How a Record Cash Haul Vanished for Senate Republicans

It was early 2021, and Senator Rick Scott wanted to go big. The new chairman of the Senate Republican campaign arm had a mind to modernize the place. One of his first decisions was to overhaul how the group raised money online.

Mr. Scott installed a new digital team, spearheaded by Trump veterans, and greenlit an enormous wave of spending on digital ads, not to promote candidates but to discover more small contributors. Soon, the committee was smashing fund-raising records. By the summer of 2021, Mr. Scott was boasting about “historic investments in digital fund-raising that are already paying dividends.”

A year later, some of that braggadocio has vanished — along with most of the money.

The National Republican Senatorial Committee has long been a critical part of the party apparatus, recruiting candidates, supporting them with political infrastructure, designing campaign strategy and buying television ads.

By the end of July, the committee had collected a record $181.5 million — but had already spent more than 95 percent of what it had brought in. The Republican group entered August with just $23.2 million on hand, less than half of what the Senate Democratic committee had ahead of the final intense phase of the midterm elections.

Now top Republicans are beginning to ask: Where did all the money go?

The answer, chiefly, is that Mr. Scott’s enormous gamble on finding new online donors has been a costly financial flop in 2022, according to a New York Times analysis of federal records and interviews with people briefed on the committee’s finances. Today, the N.R.S.C. is raising less than before Mr. Scott’s digital splurge.

Party leaders, including Senator Mitch McConnell, are fretting aloud that Republicans could squander their shot at retaking the Senate in 2022, with money one factor as some first-time candidates have struggled to gain traction. The N.R.S.C. was intended to be a party bulwark yet found itself recently canceling some TV ad reservations in key states.

The story of how the Senate G.O.P. committee went from breaking financial records to breaking television reservations, told through interviews with more than two dozen Republican officials, actually begins with the rising revenues Mr. Scott bragged about last year.

The committee had squeezed donors with hyperaggressive new tactics. And all the money coming in obscured just how much the committee was spending advertising for donors. Then inflation sapped online giving for Republicans nationwide. And the money that had rolled in came at an ethical price.

One fund-raising scheme used by the Senate committee, which has not previously been disclosed, involved sending an estimated millions of text messages that asked provocative questions — “Should Biden resign?” — followed by a request for cash: “Reply YES to donate.” Those who replied “YES” had their donation processed immediately, though the text did not reveal in advance where the money was going.

Privately, some Republicans complained the tactic was exploitative. WinRed, the party’s main donation-processing platform, recently stepped in and took the unusual step of blocking the committee from engaging in the practice, according to four people familiar with the matter.

The texts had been part of a concerted push that successfully juiced fund-raising, though it used methods that experts say will eventually exhaust even the most loyal givers.

One internal N.R.S.C. budget document from earlier this year, obtained by The Times, shows that $23.3 million was poured into investments to find new donors between June 2021 and January 2022. In that time, the contributors the organization found gave $6.1 million — a more than $17 million deficit.

Mr. Scott declined an interview request. His staff vigorously denied financial struggles, said some of the canceled television ads had been rebooked, and argued the digital spending would prove wise in time.

“We made the investment, we’re glad we did it, it will benefit the N.R.S.C. and the party as a whole for cycles to come,” said Chris Hartline, a spokesman for Mr. Scott and the committee.

Yet as Republican chances to retake the Senate have slipped, a full-blown case of finger-pointing has erupted across Washington, with Mr. Scott a prime target. His handling of the committee’s finances has become conflated with other critiques, especially a flawed field of Republicans who have found themselves outspent on television.

Mr. Scott’s please-all-sides decision to stay out of contested 2022 primaries has been second-guessed, including by Mr. McConnell. Mr. Scott’s detractors accuse him of transforming the N.R.S.C. into the “National Rick Scott Committee” — and a vehicle for his presidential ambitions.

“The spending wouldn’t matter if the polling numbers looked better,” said Liam Donovan, a Republican lobbyist and N.R.S.C. donor. “To the extent the red wave is receding, people look for someone to blame.”

The financial fortunes of the group alone will not sink Republican chances in November. A super PAC aligned with Mr. McConnell has more than $160 million in television reservations booked after Labor Day.

Mr. Hartline dismissed those questioning the group’s digital spending as “disgruntled former staff and vendors.” He said the $28 million invested had tripled its file of email addresses and phone numbers and added 160,000 donors.

“Our goal is to build the biggest G.O.P. digital file to help the party now and in the future,” he said. He declined to discuss the texting scheme.

Mr. Hartline said the Senate Democratic arm has more money because it had not yet spent significantly on television. Mr. Scott, he said, had strategically spent early, with nearly $30 million on ads aiding Republicans through July.

That sum, however, is actually less than the $37.4 million the G.O.P. committee reported in independent expenditures for candidates as of the same date two years ago.

A huge online outlay

For months last year, the National Republican Senatorial Committee was far and away the nation’s biggest online political advertiser, outspending every other party committee combined and pouring money into platforms like Google at levels almost unseen except in the fevered final days of 2020.

The sums were so breathtakingly large — peaking at more than $100,000 a day on Facebook and Google — that some concerned Democrats began to study the ads, fretting that somehow Republicans had unlocked a new sustainable way to raise money online.

They had not.

The Senate Republican bet had been this: By spending vast amounts early, the party could vacuum up contact information for millions of potential donors who could then give repeatedly over the coming months.

The internal budget document showed the shortcomings of the approach. The first month of outreach investment, June 2021, was projected to generate $3.2 million for the committee by November 2022. But the other $22 million in investments over the next seven months combined were projected to add up to a narrow net loss by Election Day.

Still, the document showed the digital department was asking for more: an additional $12 million in February and March. Mr. Hartline dismissed the document as a “potential draft budget.”

Not long after, the spending spigot was cut off. The committee went from being the biggest political spender on Facebook to being completely absent on it. No Facebook fund-raising ads ran from April to late August, company records show.

Digital fund-raising has dried up across the Republican spectrum in recent months, and the N.R.S.C. has been hard hit. Online donations to the committee plunged by 37 percent between the first and second quarters of this year. If not for $10 million in transfers from the Republican National Committee, the Senate arm would have spent more than it raised this cycle.

In the most recent six months that fund-raising data is available, the N.R.S.C. in 2022 has raised $15 million less than during the same six-month period in 2020.

The tight finances stand in contrast to the House Republican campaign arm, which entered August with $110 million — spending 57 percent of the money it had collected, compared with the Senate committee’s 95 percent.

In its pursuit of cash, the Senate committee has increasingly adopted a pro-Trump tone: Of the more than 1,500 emails sent this year, more than 900 have invoked Donald J. Trump in the sender line. Zero have mentioned Mr. McConnell anywhere, despite the fact that the committee’s ostensible goal is to make him majority leader.

The N.R.S.C.’s larger donor program has struggled at times, too. In August, four Senate candidates, including J.D. Vance, the Republican nominee in Ohio, trekked to Nantucket, Mass., for an event that netted each an initial $25,000, according to multiple officials, a paltry payout for the far-flung event.

Tensions are high. Mr. Vance recently snapped at Mr. Scott over a different issue with committee staff in a phone call, according to two people with knowledge of the conversation.

Though the committee exists chiefly to help Republican Senate candidates, under Mr. Scott it has only occasionally leveraged its enlarged email list to fund-raise directly for them. And when it does, the fine print indicates the N.R.S.C. keeps 90 percent of the proceeds.

‘Reply YES to donate’

The unsolicited text messages seeking contributions to the Senate Republican committee began buzzing phones in mid-2021 — often without identifying whom they were coming from.

“This is URGENT!” read one such flurry of messages. “Do YOU support Trump?”

Then came the key line: “Reply YES to donate $25.”

Those who wrote back “YES” automatically had a $25 donation to the National Republican Senatorial Committee charged to their credit cards, though the initial message said nothing about the destination and there were no links to click to find out. The committee used a tool that paired donors’ phone numbers with credit-card information saved on WinRed.

The Times documented the practice through interviews with people who had received such texts and made donations, Republican officials familiar with the tactic and a review of thousands of messages flagged by the spam-blocking app RoboKiller.

RoboKiller used the volume of texts marked as spam to estimate that tens of millions of “reply YES to donate” messages were sent from an 855 phone number that has been used by the Senate Republican committee.

Giulia Porter, a spokeswoman for RoboKiller, described the practice as predatory because it used donors’ saved credit card information to send money without telling them where it was going. “It does speak to how quickly the tactics have evolved technologically,” she said.

It is not clear how many people donated in response to the texts. But demands for N.R.S.C. refunds, a key metric of donor dissatisfaction, have soared, with the amount returned to donors quadrupling, from less than $2 million in 2020 to more than $8 million now.

The Senate Republican refund rate equals 6.6 percent of direct individual donations this cycle; the Senate Democratic committee’s rate is 1.67 percent.

WinRed declined to comment on stopping the Senate committee from using the tactic. The committee is still using the “reply YES to donate” function in texts, but it is now disclosing itself as the sender of the messages.

All told, the Senate committee has poured more than $26 million into expenses marked as texting-related since 2021, part of a digital budget that ballooned so quickly that Republicans, even inside the committee, are talking about a financial autopsy to examine whether there have been potential conflicts of interest.

Gary Coby, Mr. Trump’s longtime digital director, is an adviser to the committee and widely seen as the main behind-the-scenes influence on the N.R.S.C.’s current digital operations. Two of his companies, Direct Persuasion, a digital agency, and Opn Sesame, a texting firm, have been paid by the Senate committee more than $4.6 million combined. Two others that he has promoted, DirectSnd and Red Spark Strategy, have received another $9.2 million.

The N.R.S.C.’s digital director, Daria Grastara, worked for Mr. Coby during the Trump 2020 campaign. She was a director for Direct Persuasion, according to her LinkedIn page. While at the Senate committee, Ms. Grastara has maintained financial ties to at least one firm that has been paid committee funds and informed the N.R.S.C. of the arrangement, according to a person briefed on the situation.

Mr. Hartline called Ms. Grastara a “fantastic employee” but declined to discuss any specifics, adding only, “She has been open and transparent with all parties involved since the beginning of the cycle.” Ms. Grastara, who attended Direct Persuasion’s Miami Beach retreat this year, did not respond to a request for comment.

Mr. Coby referred questions to the N.R.S.C., which declined to discuss his financial relationships.

In a broad statement, Mr. Hartline said Mr. Scott had “instituted the toughest conflict of interest policy at the N.R.S.C. for our staff and vendors to clean up issues from the past.”

Scott versus McConnell

Mr. Scott has taken to saying that money could be the party’s greatest impediment to taking control of the 50-50 Senate in November, and he has been acting to make up financial ground.

Committee staff beyond the finance department have been asked to devote an hour per week to calling donors for cash. “Everyone plays a role in fund-raising,” Mr. Hartline said.

Under campaign finance law, a portion of the committee’s funds are supposed to be walled off for legal expenses, and are not to be used for campaigning. Yet in July, the committee’s biggest expense — a $1 million media buy, apparently for Colorado and Washington ads — came from those restricted legal funds, according to federal records.

“We will always find the most effective, efficient and creative way to get our message out and stretch every dollar, in accordance with the law,” Mr. Hartline said about the expenditure. “If the Democrats don’t like that, tough.”

Prior to politics, Mr. Scott led a major for-profit hospital chain. He was forced out in the late 1990s and the company went on to pay $1.7 billion in federal civil and criminal penalties for health care fraud.

He has clashed with Mr. McConnell, who recently lamented Senate “candidate quality” in 2022. Mr. Scott shot back that “trash-talking our Republican candidates” was “an amazing act of cowardice.”

Mr. Scott also rolled out his own “Rescue America” agenda despite Mr. McConnell’s desire to keep the policy focus on Democrats. Mr. Scott’s initial openness to taxing more Americans and letting Social Security expire has been used repeatedly by President Biden to bludgeon Republicans.

Mr. Scott’s sharp elbows have earned him enemies. His family vacation on a yacht outside Italy, for instance, promptly leaked.

Just after Labor Day, Mr. Scott has another trip planned. It is not to a key Senate battleground. He is headed to Iowa, helping a House candidate in the leadoff state on the presidential nominating calendar.