Portland City Council candidates swapped donations, raising campaign finance questions

Portland voters will elect 12 new city councilors and choose a new mayor this November. Willamette Week’s Sophie Peel found that some of the candidates running agreed to swap campaign donations in order to qualify for the city’s system of matching funds. That practice violated campaign finance law, according to attorneys and experts quoted in the stories, although the secretary of state’s office had declined to weigh in without having done its own full investigation. After inquiries, Secretary of State LaVonne Griffin-Valade has now directed the Elections Division to open an investigation. We talk with Peel about what she found and why it matters as Election Day approaches.

Note: The following transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Portland voters will elect 12 city council members and choose a new mayor in under two months. Many of the candidates in those races have been trying to reach a certain threshold of individual donors in order to qualify for the city’s system of matching funds. But as Willamette Week’s Sophie Peel reported recently, about a dozen candidates agreed to swap donations in order to try to get access to that public money. According to attorneys and experts she talked to, that violated campaign finance law. The Secretary of State has not said yet if she agrees.

Sophie Peel joins us now to talk about all of this. Sophie, welcome back.

Sophie Peel: Thank you. Thanks for having me.

Miller: So I think before we can get to what these candidates did, we should have a better grounding on Portland’s public matching system itself. Can you just give us the basics of how it works?

Peel: Yeah. So the city’s matching taxpayer election system is called the Small Donor Elections program. And basically what it does is if any candidate for city council can get 250 donations from individual donors, they unlock, at minimum, $40,000 in matching taxpayer funds, so the city will match what they’ve raised with taxpayer dollars. And we knew that this program, going into this sort of historic election where we have more than 90 people running for city council, that this program’s budget was going to be really stretched and we knew quite a few people were probably gonna qualify for those matching funds.

And the intent of this program is really to sort of even out the playing field of Portland elections, to take big money out of local elections. And in that threshold of 250 donations from individual donors, it’s really aimed … What the program wants candidates to prove is that they have broad grassroots support and they don’t need to garner a lot of money. These donations can be as little as $5. They just want candidates to show that they have sort of this groundswell of genuine support from Portland voters, everyday Portland voters, in order to get taxpayer dollars, which is sort of seen as a way to even out the playing field in a city where big outside interests have had outsized influence on city elections before.

Miller: So what exactly did nearly a dozen candidates for city council primarily, and mayor as well … what exactly did they do?

Peel: In an August email thread, which we got a hold of, 11 candidates total – we believe there’s probably a couple more out there that we haven’t sort of seen proof of them doing this – including one mayoral candidate and 10 candidates for the city council agreed to explicitly swap donations with one another. So it was basically saying if you give me $5, I’ll give you $5 back, and all of these 11 people put that in writing in one way or another. And it was in an effort to get those to reach that threshold of 250 contributions in order to unlock those matching taxpayer funds from the city’s public campaign financing program.

Miller: One of the important words you use there is explicit. Just to be clear, it’s not like there was any subterfuge here within the email chain, right? I mean, they’re very literally saying, “Let’s do this. I give you money, you give me money so we can meet this threshold”?

Peel: Right. I mean, yeah, I think the word explicit here is really important, especially when it comes to potential legal ramifications. There’s absolutely nothing that prohibits one candidate from donating to another candidate. Where sort of the legal waters get sticky is when these candidates are basically saying I will give you $5 but it is incumbent upon you giving me $5 back. That’s a really important distinction, especially when we sort of look at larger donation swapping among city council candidates because there’s a whole lot of it. But so far, there’s only 11 that we know of that actually explicitly put in writing that they would agree to these swaps, which again are incumbent upon or predicated upon reciprocity.

Miller: I want to turn to those legal questions in more squarely in just a second. But have there been cases like this in the past?

Peel: Not that I’m aware of. I think one of the interesting things, I think reporters and also … I mean, everyone who voted for the charter reform measure in November 2022 knew that these massive changes were probably going to bring heartburn in certain ways and it was going to throw a real loop to the small donor elections program. I mean, it’s a small program. It’s never had to deal with just the sheer volume of candidates that are running in this election cycle.

So I think we knew there were going to be growing pains. I think it’s so hard to predict what those will be until they happen. And so I’m not totally surprised that this happened. I think they are just … hindsight is 2020. And this is one of those things that I think maybe in a year we’ll look back at the city’s program and voters will say, oh yeah, that kind of makes sense that that happened. But it’s just one of those things that it’s sort of an emergent issue.

Miller: So you talked to two local campaign finance experts and advocates for changes to the way elections happen in this state, Dan Meek and Jason Kafoury, who said that this activity could go against Oregon revised statute 260.665. For those listeners who don’t have ORS statutes memorized, what does that law say?

Peel: Yeah, I wish I could rattle off the exact text from memory, but I’ll sort of put in sort of simpler terms. It prohibits a candidate or a campaign from soliciting a donation by offering something of value in return. So in this specific scenario, how this ORS would apply, is that what the candidate is offering, the thing they are offering in return is a $5 or $20 check. So they are agreeing to exchange $5 for $5 and that falls under – by the telling of these campaign finance experts and there’s also attorneys, I will add that as well – what’s called, quote unquote, “undue influence,” which basically means this candidate or this campaign, offered something of value in order to solicit a donation.

Miller: How did various candidates that you talked to – you reached out to all of them – respond to your questions about this?

Peel: Yeah, it’s been really interesting. I would say there are a couple sort of strains that have been really consistent amongst all of them, and I’ll start with that. I think all of them have been very adamant that, one, if there was wrongdoing, especially legal wrongdoing, they certainly didn’t know that was going to be the case. They probably wouldn’t have put this in writing if they had. I think what a lot of them stress is that, look, this is a historic election and I’m so proud that all of us candidates are mutually supporting one another.

I mean, I will say the email thread that we got a hold of, it has all the city council candidates on that. It’s a listserv, so it’s basically a huge email list. And I don’t think that’s ever really happened before, in city council elections. I mean, I will say it is something really unique about this election is that candidates are, up until this point at least, have really been kind of linking arms in a lot of ways, mutually supporting each other and hosting mutual candidate events. So I think a lot of the candidates that have participated in this and agreed to make the swap said, look, we were getting really caught up in just mutually supporting each other and it feels like a very supportive environment – we certainly didn’t think there was wrongdoing.

When it comes down to whether or not they’re sort of denying that they broke a law. I mean, no one has explicitly said, has admitted to breaking the law. I don’t know why they would, especially when the Secretary of State’s office hasn’t taken a position, but I think some of them are really skeptical about whether their kind of good faith efforts to support one another should be considered illegal. So yeah, again, there’s been nuances in some of their responses, but I think overwhelmingly they’ve all said, look, what I did, I definitely didn’t know it was illegal and I was just doing it in order to support other first-time candidates.

Miller: Sophie, it does seem worth circling back to that the law that you were talking about there, this is statewide, but we’re talking about a city-specific campaign finance program. How much could this have been prevented if the city itself had been more clear about its rules?

Peel: Yeah, that’s a great question and I think it’s a fair question to ask. I think it probably could have prevented a lot of things from happening because my understanding is that the city’s Small Donor Elections program does not have an explicit rule in which they say candidates cannot explicitly agree to swap donations basically on, again, the condition of reciprocity, which is the really kind of key part here, key distinguishing factor.

What I will say about a lot of these candidates that were implicated in this is I do think they have, in many other ways, have been really keen on following the rules of the city’s campaign finance program. So it’s not like they are flouting these rules for no reason. I think a lot of these candidates did take the city’s training on this program. So I think rules on the local level could have really done a lot to prevent any of these candidates from partaking in this.

Miller: Although the flip-side is that it is curious to see that one of the defenses that folks said is, hey, we’re linking arms. We are showing that this is not just a brawl, that even if we are not necessarily in agreement policy-wise, we can support each other.

I understand that argument, but it’s hard to square that with the obvious purpose, intent of this public funding mechanism which is, if folks can show broad, even I would say even just relatively broad grassroots support – 250 donors – then you unlock this public money. It’s hard to see a scheme where you’re getting maybe a not insignificant number of donors purely because you’re giving to each other to see how that would represent support from other Portlanders. Did anyone address that issue?

Peel: No. And I think that’s because they know that’s a really fair criticism of what’s been going on. And how I’ve been thinking about it is whether or not these agreements and donations did in fact violate state law. I think, in some ways, the more important lesson to take from this, or the more concerning thing, is that these agreements really undermine the intent of the city’s public financing program. Like you said, this program is set up for candidates to be able to prove that they have genuine support from everyday Portlanders that maybe can’t give more than $5 or $20 to any candidate. And these agreements, we see these candidates not appealing to everyday voters, but instead agreeing to swap donations with other candidates who also want to unlock those taxpayer dollars.

So it does feel like a gaming of the system to some extent and no, I don’t think any of the candidates would … I mean, maybe they do realize that to some extent, I don’t think they would publicly say that. But yeah, I think that’s what feels exploitative about this whole thing is they’re trying to unlock … And $40,000 in taxpayer funds, that is not nothing. I mean, that’s a significant chunk of money, especially when there’s 70 candidates trying to get that money. So it does feel like it’s sort of taking advantage of this well-meaning program.

Miller: Am I right that out of these 11 candidates who took part in this, in the end, only two of them actually got enough donors to reach the threshold?

Peel: I’m going through it real quick in my head, I’m going through the list. I don’t believe that’s correct. I believe that there are at least, based on my reporting, at least four candidates that unlocked matching taxpayer funds. What I will say is that the director of the Small Donor Elections program, Susan Mottet – who’s kind of a one person operation, she does a lot to make this program work – said that look, the majority of these candidates that agreed to these donation swaps and also qualified for matching funds, they were way above the 250 threshold, like these 10 to 30 donations from other candidates would not have made the difference.

I think one exception to that is mayoral candidate Liv Osthus, better known as Viva Las [Vegas], a very well known stripper in Portland. And she, for mayoral candidate, they had to get at least 750 contributions and she was just over that threshold. She was one of the ones who agreed to do these swaps. So I think that that case is a little bit different. But by my accounting, I think there’s at least four that agreed to swap donations that qualified for matching funds.

Miller: I appreciate that clarification. Just before we go, so you first broke this story a week ago and you’ve had some updates in the days since, but it wasn’t until yesterday that we heard from the Secretary of State’s office that they were opening an investigation into this. They’re obviously the division of the state government that oversees elections. Do you have a sense for the timing now, with the election under two months away?

Peel: Yeah, there is a time crunch and I don’t know how quickly the Secretary of State’s office and their elections division is going to move on this matter. I think that’s to be determined. Sometimes these investigations can move quickly, sometimes they can really get dragged out, and I actually don’t know the status of how quickly this one is supposed to move. But like you said, we’ve got less than two months to go until the election and so I’m very curious. I think it will be a really interesting 45 days leading up to the election and how this may or may not affect election results.

Miller: Sophie, thanks very much.

Peel: Thanks for having me.

Miller: Sophie Peel is a reporter for Willamette Week.

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