Clinton Fund-Raising Strategy Backfires

There's a turncoat inside Hillary Clinton's money machine. Over the past several years, Leonore Blitz has helped raise about $250,000 for Clinton's Senate races, and she signed up early to help the new presidential campaign. But in recent weeks the Manhattan marketing consultant has secretly attended finance meetings and fund-raisers for Clinton's archrival, Barack Obama. Under intense pressure from the Clinton team to pick sides, Blitz—who bundled more than $1 million for John Kerry in 2004—felt deeply conflicted. Clinton operatives have warned donors not to contribute to other campaigns, and put a price on disloyalty: early supporters will be valued and latecomers scorned. But now Blitz is coming out of the shadows, ready to test the rules. "I have been a lifelong advocate of women and minorities' participating and running for political office," she told NEWSWEEK last week. "Therefore, I'm supporting both Clinton and Obama."

The Clinton campaign denies that it has strong-armed anyone, saying the warnings were made in jest. But whatever tactics Clinton is using, she cannot be happy about how they're working. Clinton operatives had described March 31, the reporting deadline for initial fund-raising, as "the first primary." Their aim was to knock out weaker rivals and reinforce Clinton's aura of invincibility. As it happened, Obama won the money contest with $23.5 million for the primaries, while Clinton raised an estimated $20 million. (The remainder of Clinton's cash—an additional $16 million—is either destined for the general election or was carried over from her Senate race last year.) Clinton attracted half the number of donors that Obama recruited, despite the Illinois senator's late start in mid-January. Online fund-raisers contributed about a third less to Clinton than to Obama, giving her $4.2 million, compared with his $6.9 million.

What happened to the Clinton juggernaut? The answer lies partly in her go-for-broke strategy. There's a fine line between confidence and arrogance, and for some fund-raisers the Clinton team crossed it. "They clearly communicated a message that this candidacy is inevitable because we'll have more experienced consultants, more political insiders, more money and more of every resource that is vital to being nominated," says a prominent New York donor who joined the Obama camp but declined to be named to protect friendships with Clinton supporters. "Therefore, you are politically stupid if you don't get it, if you can't add."

Big donors to any campaign are keenly interested in what their money gets them. Newcomers to Clinton's orbit don't expect to have much influence or access. So they have fewer reasons to call on wealthy friends for more cash. "That tent seemed pretty much full," says Howard Gutman, a D.C. lawyer who was part of the small team that raised $10 million for Mark Warner's aborted presidential effort. Several campaigns courted Gutman, but he chose Obama over Clinton. "I could raise money from now to eternity and not really be on the radar screen. And the Obama camp seemed to offer more upside in terms of personal fun for the next year and change for the country for the future." In that way, the start-up feel of the Obama campaign—even with its lack of manpower and experience—is a selling point for some donors. "The fact that this is new and people are having their input and also having a voice in the process is all part of the attraction," says Penny Pritzker, Obama's national finance chair. (The campaign has mirrored that on its Web site, asking supporters to contribute policy ideas.)

A handful of old friends from Bill Clinton's campaigns are setting aside loyalties to join Obama's camp. Alan Solomont was an overnight guest at the Clinton White House in the first term, and the national party's finance chair in the second. Now he's raising cash for Obama because, Solomont says, he represents change. "People are ready for a new generation, a new face and a new voice," Solomont tells NEWSWEEK. "And Barack Obama is the only candidate who speaks to that."

Of course, the money race has only just begun: the first real primaries are still nine months away. In the peculiar expectations game of this early phase, Obama must now prove that he's not a one-quarter wonder. His fund-raisers believe they have room for growth among the 45,000 online donors who gave less than $100 last quarter. But they also are bracing for a big comeback from their rivals.

Clinton's network of consultants and deep-pocketed friends may be her best asset in a long, expensive contest. But her big campaign machine is also costly. Clinton spent on average more than $1.4 million a month during her Senate campaign last year, including $400,000 a month on consultants. It's not clear how much cash she's burning now, but her consultants remain the same.

Finding a lot of new donors, even among some of Clinton's natural allies, may not be easy. Blitz founded the National Women Business Leaders Council for the DNC in 2004. But when she called on her group to attend a Clinton fund-raiser last month, less than a third signed up. "I was surprised when I found out this wasn't a greater percentage of women," she says. "I know there are some major New York women donors that are not supporting Hillary to the extent they could." Why not? Hope Winthrop also raised a seven-figure sum for Kerry in '04 and thinks of Clinton as "a great senator." But she's more attracted to what she sees as Obama's freshness. "There was a sense of inevitability around the Clinton campaign that maybe made people a little wary," she says. "Now they will see there are several choices out there and it's not all locked up." That's the problem with inevitability: once the all-powerful aura is gone, it's hard to get it back.