions:

GOP: $11.2 million

Democrats: $9 million

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AMONG THE CORPORATE DONATIONS

GOP: Amway Corp., Callaway Golf Co., Dole Food Co., Marriott International Inc., Texaco Inc., Transamerica Corp., Atlantic Richfield Co., Chevron Corp., General Dynamics Corp., Goldman Sachs, Jenny Craig Inc., Microsoft Corp., Occidental Petroleum Corp., Philip Morris Cos. Inc., Time Warner inc., Warner Brothers Inc., the San Diego Padres, Pacific Telesis Group and Union Pacific Corp.

Democrats: Allstate Insurance Co.; Blue Cross/Blue Shield of Illinois; Fruit of the Loom Inc.; Hyatt International Corp.; Kraft Foods International Inc.; Marshall Field & Co.; McDonald’s Corp.; Montgomery Ward & Co.; J.P. Morgan & Co.; Motorola Inc.; PaineWebber Group Inc.; Sears, Roebuck & Co.; Quaker Oats Co.; Sara Lee Corp; Unicom Corp.; Walgreen Co. and Xerox Corp.

Sources: Citizens Research Foundation at the University of Southern California; National Journal