Top ‘Soft-Money’ Donor Does It ‘Under the Radar’

In the three years since Steven T. Kirsch sold his dot-com startup, Infoseek, for hundreds of millions of dollars, the Los Angeles native has donated millions to the causes of nuclear disarmament, clean air, major-disease cures and even the protection of Earth from asteroids.

Among Kirsch’s top crusades: campaign-finance reform, a cause that his charitable foundation says it has funded with nearly $1 million in donations to nonpartisan groups that are fighting to purge American politics of the corruptive influence of billions of dollars in “soft money,” which is the unlimited, unregulated contributions to political parties--not to specific candidates--from corporations, unions and wealthy individuals.

On Tuesday, the 45-year-old entrepreneur emerged at the top of a list of soft-money contributors--a “stealth” donor who quietly funneled $2.1 million meant to defeat George W. Bush through nine separate state Democratic committees only days before the November 2000 election.

“So I was No. 1? Cool,” Kirsch said Tuesday in a telephone in- terview from his Silicon Valley home.

While federal law bans unlimited contributions to specific candidates, the tactic of using state parties and soft money to influence federal elections is sanctioned by a loophole that has become the focus of the debate over campaign finance reform. It was specifically targeted by the landmark Bipartisan Campaign Reform Act that Congress passed this year.

But critics say new loopholes were opened Saturday when the Federal Election Commission amended the law with a series of regulations that permitted broader activities by state committees. Tuesday, three reform groups criticized that action as they released a list of top state-level soft-money donors.

The donor list was part of an unprecedented yearlong investigation into the flow of soft money at the state level during the last presidential elections. Entitled “State Secrets: A Joint Investigation of Political Party Money in the States,” the study found that nearly half of the $570 million in soft money raised in 2000 by state Democratic and Republican committees was actually funneled through or directed by national political party committees, a practice that will remain legal until the campaign law takes effect in November.

Most of those contributions specifically targeted swing states--such as Florida--where the election would be decided, according to the study, which was based on about 30,000 pages of documents from all 50 states that were examined by 32 researchers from the Washington-based Center for Public Integrity, the Center for Responsive Politics and the National Institute on Money in State Politics.

And those swing states were precisely what Kirsch was trying to target, he said, reflecting deeply held views that Republicans give far more to their party than Democrats, that genuine campaign-finance reform is the only ultimate solution, and that, in the meantime, Democrats should use their millions to balance the scales.

In many ways, Kirsch, who drives an electric car, lives in a $10-million all-digital house and funds an array of causes ranging from the Sept. 11 attack victims to long-term hospice care, symbolizes the push-pull contradictions and ironies in the debate about campaign-finance reform.

In fact, he contributed $50,000 to one of the groups that singled him out for criticism Tuesday, the Center for Public Integrity. The report disclosed the donation in a footnote that asserted “Kirsch was not known as a major political donor” when the center sought and took the contribution in 2000--the same year Kirsch gave a total of $3 million in soft money to state and candidate committees.

“It’s a great irony,” the center’s director, Charles Lewis, said of Kirsch’s history of funding campaign finance reform groups and his sudden emergence as a big-time financier--a leap so rapid that Lewis said Kirsch “went from zero to 200 mph in just a few days or a few months.”

“We have a stealth process here in the 21st century where you can’t see who’s doing what [at the state level], and that’s the irony to me of what Kirsch has done,” Lewis said.

The joint report added that what Kirsch did in the 2000 campaign was emblematic of the soft-money problem. Specifically, it documented that Kirsch had “spread $2.1 million in six-figure chunks among nine different state Democratic Party committees, virtually all in key swing states in the 2000 presidential elections”--none of them in his home state of California.

“By spreading his contributions around, Kirsch was able to come in ‘under the radar,’ according to one former elections official, and avoid the type of scrutiny endured by people who make big donations to the national parties,” the report says. There are no limits on soft contributions, but Kirsch was able to avoid publicity by giving smaller amounts to a number of states.

“There was no intention at all to fly under the radar,” said Kirsch, who is reportedly worth $400 million and who now runs a high-tech San Jose start-up, Propel Software Inc.

“The fact is, I had a finite amount of money to spend, and I went on the Web to identify the states where the deployment of that money was going to make the most difference in the outcome of the last presidential election,” he said. He conceded that the Democratic National Committee also advised him where his money would be most effective in defeating George W. Bush.

“My objective was not to make the Top 10 list. My objective was, I had a capacity to give and to make a positive difference ... in this case, to elect the best president for the United States.” Despite the limits on contributions to specific candidates, a series of rulings by the FEC and the courts beginning in the early 1970s have opened a loophole in election law through which both state and national parties can raise unlimited, unregulated funds for “non-federal election activity.”

As the loophole widened and the millions of soft dollars multiplied in recent years, those activities have grown from traditional “get-out-the-vote” drives to include “issue” advertising and other events that critics say have given the best-endowed special interests inordinate influence on federal politics and policies.

In practice, the study released Tuesday found that the state parties have become a largely unmonitored “back door” for vast amounts of money that do, in fact, strongly influence federal elections; Florida, where the last presidential election was decided, topped the list of states receiving the most soft money--almost $27 million--from national party committees.

The leaders of the three reform groups noted that the campaign finance reform act, which takes effect Nov. 6, the day after this year’s elections, permits state party committees to continue to raise soft money. But they stressed that regulations added by the FEC through amendments to the reform law last week undo key restrictions in the law and are likely to expand exponentially the soft-money loophole the law was meant to close.

Among the amendments was a provision that limits what state and local committees must disclose to the FEC, which reformers asserted could make the new system even less transparent. “It appears to us that the state party money channel will most likely become a flood after the Bipartisan Campaign Reform Act--more familiarly known as either McCain-Feingold or Shays-Meehan--takes effect the day after the midterm elections,” Lewis said Tuesday.

As for the FEC itself, Lewis added, “This is an agency that, based on its record on enforcement, has a ghostlike presence,” and he characterized the reform act as “an attempt to put a Band-Aid on a hemorrhage.”

The law’s congressional sponsors--Sens. John McCain (R-Ariz.) and Russell D. Feingold (D-Wis.) and Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.)--have blasted the FEC for attempting to rewrite the law, which took seven years to get through the House and the Senate. They have scheduled a news conference today to announce what they intend to do about it.

In any case, most analysts say the future shape and reach of the law, which has been challenged in the federal courts, is likely to be determined by the U.S. Supreme Court.

Meanwhile, the tens of millions of dollars in soft money continue to flow into the parties’ coffers in this year’s run-up to the Nov. 5 congressional elections.

And again this year, Kirsch--a registered Republican until the mid-1990s, he said--is right up there in the Top 10, confirming Lewis’ assertion that he gave an additional $1 million in soft money to Democratic Party committees last March. In fact, Kirsch said, it totaled $1.2 million.

The bottom line, Kirsch said, is that he does not see himself as a “special interest.”

He insists that he has gotten little or nothing back for the millions he has put into the electoral system.

“I got about a dozen thank-you letters from the state committees,” he said. “Al Gore didn’t even thank me, at first.

“Eventually, I got a personal call from the vice president, but I had to ask for it.”