Liberal Leadership could be settled by fundraising
December 1st, 2012
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The entry fee and other financial rules established by the federal Liberal Party for the conduct of its leadership race could wind up being the decisive factor in the outcome – and leave several aspiring candidates at the altar of unmet fundraising expectations.
To date only Justin Trudeau and Deborah Coyne have been accepted as registered candidates by the Liberal Party, and have filed their Leadership Contestant Registration Reports with Elections Canada. Those reports detail what the candidates have raised and/or borrowed prior to their registration. Here's a summary of what they say:
|* See note below|
|Period Starting||Oct 2||Oct 5|
|Period Ending||Nov 15||Nov 7|
[* Note that this category is not available for leadership contributions made through the registered party, only for those made directly to a contestant's campaign. The Liberals, like the NDP before them, are insisting that contributions to leadership contestants – once they are registered with the party – must go through the party. Thus we will see names and amounts for all donors on all their subsequent reports. Justin Trudeau's campaign opted to report all names and amounts on his registration report in spite of this distinction. I did an exhaustive (some might say exhausting) review of the rules for leadership contestant reporting, during the NDP leadership race (read down half-way for the "Primer" on it).]
Looking at these registration reports, a few things become clear:
- Both registered candidates to date borrowed the funds to pay their first installment of the party's entry fee (Mr. Trudeau from the Bank of Montréal, and Ms. Coyne from herself).
- And while Trudeau had already raised just under 10% of the spending limit by the time the race had started, Coyne (in spite of being on a near-constant leadership tour since last July, and not registering until mid-November) had raised less than $3,000. UPDATE: Let's remember that contributions made directly to a candidate (i.e., and not going through a party) are not eligible for a political contribution tax credit. Thanks to a regular reader for reminding us of this point.
Now, some of the Liberal Party's own leadership rules will start to have a bearing on what happens next. Consider:
- The next installment of the entry fee is another $25,000 which is due for all registrants on December 15. Any new candidate wanting to register between December 15 and January 13 would then have to post a $50,000 fee. The third and final installment for registered candidates is due on January 13, and the last day to register as new candidate is Monday, January 14.
- A candidate such as Deborah Coyne who had not raised the $25,000 needed to pay the second installment as of November 7 would have to raise a net of $657 and change daily until December 15 in order to do so. In the alternative, such a candidate could loan him- or herself another $25,000, or take out a loan at a bank or credit union.
- The party will not let candidates take out more than $75,000 in loans, nor will it allow any candidate to rack up more than $25,000 in unpaid bills on any of their monthly financial reports to the party. The relevant sections of the rules are transcribed here.
What is the entry fee to become a candidate for the 2013 LPC Leadership?
The entry fee to become a candidate for the 2013 LPC Leadership is $75 000 non-refundable, and payable to the LPC in three installments as follows:
(i) $25 000 on the date of the leadership contestant’s registration with the Party;
(ii) $25 000 thirty days after the call of the 2013 LPC Leadership (December 15 2012); and
(iii) $25 000 ninety days before the day of the vote (January 13 2013)
What is the spending limit for candidates for the 2013 LPC Leadership?
The spending limit for candidates for the 2013 LPC Leadership is $950 000, from September 6, 2012, exclusive of the entry fee, transfers made to or withheld by the LPC for the processing of donations or services incurred, and certain policy research expenses, fundraising costs, candidate travel and other expenses as recommended by the Leadership Expenses Committee or the Ad Hoc Leadership Vote and Expenses Committee in the interim.
What is the loan limit for candidates for the 2013 LPC Leadership?
No 2013 LPC Leadership candidate shall exceed or allow his or her leadership campaign to exceed $25 000 in total leadership campaign accrued, unpaid and contingent liabilities, at the time of reporting, nor shall any such candidate or candidate’s campaign exceed a Maximum Total Campaign Debt of $75 000 in the form of loans, held by the candidate and/or third parties, subject to any rules adopted by the Leadership Expenses Committee or the Ad Hoc Leadership Vote and Expenses Committee in the interim, further and subject to any bylaw adopted pursuant to Chapter 15 of the LPC Constitution.
Will there be a levy on donations to 2013 LPC Leadership candidates?
10% of funds donated to 2013 LPC Leadership candidates will be levied by the LPC.
What are the reporting requirements for candidates in the 2013 LPC Leadership?
In addition to the statutory reporting required by Elections Canada, candidates in the 2013 LPC Leadership will be required to produce monthly expenditures reports to the LPC from the outset of the campaign.
To run a fully-funded leadership campaign (let's call that $950K, notwithstanding the other caveats) with a zero balance by the end of the contest on April 14, and assuming that a campaign started fundraising on September 6 (the day from which the party is counting leadership contest expenses), one would have to have raised at least $4,300 on average per day for those 220 days.
Someone wanting to enter the race and at least pay the entry fees on time without going into debt at all, would have had to raise on average $500/day for the 100 days between September 6 and December 15, and then another $862 daily on average for the next 29 days till January 13. And that's not counting any spending on leadership expenses themselves: staffing costs, designing and hosting websites, brochures, business cards, video production, databases, translation, etc., or other non-ceiling costs like candidate travel, polling and opinion research, and fundraising costs.
Then suppose you've made it over the first three hurdles of the entry fee, you still need to raise at least $862 daily on average to avoid running up more than $25K in unpaid bills, unless you don't spend anything. Even if you took out the maximum loan ceiling to cover the entry free, you would have to raise money to cover all other expenses out of fundraising.
We'll get our first look into who is making progress in the fundraising contest when the Liberal Party files its fourth quarter return at the end of January, but if more than a few other candidates don't get registered soon with the party and then Elections Canada, I think we'll know why.
Any campaign not raising a thousand dollars a day is going to have a hard time staying in the race under these rules, unless they are prepared to do so using mostly deficit financing.
Turning to the source of Justin Trudeau's early fundraising as detailed in his registration report, here's the breakdown by region, and contribution size:
[click on image to open full-sized PDF version]
You'll notice that 68% of Mr. Trudeau's early fundraising came from donors who have now given their maximum for the leadership race, including 10 $1,200 donors each from Montreal, Ottawa and Toronto, 13 from Vancouver, and another 3 from around Toronto, along with a smattering from the rest of the country. Ms. Coyne picked up donations from Manitoba, the Toronto area and Nova Scotia.
For the latest on the Federal Liberal Leadership Race, don't forget to follow the half-hourly news updates, and social media tickers at the Pundits' Guide LPCLdr portal page: http://lpcldr.punditsguide.ca. It's recently been updated with the latest candidate announcements and websites.